Treasury Wrong On LG Pension

8 Nov 2011

The Treasury’s pensions calculations are wrong and the truth is council workers will suffer a huge loss in pension and wages says GMB. A part time school dinner lady could typically expect to get £400 a year less pension even if she works until she is 68. On top of this she’ll have to pay £5,500 more for the privilege of getting less

New GMB analysis of last week’s government’s ‘improved offer’ for public sector pensions shows that Treasury’s quoted local government examples are wrong.

The figures below for 3 case studies used by the Treasury but calculated by GMB clearly show the annual pensions losses local government employees would face. The figures also show the increase in contributions to reach this level of pension.

Treasury Case Study 5 – Local Government Administrator

Salary (full time) £20,000

Age when new scheme starts 32    

Length of service when new scheme starts 13      

Annual pension under the current LGPS taken at 65                         £15,333

Annual pension under the government proposals taken at 65       £13,683 a drop of £1,650 a year.

Annual pension under the current LGPS taken at 68                         £19,910

Annual pension under the government proposals taken at 68       £17,282 a drop of £2,628 a year.

In addition she would have paid out an additional £21,600 in extra contributions by the time retires in order to qualify for the lesser pension under the government’s latest proposals.

School Dinner Lady

Salary (working part time) £8,000

Age when new scheme starts 45    

Length of service when new scheme starts 5

Annual pension under the current LGPS taken at 65                         £3,333

Annual pension under the government proposals taken at 65       £2,933 a drop of £400 a year.

Annual pension under the current LGPS taken at 68                         £4,551

Annual pension under the government proposals taken at 68       £3,879 a drop of 672 a year.

In addition she would have paid out an additional £5,500 in extra contributions by the time retires in order to qualify for the lesser pension under the government’s latest proposals.

Environmental Health Officer

Salary (full time) £30,000

Age when new scheme starts 50    

Length of service when new scheme starts 20      

Annual pension under the current LGPS taken at 65                         £17,500

Annual pension under the government proposals taken at 65       £16,375 a drop of £1,125 a year.

Annual pension under the current LGPS taken at 68                         £23,161

Annual pension under the government proposals taken at 68       £21,190 a drop of £1,971 a year.

In addition she would have paid out an additional £16,000 in extra contributions by the time retires in order to qualify for the lesser pension under the government’s latest proposals.

GMB National Secretary, Brian Strutton said, “There is clearly a serious problem with the information presented by Treasury.  Where it shows local government employees benefiting, the reality is a very significant loss.  A part time school dinner lady could typically expect to get £500 a year less pension even if she works until she is 68. On top of this she’ll have to pay £5,500 more for the privilege of getting less.  When the government talks about putting their ‘offer’ direct to public sector workers I think it is important that proper information is used not misleading propaganda.”