Social workers may have to pay an extra £75 a month into their pensions if the government’s plan to increase employee contributions goes ahead in 2012, a union has warned.
The Treasury aims to cut £1.8bn from the public sector pensions pot each year by 2014-15 by increasing employee contributions for all except the lowest paid and those in the armed forces.
That equates to a blanket increase of three percentage points, on average, in employee contributions.
Such increases could drive people out of the social care and local government sector altogether, said Brian Strutton, GMB’s national secretary for public services.
Most social workers are on the local government pension scheme. They contribute between 5.5% and 7.5% of their salary into pensions, with employers covering about 14% of the overall pay bill.
“If a social worker earning £30,000 has their pension contribution increase from 6.5% to 9.5%, that will mean they’re paying an extra £75 a month,” said Strutton.
A three percentage point increase would be “totally unaffordable” for staff on lower salaries, he added.
“They’re not going to put up with it, they’re going to say ‘I can’t afford this’, and it will force people to leave the sector and find other jobs.”
Different pension schemes already charge variable rates of employee contributions and the government plans to consult with each scheme on a fair rate.
Strutton said the local government pension scheme is paid for by employee and employer contributions, not the taxpayer.
“The local government pension scheme has £132bn in the bank, the value of the fund has just gone up by 36% in the past year because the share portfolios are performing really well,” he said.
“These changes will be phased in from 2012-14. It’s a misjudgement based on a lack of understanding about the scheme and about the ability of the workforce to afford this kind of increase.
“It will be a failed policy and the GMB will be writing to the chancellor [George Osborne] to persuade him to change his mind.”
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