LGA warns of local government pension crisis

Crisis could engulf the local government pension scheme if the government increases employee contribution rates, the Conservative chair of the Local Government Association has warned.

Baroness Eaton wrote to chancellor George Osborne on 16 February setting out a number of concerns about the impact on local authorities if ministers pushed through money-saving reforms.

Under the proposals, council workers would face an average 3.2% increase in their contributions to retain their pensions.

Social workers earning around £30,000 per year would face paying additional contributions of at least £300 per year.

Eaton said there was “strong evidence” to suggest masses of employees would opt out of the scheme if their contributions increased, adding: “A significant level of opt outs would result in a serious and detrimental impact on the scheme’s future sustainability and viability.”

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