Social workers fear for their pensions

Most social workers are concerned about the impact of spending cuts on their pensions, a survey has found, amid growing concern that thousands will opt out of the system once proposed reforms are brought in.

The research by social work recruitment agency Liquid Personnel found that more than three-quarters (79%) of social workers in England were concerned about pension affordability in the face of the public sector pay squeeze.

This has prompted the government to urge frontline workers not to make rash decisions about their pensions.

The Treasury has advised local authority staff to wait until it has finalised plans, which include increasing employee contributions to all public sector pension schemes, including the final salary Local Government Pension Scheme, by an average of three percentage points. An announcement is expected shortly.

Earlier this month, the department admitted that tens of thousands of members of the LGPS could opt out if their contribution rates increased, according to documents released under the Freedom of Information Act. This would put the scheme’s sustainability at risk.

Unions are in ongoing discussions with ministers about the proposals. A Treasury spokesperson said: “There is no reason for members to make long-term decisions on their pensions, including opting out of schemes, in advance of the conclusion of these discussions.”

However John Wright, a partner at Hymans Robertson, the pension consultants brought in to advise Lord Hutton on his review of public service pensions, said there was evidence that the pay freeze faced by many local government employees was already leading to higher opt-out rates, even ahead of the contribution increase.

Liquid Personnel found more than two thirds (69%) of social workers have had their pay frozen in the past year.

Wright said many local authority employees were facing a real terms pay cut as a result of the pay freeze, and opting out of the pensions scheme was one way to counter this.

He cautioned, however, that high opt out rates could be bad news for the schemes and in the short term for the taxpayer as fewer people paying in will increase the gap between money coming in and pensions being paid out.

Most social workers are members of the LGPS and currently contribute between 5.5% and 7.5% of their salary, with employers covering about 14% of the overall bill.

The Treasury said Hutton’s recommendations would “make for a fairer balance between what employees pay and what other taxpayers have to pay”.

The unions described the plans as an attack on frontline staff.

On the pay findings, Liquid Personnel’s managing director, Jonathan Coxon, said: “Social workers deserve to be well paid.

“If this is not addressed, we will struggle to retain the current crop of skilled social workers, let alone attract new people to the profession.”

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