No hike in pension contributions for lower paid council staff

The government has pledged to protect lower paid council workers from increases to their pension contributions, after unions and employers warned many would opt out of the system.

Danny Alexander, chief secretary to the Treasury, announced this morning that public sector workers earning less than £15,000 would not have to pay higher contributions to their pension scheme, and for those earning up to £18,000 the increase would be “significantly reduced”.

But union leaders reacted angrily to Alexander’s comments, claiming he should have waited until official negotiations concluded before firming up government policy on pensions.

The government had originally proposed to increase contributions to public sector pension schemes, including the Local Government Pension Scheme, for all staff, thereby relieving some of the financial burden for employers and the taxpayer.

Unison, Unite and the GMB – the three unions on the bargaining body, the National Joint Council – subsequently warned that up to 40% of members would leave the LGPS if their contributions go up significantly.

They have been negotiating with the government on this and other issues including proposals to raise the retirement age for public sector staff.

Responding to Alexander’s announcement today, Brian Strutton, GMB’s national secretary for public services, said: “In the past couple of days [Cabinet Office minister] Francis Maude has been keen to say the government is committed to the negotiations process.

“But today Danny Alexander seems to be saying negotiations are dead, because the government has made its mind up. He’s putting every trade union on a war footing.”

Karen Jennings, Unison’s assistant general secretary, added: “It’s a real shame that Danny Alexander has seen fit to make these inflammatory announcements through the media, while we are still in the middle of detailed negotiations with the government.”

On Radio 4’s Today Programme this morning, presenter John Humphrys asked Alexander if he was effectively pre-empting the results of any negotiations.

The minister replied: “Not at all. What I’m doing is setting out the proposals we have been discussing in those talks.”

Strutton and Jennings also warned that protecting the lowest paid from increased contributions would have a knock-on effect for those on middle incomes, including social workers.

Jennings said: “Taking the low paid out of the pensions’ increase is nothing but sugar coating; those on modest wages will have to pay more.”

Strutton added that there was evidence to suggest people on middle incomes would opt out of the schemes in “just as great numbers”.

But in speech to think tank the Institute for Public Policy Research this afternoon, Alexander argued that a phased increase would be “progressive and fair” and redress the imbalance between taxpayer and employee contributions.

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