Social workers to be spared 2014 pension contribution hikes

Council social workers look set to be spared a steep hike in their pension contributions in 2014, under a revised pensions offer tabled today.

The 2014 Local Government Pension Scheme (LGPS) offer proposes freezing contribution rates for 2014 at current levels for staff in several income groups, including those earning between £21,001 and £43,000 – a bracket likely to include the majority of social workers.

Under the plans, staff earning between £21,001 and £34,000 will pay 6.5% in contributions in 2014, the same as current levels. Earners in the £34,001 to £43,000 bracket will see contribution rates frozen at current levels of 6.8%. A freeze will also apply to low earners with incomes up to £21,000.

The move to protect lower earners would be offset by steep contribution hikes for higher earning employees. Staff earning between £43,301 and £60,000 will see contribution rates increase to 8.5% from the current level of 7.2%. The steepest rise will be felt by staff earning over £150,000 who will see contribution rates leap from current levels of 7.5% to 12.5% in 2014.

Union leaders, who will now consult their members on the proposals, described the offer as “the best possible outcome” after “long and tough” negotiations with the Local Government Association (LGA). If union members vote to accept the offer, the government will launch a statutory consultation on the proposals in the autumn.

Heather Wakefield, Unison’s national secretary for local Government, police and justice, said:

“The negotiations over LGPS 2014 have been long and tough and have taken place in a demanding political and economic climate.

“LGPS 2014 is a sustainable, defined benefit scheme, which is designed to protect existing members and be affordable for the low paid and part-time workers who are its majority. Under exacting circumstances, we have achieved the best possible outcome”

The GMB and Unite unions said that they will formally ballot members on the joint offer.

Merrick Cockell, chairman of the LGA, said:

“Along with the LGPS unions we shared the goal of encouraging existing members to stay within the scheme and new employees to join, these proposals are an example of us working together to achieve such shared goals.”

Despite the contribution rate freezes several key planks of the government’s pension reforms remained unchanged in the new offer. These include plans to shift the LGPS pension from a final salary to a career average scheme and proposals to link pensions to state retirement age, which will rise to 66 from 2020 and to 68 by 2045. The current retirement age for LGPS members is 65.