UNISON Active Analysis - The Bankers Crisis and the LGPS‏

The latest facts about the LGPS for England and Wales have been published by the government. They can be found here:  The full effect of the economic collapse that was engineered by the bankers is starting to bite as income from investments has shown a dramatic drop. Income from investments fell by 10 per cent in 2009-10 to £2.6 billion. This follows a fall of 9 per cent in 2008-09, so in two years that source of income has declined by 19%.

The numbers do not show how much we have been paying out for the costs of the fund manager’s disaster. UNISON research showed that these charges have been going through the roof.

We are paying on average £11 pounds back to the City for every £100 of investment income. In some cases this was a jaw dropping £54 for every £100 of income. We have been ripped off for total failure! How much longer are we going to pay for our own down fall?

The only sensible remedy to this is to merge the funds. The same UNISON report calculated that this could bring in an additional £1bn a year and at the same time cut the amount of money we pay the fund managers.

The impact of privatisation is also demonstrating itself, for the first time in the history of the scheme the number of members who are no longer paying into the scheme is larger than the number of pensioners. The number of members still paying into the scheme stayed the same.

This suggests that the costs of the pensions will rise as the income keeps falling. More than that any cost sharing bought in would mean the active members would be forced to pay a lot more in contributions. Once again the only method of avoiding this would be to merge the funds.

The key points from the latest release are:

· Local Government Pension Scheme expenditure on benefits in 2009-10 was £6.3 billion, compared with £5.6 billion in 2008-09, an increase of 13 per cent.

· Income from employees' contributions to the Local Government Pension Scheme in 2009-10 was £2.0 billion, an increase of 3 per cent on 2008-09. Income from employers' contributions to the scheme rose by 7 per cent to £5.8 billion in the same period.

· Income from investments fell by 10 per cent in 2009-10 to £2.6 billion. This follows a fall of 9 per cent in 2008-09.

· The market value of the funds at end of March 2010 was £132 billion. This represents a decrease of 17 per cent on March 2006 and increase of 10 per cent on March 2008.

· There were nearly 1.7 million employees in the Local Government Pension Scheme at the end of March 2010, almost no change on March 2009.

· The number of former employees entitled to deferred benefits rose to 1.2 million in 2009-10, an increase of 46 per cent over 2005-06. Over the same period the number of pensioners has increased by 16 per cent. The number of former employees entitled to deferred benefits exceeds the number of pensioners.