When a 3 per cent increase in members’ pension contributions to public sector schemes was announced in the Comprehensive Spending Review, few people will have recognised the wide-ranging consequences. Even now the message is muted nevertheless, by the end of this Parliament the biggest pension scheme in the UK could be in tatters.
The LGPS is unique among public sector schemes in two fundamental respects. Firstly, pensions for local government workers are not funded by the Treasury. The LGPS has £150bn in assets to pay the pensions of the scheme’s four million members.
The LGPS is a pension scheme that invests the surplus of income over pension payments. It holds around £20bn in UK government bonds, this means it has lent government money to allow it to provide us with services and of course to bail out the failed banks.
Now the Con Dem's have decided to take more than £1bn a year from the scheme members in order to allow council budgets to be cut further. Not 1p of the £1bn will go into improving the funding level of the scheme. The Treasury expects councils to reduce their contribution to the scheme by 3% in response to the rise in employee contributions.
There seems to be no questioning of the government message that it deems it acceptable to introduce a ‘tax’ on pension savers. Nevertheless, by the end of this Parliament the biggest pension scheme in the UK could be in tatters.
It means that LGPS members who have lent the UK goverment up to £20bn are being robbed by the Osborne to pay themsleves back, instead of the government paying up on the debt they owe to them.
You can read the full article here which has been produced by the GMB's Pension's Officer Naomi Cooke http://www.leftfootforward.org/2011/01/impact-of-tax-on-pensions-savings/
