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COMMENT - FAR TOO IMPORTANT FOR CHILDISH POLITICAL GAMES

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The Local Government Pension Scheme has its origins in the days when Dickens was stalking London's streets recoilin...
The Local Government Pension Scheme has its origins in the days when Dickens was stalking London's streets recoiling from the horrors that befell orphans and the elderly.

It is for this reason there is some validity in the government's claim that it is right to modernise it.

For the trades unions, words such as flexibility and modernisation have all too often been used to disguise attacks on their members' rights.

They are right to be worried in this instance: there can be no denying that, despite the superficial gloss of modernisation, this review is being driven by turbulent stock markets, demographics and the flight of private companies from final salary schemes offered by the public sector.

Last year's triennial valuation revealed a widening gap between assets and liabilities in most local authority pension funds. Employer contributions are on the rise.

Some councillors are being asked why council taxpayers should fund such increases when their own pensions are being undermined by the closure of final salary schemes.

The government is right to reassure existing scheme members their provision is not under attack.

But such assurances can not be given for future employees.

Ministers must remember however, that a scheme which is viewed as generous - even though it pays out an average annual pension of under£4,000 - remains one of the sector's few recruitment cards. Undermine that impression and ministers risk exacerbating the ever-present shortage of skilled staff.

Councillors can help by scrupulously avoiding exaggerating the impact of pension fund contributions on council tax. One fund administrator estimated that contributions would have had to rise 130-fold to explain last year's council tax increase in one London borough. Yet councillors successfully spun the pension line to the local press. This issue is too important for such games.

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