Negotiators have failed to submit proposals for changes to the local government pension scheme, raising the prospect of a government-imposed solution.
The LGA and three unions representing council workers had been asked by communities secretary Eric Pickles to suggest by the end of last week ways to cut the cost of the scheme by £900m.
But Unison, Unite, GMB and the LGA have been unable to agree on an alternative to the government’s plan to increase employee contributions by an average of 3.2 percentage points, raising the possibility of a unilateral decision.
The unions argue that the short-term saving of £900m is unnecessary and negotiations should focus exclusively on implementing the long-term reforms set out by Lord Hutton earlier this year.
Union representatives say a letter from Mr Pickles containing the government’s verdict is expected imminently.
Brian Strutton, national secretary for public services, said earlier this week: “At the moment I don’t know the outcome of their deliberations. We obviously need more time but I’ve also made the case that the scheme needs flexibility in delivering any savings and reform if we are to ensure it remains viable.”
Heather Wakefield, Unison’s head of local government, said “it seems unlikely we are going to reach an agreement”. She said changes already made -including redundancy programmes and a two-year pay freeze - had contributed £2bn in savings.
“Our argument is these [£900m] savings do not need to be made. I do not see how trade unions can offer more of our members’ money - there is not much more that can be squeezed from them,” she said.
The government says raising £900m by the end of 2014 will allow councils to reduce their employer contributions and spend the money on other things.
The 9 September deadline was set because a 12-week consultation period must take place before regulations are drawn up in time for implementation in April.
At a meeting with union and council representatives held last month, senior civil servants said: “If no substantive proposals emerged from the discussions, the Department for Communities & Local Government would draw up its own plans for consultation.”
Ms Wakefield said this now seemed likely to happen. “We’ll have to see what they say,” she added.
One option examined by officials would raise £480m with an average 1.6 percentage point rise per member and the remaining £420m raised through changes such as a raised retirement age. But average rises ranging from 1 to 1.9 percentage points were also discussed.
DCLG’s calculations include exemption for those earning under £21,000 and increases for the highest earners limited to six percentage points. Contribution rates for those earning more than £75,001 would almost double from 7.5% to 13.5% over three years.
A DCLG spokesman confirmed no proposals had been produced but that this did not mean discussions were finished.