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Pension scheme 'not sustainable'

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Local government needs to take an axe to its own final salary pension scheme before change is forced on the sector from outside, the new president of the Public Sector People Managers’ Association (PPMA) has warned.

Gillian Hibberd, who took the reins of the PPMA at the body’s annual conference, said Local Government Employers and the Local Government Association must lead on reform.

“My view is that the Local Government Pension Scheme is not sustainable and we have got to be brave to recognise that and then plan carefully for the change. We’ve got to lead the debate,” she said.

“It might be that we have to shift towards more of a defined contribution system in the future, but we need to plan for this all now and do it properly.”

Ms Hibberd said that by taking the lead itself, the sector would be able to change the scheme for the future in the most advantageous way possible, protecting its existing funds and allowing staff flexibility in how they contributed.

She insisted the move would not diminish local government’s attraction, saying she had not seen evidence that the final salary scheme worked as a recruitment asset.

Ms Hibberd, Buckinghamshire County Council’s corporate director of people and policy, also said that as final salary schemes increasingly disappeared from the private sector, comparisons of benefits packages became more difficult.

Alan Warner, director of people and places at Hertfordshire County Council, said local government had to look at its “total reward” package and that being part of a final salary scheme was not a priority for everyone in the sector.

“We should look at everything, because there is a tradeoff between pay and benefits,” he said.

One senior employment expert, who did not want to be named, said she believed that reforming the pension scheme could lead to a greater turnover in middle management jobs, by removing some people’s motivation to stay in the same jobs and not seek new challenges.

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