Unions have accused the government of making an “unwarranted” attack on council employee’s pensions.
GMB national secretary Brian Strutton has expressed concern that the Local Government Pension Scheme has been included in plans to increase employee contribution rates by an average of 3% from 2012.
The chancellor said the increase was designed to make pensions more affordable and help repair the whole in the nation’s finances.
Mr Strutton said the inclusion of local government workers’ pension contributions in that increase was “unnecessary” and could lead to some of the least well off scheme members opting out of the pension.
Local Government Pension Scheme pension payments are paid from investment funds worth £132bn and do not contribute to government debt, Mr Strutton said.
“An increase in employee contributions from 6.4% to 9.4% and would yield an extra £1bn per annum from the 1.7m low paid council workers in the LGPS,” he said.
“This unwarranted hike in member contributions will contribute nothing to the deficit yet will price many council workers out of the scheme,” he added. The increase “is simply not affordable to employees who are already suffering pay freezes and job losses” and conflicted with Lord Hutton’s recommendations on employee affordability, he said.
“Why are council workers being penalised for having properly built up their own retirement savings?”
However a Treasury spokesman denied that a 3% increase had been agreed and said the exact level of increase would not be announced until next year’s Budget. He added: “The spending review announced that the government would implement progressive changes to the level of employee pension contributions equivalent to an average of three percentage points.”