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Pension reform decision on hold

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The Treasury is to delay announcing details of rises in pension contributions following union intervention.

Cabinet Office minister Francis Maude, right, and TUC general secretary Brendan Barber are to meet to discuss pension reform, including the government’s proposal for public sector employees to pay an extra 3% in contributions.

The government, which has been exploring how to protect the lowest-paid staff, had planned to announce how the increase would be applied in the March Budget.

As well as high-level talks about the principles behind the rise and other reforms, discussions are set to take place on changes to individual public sector schemes, including the Local Government Pension Scheme.

A decision on the level of increase, whether it should be tapered and which pension members it should be applied to needs to be made by June so that a three-month consultation can be carried out for implementation from April 2012.

The increase in rates, announced in the spending review, has proven controversial among LGPS stakeholders who fear it will lead to members opting out.

Concerns have been raised with the Department for Communities & Local Government by the LGPS policy review group, which includes representatives from unions, fund managers, actuaries and Local Government Employers.

Unison’s head of pensions Glyn Jenkins said: “The whole thing is going to start the race to the bottom that the government are pretending they don’t want.

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