The Local Government Association Group has called for a six fold increase in the number of councils using the Local Government Pension Scheme to retain staff and attract new talent.
The LGA has set a target for two-thirds of councils to adopt a ‘total reward’ approach to pay - which involves quantifying non-salary benefits such as pension plans and flexible working - by March 2011.
Currently only one council in 10 uses the system but a further 18% have indicated they are preparing to introduce some form of total reward in the next few years.
Local authorities are going to have to work very hard to keep staff engaged in different ways
John Sutcliffe, LGE
The 2010 Local Government Workforce Strategy says councils should emphasise the value of public sector pensions.
The three main political parties have all made reform of public sector pensions a manifesto pledge, and LGA chairman Margaret Eaton (Con) said publicly that the local government scheme is facing reform. Speaking at the body’s annual conference last year, Ms Eaton warned it was “not acceptable to cut frontline services to pay for gold-plated pension packages”.
However, the 2010 workforce strategy paper recognises that pension benefits will remain under close scrutiny, it says the scheme “is likely to continue to be an important staff benefit” and adds that the reform debate may help councils to calculate, and communicate, the value of pensions.
John Sutcliffe, principal adviser for Local Government Employers, said early enthusiasm for total reward had waned as the recession hit because councils were concerned that the system required unaffordable investment.
“Budgeting for pay is going to be really tight for the foreseeable future,” Mr Sutcliffe said. “Local authorities are going to have to work very hard to keep staff engaged in different ways and ‘total reward’ is one way.”
As well as a holistic approach to remuneration, the strategy also advises councils to refocus their efforts on introducing performance-related pay.
Such an approach, the document says, will be a vital means of keeping and motivating the right people at a time when there is no money for wholesale pay increases.
Currently, 44% of councils have some form of competency- or contribution-based pay system, according to the 2009 Local Government Workforce Survey, but such schemes only cover 20% of their workforce.
Jan Parkinson, LGE’s managing director, told LGC the main barrier to performance-related pay was the requirement for investment in a “very robust” performance management system. “I’m just not sure that we are there yet”, she added.