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Quarter opting out of council pensions - GMB

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The strain on the local authority pension scheme has been claimed with new figures said to show one in four council workers have opted out in the past five years.

A study by the GMB union showed a quarter of workers in local authorities in England had decided they could not afford to stay in the scheme.

Government plans to increase contributions to the scheme will make matters worse and could jeopardise the entire scheme for its four million members, the union warned.

Participation rates ranged from 46% in Central Bedfordshire to 99% in Sheffield, according to the research.

GMB national officer Brian Strutton said: “Low paid council workers have had a two year pay freeze and are finding it increasingly hard to save for their retirement as our survey shows.

“Government proposals to increase contributions by 3.2% to 9.6% would make this worse, jeopardising the entire scheme for its four million members. We need sustainability and fairness that encourages people to invest in their retirement and not be reliant on welfare benefits.

“The government has said that it wants people to save for retirement but is failing to ensure low paid workers stay in their pension scheme.

“As the government prepares to introduce auto-enrolment in the private sector it should be examining why 20 years of auto-enrolment to a good quality scheme still leads to a quarter of local authority employees opting out.”

Local government minister Bob Neill said: “Town hall pensions now cost local taxpayers £6bn a year - more than £300 a year to each council tax-paying household. Hard-pressed taxpayers cannot afford to foot an ever-growing bill. This is why action needs to be taken to reduce the unsustainable cost of state sector pensions.”

However, the minister’s use of a figure which has previously been discredited was described as “twaddle” by Mr Strutton.

The figure, used previously by communities secretary Eric Pickles, has been questioned before because council tax only provides a small part of local government funding, with a much larger proportion funded by central government.

Actuary Graeme Muir, head of Barnett Waddingham’s local government team, said pensions also only make up about 5% of a council’s total budget.

Mr Strutton added: “At a time when the LGPS is under threat by being caught up in government policy aimed at the other public sector schemes, you would have thought that a minister in the department that regulates the LGPS would be making the case for the scheme rather than repeating the same old discredited twaddle.”

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