The sustainability of the Local Government Pension Scheme

11.03.09

 

This article was written by Mike Woodall, public sector pensions strategist in Wragge & Co LLP's Pensions team and published in the March issue of Local Government Chronicle.

It is only a matter of time before the focus of elected members and council tax payers returns to the sustainability and affordability of the Local Government Pension Scheme as a defined benefit scheme.

As council tax bills land on householders' doormats, they will be reminded that whilst they have in all probability lost their own final salary scheme, they do continue to contribute to at least one through their council tax payments.

They will probably not take into account that the remuneration package of local government officers, when including their employer's pension contribution, probably creates a fairly level playing field when compared to their own total remuneration package.

It is likely that the ongoing affordability of the current scheme can be achieved through the Department for Communities and Local Government's (DCLG) current proposals regarding a cost sharing mechanism, where scheme members will bear a greater proportion of any future increases. The DCLG may also need to give consideration to containing future benefits within an agreed cost envelope. It would be an extremely sad situation if the defined benefit régime was lost, particularly as it appears only the public sector is making adequate provision for the retirement of its workforce.

Failure for this situation to continue would result in greater demands in the future on the means tested benefits available from government for those with insufficient income in retirement. It appears therefore that there is a cost to be met and the only decision to be made is whether it is paid during employment or retirement.

For further information about this published aticle, contact Kathryn Hobbs on +44 (0)121 213 2397, Amie Ryalls on +44 (0)121 213 2360 or Rebecca Davies on +44 (0)121 213 2396

This published article may contain information of general interest about current legal issues, but does not give legal advice.