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Conservative peer attacks Osborne's public sector pension plans

by Daniel Grote on Feb 21, 2011 at 09:08

Conservative peer attacks Osborne's public sector pension plans

Conservative peer Baroness Eaton has attacked chancellor George Osborne's plans to raise public sector pension contributions by an average of 3%, warning they will lead to mass opt-outs from the Local Government Pension Scheme (LGPS), The Observer has reported.

Eaton, Conservative chair of the Local Government Association, warned there would be a 'significant level of opt-outs' from the 3.5 million-member LGPS, which would call into question the scheme's 'sustainability and viability' and harm the economy, according to the paper.

She warned opt-outs would lead to the state picking up the bill of 'further reliance on the state via means-tested benefits in retirement' and the increase in pension contributions was likely to lead to 'a significant worsening in industrial relations'.

Osborne announced the public sector pension measures in the comprehensive spending review last year. The government also commissioned former Labour cabinet minister Lord Hutton to deliver an independent review of public sector pensions. The Independent Public Sector Pension Commission's initial report last year suggested raising contributions but did not name a figure.

11 comments so far. Why not have your say?

Soul Adviser

Feb 21, 2011 at 09:24

I Hope the honorouble lady is correct. A 100% opt out would be a massive boost to the UK tax payer.

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ms simpson

Feb 21, 2011 at 09:59

I fear that Baroness Eaton has gone native.The sooner that local government is dagged from its make -- believe world into the harsh glare of the real world --- the better for all of us.

It is a scandal that local government has been allowed to drift into such an ethos that they convinced themselves that life within the councils was a period of long sunny days that would never end.

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Greg Kingston

Feb 21, 2011 at 11:45

If significant opt-outs bring into question the sustainability of the scheme, that merely highlights how unsustainable it is already, as it is being heavily reliant upon the contributions of today to fund the payments of today, i.e. unfunded and with shortfalls met by the taxpapyer.

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Feb 21, 2011 at 11:47

If somebody is stupid enough to opt out of an index linked, government backed scheme that pays 80th after tax-free cash has been taken because they are asked for an additional 3% contribution then they don't deserve that type of pension anyway.

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Julian Stevens

Feb 21, 2011 at 11:56

It's the same old public sector mentality ~ everybody else, i.e. the commercial private sector, pays. We pay for their salaries, their NIC, the costs of their office premises, their pensions (including all those phoney redundancy enhanced early retirement packages), their holidays, everything. A large proportion of them wouldn't be able to hack a job in the real world anyway ~ after a week they'd be having a heart attack as a result of the pressure, which is why George Osborne's assertion that the private sector will soak up most of the people shed from the public sector is just complete baloney. Most of them the private sector simply wouldn't want.

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Feb 21, 2011 at 12:57

Local Government Pensions are funded by private sector investments; the employee and employer contribute to the scheme which then invests in the stock market etc to get the returns to pay for the pensions IT IS NOT AN UNFUNDED SCHEME!! Private sector firms would be aversely affected by a diminution of the LGPS. The fact is that the majority of local government workers are lowly paid, are going into a second year of a pay freeze and would not be able to afford to continue contributions regardless of how shortsighted it would be for them to withdraw.

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Feb 21, 2011 at 12:58

I agree with all of the above comments.A worker on the average salary of £25,000 would pay an additional gross contribution of £750 per annum which after tax relief of 20% equates to an additional nett contribution of £600 per annum. Give up an index linked scheme for that, I think not!

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Feb 21, 2011 at 14:13

Baroness Eaton - started as a teacher and been employed by the state ever since - go out and get yourself a proper job pet.

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Feb 21, 2011 at 15:31

George; go further please. Close the DB scheme to new starters ASAP.

If the Baroness is worried about opt outs, I've heard auto-enrolment via NEST is a great scheme and if it's good enough for the private sector what's up with using it for state employees too??!!

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Harry Katz

Feb 21, 2011 at 17:44

Hey George if the Dame is right then raise the contributions to 10%.

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Ron Jones

Feb 22, 2011 at 09:43

I always thought that these pensions should remain but be capped at low benefit levels.

However now I have completely changed my mind, the people in these schemes clearly have no idea at all just how much the UK tax payer pays in to these schemes, they do not realise that their contributions are virtually insignificant in the cost of running these schemes.

Others are correct unless everyone is in the same type of pension situation then there will never be any improvement in the UK.

All of these schemes should end and the employees wages should be increased to include the level of their employers pension contributions then they will see how far their money goes.

The worst comments I have heard from people who's salaries are paid by the taxpayer to begin with, was 'but think of the tax we pay on our salaries and the goods we buy which helps the economy' I did not hear it once but over a hundred times.

Never should people be so far from reality to think these crazy thoughts.

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