GMB: 1 in 4 opt out of council pensions

One in four council workers have opted out of the local authority pension scheme in the past five years, it has been claimed.

A new study by the GMB union shows that one in four or more of all council workers including low earning care workers, teaching assistants, cleaners and support staff are not members of the pension fund.

Government proposals to increase contributions by 3.2 per cent to 9.6 per cent will make this worse, jeopardising the entire scheme for its four million members, says GMB.

The study also shows that in the five years to 2011 these has been a 7 per cent overall drop in workers participating in the scheme. Overall 1 in 4 workers eligible to be in the scheme are opted out of the scheme concluding that they cannot afford to be in it.

According to the study, the participation rate in the scheme ranges from a low of 46 per cent in Central Bedfordshire to 99 per cent in Sheffield.

Brian Strutton, GMB national secretary for Public Services, 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 per cent to 9.6 per cent would make this worse, jeopardising the entire Local Government Pension 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 Chancellor is insisting on raising £1 billion from the LGPS in a tax that will see central government grants to local authorities cut and contribution income to the scheme plummet as members leave the scheme. In a survey of more than 2,000 scheme members 39 per cent said they would leave the scheme if the average contribution rate increased to 9.6 per cent.

“The LGPS pays out on average £4,200 a year to LGPS pensioners, the lowest in the public sector and has an annual positive cash flow of £4billion. Yet the Chancellor seeks to wipe this out overnight with a doomed policy that will destroy what should be a viable, sustainable means of funding retirement for millions of front line public sector workers.

“Government has said that it wants people to save for retirement but is failing to ensure low paid workers stay in their pension scheme. This causes the legacy of under saving that the Turner Commission warned about five years ago, a legacy that will leave millions in poverty in later life.

“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."