Saving the LGPS and good pension schemes for our members

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2017 Local Government Service Group Conference
23 February 2017
Carried as Amended

Conference is concerned that good pension provision is continuing to decline. Defined benefit pension schemes that guarantee pensions based on final salary or career average are under threat.

The main reason employers give is increasing costs and risk of further increases of providing the benefits and increased employer contributions.

In the public sector (for example LGPS/NHSPS) employers are also looking at ways to reduce pension costs. In some cases by tempting members to leave the schemes by offering pay increases. Another tactic is to transfer services to arms length companies that then try to exclude new starters from the public sector schemes.

There are a number of reasons why costs are increasing but by far the most damaging is the assumptions the schemes and their actuaries are using to value the future growth of their funds. Many funds base future growth on the likely increase in gilts. Yields have been artificially low since the last recession so basing returns just on gilts increases the cost of benefits. We believe a better method would be to base it on the potential growth of the actual assets of the fund.

For example if the LGPS England and Wales funds had all used central government assumption on future growth in 2013 the past service deficit of £46 billion could have been halved and employer contributions reduced that may have lead to less cuts in services and jobs.

Conference welcomes the commissioning of independent actuarial advice to help branch negotiations in the private sector to improve settlements for members. Where defined contribution schemes (that do not guarantee any level of retirement income) have replaced defined benefit schemes there has been success in increasing the employer contributions.

Conference calls on the service group executive to work with the NEC to continue to recognise the importance to the future of good pension provision and to engage and empower scheme members to question and challenge the way the costings of benefits are calculated.

Conference further calls on the service group executive to work with the NEC to:

1)Update all UNISON pension leads and pension champions on how to engage on this crucial issue;

2)Make available courses and speakers for regions;

3)Distribute a negotiators guide for members on alternative cost assumptions for schemes;

4)Raise this issue with government and other political parties through Labour Link and the TUC.