- Conference
- 2024 Local Government Service Group Conference
- Date
- 1 January 2024
- Decision
- Carried
Conference notes that with the roll out of auto-enrolment pensions since 2013, more than three-quarters of current workers are now contributing to a workplace pension.
Conference notes with concern that with the closure of most good quality defined benefit (DB) pension schemes in the commercial private sector, only a quarter of current workers are members of DB schemes. These workers are concentrated in public services.
Conference reaffirms our service group’s commitment to the Local Government Pension Scheme (LGPS). The scheme provides a decent and secure retirement income for workers in local government, and Conference believes that it is sustainable for the long term.
Conference notes that the LGPS Funds have all been growing steadily over the past decade, with many funds now in excess of 100% funding.
That commentators (such as the Local Government Chronicle) recognise that the majority of that growth is due to long term reductions in liabilities (despite last year’s large CPI uprating of pensions in payment and CARE accounts).
That those decreased liabilities are in part due to a mixture of the rise in life expectancy tailing off and the impact of the changes to benefits, most notably the removal of the Rule of 85 (early retirement) option which, combined with rising LGPS and State Pension ages (particularly for women), sees many low paid members working much longer and retiring older and therefore being less time in pension payment.
That a number of funds (particularly in Scotland) have recently chosen to respond to fund surpluses and pressures to the employers’ revenue budgets, by reducing employer contributions, either drastically, allegedly for a short period, (Strathclyde) or less drastically on a longer-term basis (Tayside). Some employers may target the whole surplus as theirs to claw back, although funds are still required to make decisions independently based on actuarial advice.
That the UK has one of the worst state pension provisions in Europe.
That UNISON has led on measures to improve scheme funds through, for instance, the successful campaign for investment cost transparency and the efforts to reduce costs of fund management through pooling.
Conference opposes efforts by some employers to worsen pension arrangements for local government workers, including those providing outsourced council services.
We are alarmed by moves by some employers including housing associations, education providers and charities to end provision of the LGPS to workers.
Conference believes:
That pensions are deferred wages and these funds are our members’ current and future pensions.
That there should be no race to the bottom in workplace pensions and that LGPS pension funds are not slush funds for struggling councils.
That left unchallenged, funds may be influenced by councils wishing to use them as an easy source of savings.
That funds and fund managers have not suddenly become masters of investment and so cannot claim credit or ownership of improved funding levels.
That valuations of the LGPS schemes use a formula which does not reflect the real financial position of funds, and so fund surpluses do not feed through into improved benefits for members.
Conference believes that, in contrast to DB schemes, most defined contribution (DC) schemes fail to provide workers with decent and secure pensions. Over the next ten years, a worker on the median average salary in local government could expect to accrue four times more pension entitlement in the LGPS than they would build up in a DC scheme that uses the statutory minimum employer and employee contributions (3% and 5% respectively). A worker also takes on more risk in a DC scheme, and few DC schemes provide the ill health retirement, redundancy, and death benefits that the LGPS provides to members. Reduction in access to the LGPS marks a major worsening of employee terms and conditions and we must oppose and mitigate the effects of these employer offensives against our members’ living standards in retirement.
Conference notes with deep concern government actions to secure greater influence over the investment decision-making of local government pension schemes. The Economic Activities of Public Bodies (Overseas matters) Bill before Parliament would prevent pension funds from responding to the views and priorities of local residents in their investments. Plans announced by the chancellor in the Autumn statement to press ahead with interference in fund investment, although this was rejected by most respondents in the government’s consultation, are also of deep concern to members. The monies in pension funds belong to members, not the government. Conference believes the governance arrangements ensuring accountability to locally elected councillors, guided by fiduciary duty, and supported by boards involving member representatives, must be defended.
Conference calls on the Local Government Service Group Executive to:
1) Campaign for the continuation of DB provision for workers in local government, through highlighting the sustainability and fairness of the LGPS and its role in the recruitment and retention of local government workers;
2) Work with Labour Link to seek to ensure continuing support for the LGPS from an incoming Labour Government;
3) Work with the UNISON Pensions Unit in producing bargaining guidance and campaign materials for branches and organisers facing an erosion in the access of members to the LGPS, so as to help maintain and expand the coverage of the LGPS;
4) Launch a strategic targeted campaign to improve existing DC pension provision through highlighting the inadequacies of schemes, calling for higher employer contributions, and alleviating individual risk through exploring collective DC arrangements;
5) Campaign to maintain the freedom of pension funds to invest in a way that reflects both the ethical views and material interests of scheme members, working with Labour Link and the NEC to campaign for continued full local democratic control of LGPS investments, and working with the Pensions Unit to brief activists involved in scheme governance on these issues.
Conference also requests that the Local Government Service Group Executive works with our representatives within the relevant structures of the LGPS (Scheme Advisory Boards, fund boards etc.), branches and the wider local government membership to:
a) Campaign against employer attempts to claim fund surpluses resulting from reduced member benefits (and actuarial consequences of them) as theirs to make savings from through contribution cuts;
b) Demand that actuarial reports make clear what proportion of funding improvements in local funds and the scheme as a whole, since the mid-2000s, are attributable to reductions in scheme benefits and knock-on effects of those;
c) Campaign for a review of scheme benefits to look for improvements, particularly in the area of early retirement options and/or early retirement actuarial reductions based on the funding improvements identified above;
d) To develop and distribute information and learning for members to improve their knowledge of how the scheme and LGPS pension funds work and why we must defend them;
e) To ensure that this work does not cut across any existing or future campaigns around ethical investment of funds.
Local Government Service Group Executive (Motion 43)
Scotland Region (Motion 44)