Ministers have outlined their plans for the future of the local government pension scheme after employers and unions brokered a framework agreement on how to implement Lord Hutton’s reforms.
Treasury chief secretary Danny Alexander said “headline agreements” had been reached with LGPS negotiators, including unions and employers, to fix the gross cost ceiling for the scheme at 20.4%, with an employee cost ceiling at 9.5% and employer ceiling at 10.9%.
The government has also announced it will retain Fair Deal for the LGPS, after unions agreed on key principles put forward by the Treasury.
Alexander said: “We and the unions agree that this is the best outcome that can be achieved through negotiation. For our workforce, it means they will continue to receive the best quality pensions available in this country. This is a proper reward for a lifetime’s commitment to serving the public.”
Cabinet office minister Francis Maude called it “a settlement for a generation”.
He said: “These Heads of Agreements represent fair, affordable long-term reform that will allow public sector workers to face their future with certainty. They are – as we have always promised – a settlement for a generation.”
Figures from the Local Government Association and Trades Union Congress, including representatives from the GMB union and Unite, yesterday submitted final proposals to the Department for Communities and Local Government on how they plan to implement Lord Hutton’s proposals. It follows months of wrangling between the two sides, DCLG and the Treasury over plans to increase employee contributions by an average of 3.2 percentage points by 2014/15 to save £900m from the scheme.
The plans submitted to DCLG are understood to propose a move to career average but incorporate the planned contribution increases into a “one event” change in 2014, a year earlier than originally planned. TUC general secretary Brendan Barber said: ‘Since the day of action we have seen a new atmosphere in the negotiations. The state of play varies between sectors.
“Progress has been made in health and local government where key principles for further negotiation in heads of agreement will provide the basis for further talks in the New Year.
“It’s important to stress that no agreements have been reached, but unions now have proposals to put to their executives and members.”
Unison last night said there had been “progress” on reforms in the health sector.
Unison head of health Christina McAnea said: “This is the government’s final offer. On some issues – such as contribution rates for the low paid next year, and for people close to retirement – we have made progress.”
