Council workers flee pension schemes

One in every four council workers has opted out of their pension scheme during the last five years, a new study has found.

A quarter of council workers in England had decided they could not afford to stay in the local authority pension scheme, according to research for the GMB.

It said participation rates ranged from 99% in Sheffield to 46% in Central Bedfordshire.

And the union warned that Government plans to increase contributions could jeopardise the entire scheme for its four million members.

GMB national officer Brian Strutton 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% to 9.6% would make this worse, jeopardising the entire 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 Government has said that it wants people to save for retirement but is failing to ensure low paid workers stay in their pension scheme.

"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."

Local government minister Bob Neill said: "Town hall pensions now cost local taxpayers £6 billion a year - more than £300 a year to each council tax-paying household. Hard-pressed taxpayers cannot afford to foot an ever-growing bill. This is why action needs to be taken to reduce the unsustainable cost of state sector pensions."

May 2011

Copyright Press Association 2011