Andrew Mayer, Chairman of the London Pensions Fund Authority has told the National Association of Pension Funds that the current arrangements for local government pensions are unaffordable.
The Local Government Pension Scheme has 3.5 million members. The scheme administers pensions for local government employees across the country. It is a funded scheme, and is in the process of being valued. The news is not expected to be good.
Speaking to the NAPF conference in Warwickshire, Mr Mayer’s starting point was that whilst local government employees deserved a decent pension, they may have to contribute more to get it, claim less and claim later.
Mayer’s speech came days after the new government announced its intention to launch a review of public sector pensions, although its exact remit, make up and chairman have yet to be announced.
It was inevitable, Mayer claimed, that the conclusion of this forthcoming review would herald cut backs for public sector pensions. However, rather than sit back and passively await their fate, Mayer took the view that public sector employees and their representatives should engage with the consultation and be proactive in suggesting solutions for the pension problem. He felt that his own organisation should even be prepared to offer a cap on public expenditure to ensure the scheme’s long term viability.
Three years ago to hear such comments coming from a public sector pension spokesman would have been unthinkable. However, Mayer was at pains to convey to the NAPF (and the media who were eavesdropping) that he understood the gravity of the predicament, and that the Local Government Pension Scheme’s own survival was at stake.
One of the issues that is sure to be brought up is the possibility of a move away from final salary to career average pensions. After all, workers tend to retire at the peak of their earning power, and such a move would reduce pension liabilities overnight.
Somehow it seems unlikely that the local government employees at the coal face will be as keen to embrace changes to their retirement planning.
