Socialist Worker

Government pension myths are shattered

Two great myths deployed by New Labour against local government workers fell apart last week.

Issue No. 1988

Myth one: the “rule of 85” is illegal according to the European Union (EU)

The “rule of 85”, which applies to the local government pension scheme (LGPS), permits members whose age plus years in service reaches 85 to retire at 60, rather than 65.

The government claims this breaches an EU directive on age discrimination because people with the same length of service, but of different ages, could be treated differently.

In December last year, local government minister Phil Woolas said, “It is our clear intention to remove the rule of 85 from the scheme from 1 October 2006 to comply with European age discrimination legislation.”

But EU commission spokeswoman on employment, social affairs and equal opportunities, Katharina von Schnurbein, said, “It’s an artificial debate and one that is only going on in Britain.

“The directive has no influence on pension value or age. It is completely up to the member state. If they think it is reasonable for people to retire at 60, under EU law, that is perfectly legal.”

Heather Wakefield, head of local government at the Unison union, said, “We’ve always thought that linking the EU to the end of the rule of 85 is just a cover, because they’ve known about the directive for almost six years and it hasn’t been mentioned before.”

Myth two: a quarter of your council tax goes on local government workers’ pensions

This claim was carried by every major newspaper at the end of January.

The Sun was typical when it reported that, “Fury erupted last night as it emerged a QUARTER of council tax is funding town hall pensions.”

The claim was based on a report by Douglas Anderson on Channel 4’s “Whose Pension Are You Paying?” Anderson, who works for the LGPS actuary Hymans Robertson, said that 26 percent of council tax is spent on the LGPS, teachers’ and firefighters’ pension schemes.

But in a letter to the Local Government Chronicle, Ronald Bowie, a partner at the same firm as Anderson, apologised for the claim. The true figure, Bowie says, is “around 5 percent”.

Many more battles lie ahead

Pilots working for British Airways are being advised by their union to borrow £25,000 each to prepare for a long strike over their pension scheme.

The British Airlines Pilots Association (Balpa) said it is getting ready for an all-out strike of its 2,822 British Airways members.

The airline will announce plans by the end of March to cut the cost of its main pension scheme. The union believes that a change from a final salary to a career average scheme could cut pensions by 36 percent.

  • The Amicus union last week accused IBM of seeking to close its final salary pension scheme by stealth.

    The changes involve making only two thirds of any future salary increase pensionable, which will progressively erode the future pensions of employees.

  • Following a 15-month investigation by the parliamentary ombudsman into the plight of workers who have lost their pensions, the government may have to pay more than £5 billion in compensation.

    The resulting report by Ann Abraham, delivered to the government last month, is understood to accuse ministers and officials of a catalogue of mistakes and of misleading the public and parliament.

More than 85,000 people have lost their pensions as over 400 companies have gone bankrupt or closed their pension schemes. Most of the schemes involved foundered after the crash in share values in 2000.

In the past firms had to ensure that there was enough money in company pension funds. Labour changed the rules so that companies could pay less money in but did not warn the public that savings were no longer secure.

Socialist Worker’s guide to the pensions ballots

Who will be balloting?

  • Local government workers including nursery nurses, teaching assistants, home care workers, school meals workers, some bus drivers, road gritters, meat hygiene inspectors, environmental health officers, librarians, gardeners, college technicians, admin and clerical staff, secretaries and cleaners.
  • Others in the local government scheme such as workers in the environment agency, police support staff, cleaning and waste companies, voluntary sector and parts of higher education.
  • Around 6,000 NUT teachers’ union members who work directly for local authorities, such as advisers to schools.

What’s the timetable?

20 February Ballot opens
13 March Ballot closes
14 March Result announced
17 March Notice to employer of industrial action
28 March Proposed day of action

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Article information

Sat 18 Feb 2006, 00:00 GMT
Issue No. 1988
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