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Public service pensions
Mass opt-out fears over pension rise
BY LUCY PHILLIPS
Concern that there will be a mass opt-out from the Local Government Pension Scheme has been reignited after the chancellor said in his Budget that he would go ahead with increasing public sector employee contributions by an average of 3%.
Baroness Margaret Eaton, chair of the Local Government Association, said George Osborne failed to recognise that the LGPS was funded, unlike other schemes in the public sector, and currently in surplus.
She warned that the increase would hit workers hard. ‘It is likely that the LGPS opt-out rate will rise as a result. We would seriously counsel against pushing ahead with plans which might undermine the future viability of a highly effective scheme which helps its 4.3 million members save towards a reasonable retirement and reduces reliance on state means-tested benefi ts.’ Osborne said the case for increasing employee contributions across the board had been reinforced by the results of a public consultation on discount rates for
unfunded public sector pension schemes ‘which shows that a more appropriate rate would be infl ation plus GDP growth’. The National Association of Pension Funds also warned about how and when contributions would rise. Chief executive Joanne Segars said: ‘If opt-outs are high, the government might not generate as much money as they expect.’ But the association welcomed the chancellor's acceptance of Lord Hutton’s proposals from his independent pension review as a basis for consultation.
Training
Unions warn on two-tier education
BY GRAHAM CLEWS
The chancellor’s announcement that the number of university technical colleges will be increased to 24 has led to warnings of a ‘two-tier’ education system by teaching unions.
George Osborne said the technical colleges, to be run as partnerships between universities, colleges and businesses, will educate young people from the age of 14 in business, engineering and other practical skills, with all 24 colleges expected to be open by 2014. Businesses will have a say in the colleges’ curriculums, which can be tailored to local needs, and students will be allowed to use the facilities of local businesses. But the Universities and College Union warned that the technical colleges would drain funds from the further education sector. General secretary Sally Hunt said it would also ‘reintroduce selection at 14 and create a two-tier system in further education’.
Margaret Eaton: Fears for viability of pension scheme
The National Union of Teachers echoed the UCU’s views. General secretary Christine Blower said technical colleges could end up as the ‘poor cousins’ of academic institutions. Osborne also announced that the government would be providing £180m to fund an extra 50,000 apprenticeships over the next four years.
Budget views
JOHN CRIDLAND CBI director general
‘T is Budget will help businesses grow and create jobs. T e chancellor has made clear the UK is open for business… We agree that the recovery is likely to strengthen into next year.’
BRENDAN BARBER TUC general secretary
‘T is is a no-change Budget. T e chancellor has been forced to reveal the evidence that his policies aren’t working but has not had the courage to change them. T e measures do nothing to end the basic error of imposing deep, rapid and unfair spending cuts on an economy where unemployment is rising and growth faltering.'
ANDY SAWFORD chief executive, Local Government Information Unit
‘For most councils the big news was that there isn’t much news. T e course of the next four years has been set, councils are dealing with huge budget reductions, and nothing in the Budget statement changes that for most areas. Where for example was the commitment to new approaches, such as community budgets?’
STEVE FREER chief executive, CIPFA
‘T e Budget focuses on encouraging enterprise and economic growth... One of the big unknowns is whether the private sector can generate suffi cient new jobs to counterbalance job cuts in the public sector.’
APRIL 2011 PublicFinance 9
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