UK - One of the unions involved in negotiations with the government over changes to the Local Government Pension Scheme (LGPS) has threatened to reconsider its position, after a government minister sent a letter to unions demanding further changes to the funded pension pillar.

The letter, sent by communities and local government minister Eric Pickles, suggested a 10% ceiling for employee contributions, rather than the 9.5% cap agreed between unions in negotiations with the Treasury and Cabinet Office.

Pickles' department has responsibility for the local authority funds and is currently consulting on how best to implement a number of changes aimed at saving the equivalent of 3.2% in contributions.

The letter has since been withdrawn, with chief secretary to the Treasury Danny Alexander admitting that it was not the position agreed in negotiations.

Speaking yesterday after receipt of the letter, GMB secretary for public services Brian Strutton - who has been privy to negotiations over the past 10 months - said: "GMB in local government is reconsidering its position regarding the proposed heads of agreement in the light of the new conditions laid down by Eric Pickles."

Unite, the UK's largest union added that it had been "surprised" by the Pickles letter. In a statement, it added: "In light of this confusion, we therefore suspend our agreement and now seek an urgent meeting with government to establish an agreed way forward."

Addressing the now-jeopardised agreement outlined by Alexander yesterday in the House of Commons, Barry McKay of Hymans Robertson's Glasgow office noted that it would still mean an increase in employee contributions to those in enrolled in LGPS.

McKay added that a number of schemes he had spoken to were "not keen" on seeing such an increase, coming in addition to a public sector wage freeze and noting that there was concern about a reduction in active members.

He said that there was also uncertainty about how the agreement would affect funds in Scotland, as all negotiations currently only concerned England and Wales.

McKay said that this disparity was a result of the Scottish schemes conducting triennial valuations a year after the other funds, resulting in a usual one year lag between reforms from Westminster being implemented.

"Scotland does tend to follow what's happened and occasionally has learned from it - tweaking to try and make the scheme fairer to members," he said, noting that reforms introduced by the previous Labour government in 2008 were put in place in 2009 by Scottish local government funds.

Topics