The 99 funds which make up the The Local Government Pension Scheme, of which Manchester is a member, are together the biggest pension scheme in the country, holding more than £120 billion in assets on behalf of its four million members. The LGPS provides salary-related, defined benefits, which are not dependent upon investment performance. As it is a statutory funded pension scheme, it is a secure pension arrangement. Currently, the LGPS income from investments and contributions is between £4-5 billion more than it pays out. As a major shareholder in British businesses, property and regeneration, the LGPS is a secure and sustainable scheme, with enduring viability.
The Government is currently demanding £900 million in savings from the LGPS, and has now put forward proposals that have not been agreed with the trade unions, the representatives of the Scheme's members. This demand comes against a background of major changes previously agreed by the previous Government, employers and trade unions in 2008, which introduced benefit reforms and increased both employee and employer contributions.
As a funded scheme, the assets of the LGPS are sufficient to pay benefits for more than 20 years, without any additional contributions being made.
Now members of the LGPS - who receive an average pension of just £4,000 a year (£2,600 for women) - are being asked to make further sacrifices, on top of lower benefits and an increased retirement age. The Government is demanding that a further £900 million is cut from the Scheme. This amounts, effectively, to a tax on employee pensions.
The LGPS is affordable and sustainable for the long term in providing some security, in the form of decent future pensions, for some of the lowest paid workers in Britain. These pensions are far from being 'gold-plated'.
Without the LGPS, many local authority workers would be entirely dependent on taxpayer financed state benefits, which would be a further burden on the public purse.
There may, acknowledging the need to look far into the future, be a need for further changes to the Local Government Pension Scheme. But these should not be imposed and should be the subject of negotiation and agreement between local authorities and unions without interference from central government.