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Caithness News Bulletins February 2006

February 2006 January 2006

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LGPS Update – the rule of 85 Briefing No 132    
23 February 05
Local Government Pension Changes - Boring Topic But Huge Implications For Low Paid
Women May Fare Very Badly Under The Local Government Pension Changes Proposed
Bill Fernie is a local councillor for Wick West and is very concerned about the impact of the changes in the Local Government Pension Scheme being proposed by the government and in Scotland by the Scottish Executive.  The topic is one which most people do not think much about until retirement is looming.  However this is one that will have a dramatic affect on many local government workers and especially on low paid women workers.  The changes are being instigated apparently to comply with European legislation.  However various European spokesmen have denied that it is necessary for the UK to do so and that the decision is finally one for the UK government.  Unions are lobbying to prevent the changes adversely affecting their members as is their job.  One group in particular may fare worse than others.  they are women.  Many of the public think of local government workers as having feather bedded jobs with big pensions.  That is because they see and hear mainly from the managers at the top either in the media or through correspondence when they have to contact a council.

The truth is that most local authority workers who will be adversely affected by the changes and particularly the removal of Rule 85 are low paid women workers.  They include a vast range of jobs  - many part-time and form women who may have had to have short careers to bring up children.  These women are the dinner ladies in schools, cleaners, care workers in the community and in care homes, health related and environmental workers and a whole host of others.  They work in many essential jobs that are low paid.  They mainly do not build up the years of service to get a "Good Pension".  Instead they retire with pensions of about one third of men's as they have not usually worked long enough to qualify for larger amounts.  It is these same women who may be denied the right to retire early under the 85 rule if is is abolished.

Whilst the abolition of rule 85 will apply equally to men it will have disproportionate affect on women as they are in the greater numbers in the low paid, physically demanding and often stressful jobs.  The higher executive usually male sitting in a management job behind a desk will not see much difference and may have less need to use rule 85 to take early retirement and whenever he does the pension will be many times higher than the low paid female worker.  A similar situation does apply to low paid men but they will often have longer service where they may have similar pay levels.

This page has been put together highlighting the issue for women but it equally applies to many low paid male workers who may only have worked for a local authority for a very few years.  Whilst we all know there is growing problem with an aging population it is no help in dealing with the problem fairly if people in the most vulnerable and situations with low pay and few years of service are to be affected worse than others at the top.  The putting in of "years of service" should not be the only qualification to a good retirement.  Many people put in years of service in looking after elderly relatives or disable children and obtain employment later in life in many of the essential but low paid jobs in local government.  We should NOT be hitting them again.  The suggestions on the proposed changes to this pension scheme need to be rethought.

Bill Fernie
Highland Councillor - Wick West
22 February 2006

What Can You Do?
Unison a union that represents many local government workers has set up information and ideas on how you can help to campaign against the changes being proposed

Unison's Campaign Checklist of things you can do

In mid January 2006 the Minister for Finance and Local Government Reform announced that the Scottish Executive intends that the Rule of 85 (follow link to current provisions) will be removed with effect from 1 October 2006 in order to ensure compliance with the EC Equality Directive and to help maintain the sustainability and affordability of the Scottish scheme. Where it can be objectively justified consideration will be given to providing transitional protection to those existing scheme members who might have qualified to receive an unreduced early pension under the Rule if it was not removed, and who may not have sufficient time to make alternative savings plans for their retirement. - From The LPGS web site

Women And The Local Government Pension Scheme - From Unison web site
The current dispute over the future of the Local Government Pension Scheme (LGPS) is without doubt a women’s issue, because women are almost three quarters of all LGPS members. The Government has pledged to root out discrimination across the public services through its proposed public sector gender duty. Local authorities are supposed to comply with the Equality Standard and other public services like higher and further education and police and fire services are signed up to tackling sex discrimination.

Why then are LGPS members being treated less favourably than members of other public sector schemes like uniformed police and the armed forces whose members are largely men? And other public sector schemes with smaller proportions of women? Those schemes have all been given protection of their existing benefits and retirement age. Women in the LGPS haven’t.

The Government is planning to remove the ’85 Rule’, which enables LGPS members to take an unreduced pension from 60 if their age and membership of the LGPS adds up to 85. The only protection they are proposing is for members over 53. This will hit women particularly badly. Consider this…

• 72% of LGPS members are women
• 57% of women members work part-time
• All part-time workers have only been able to join the LGPS since 1993 What jobs do women do?
• Women in the LGPS work in a range of emotionally, mentally and physically demanding public service jobs – as teaching assistants, home care workers, social workers, school and other administrators,
police and fire control room assistants, librarians, school meals workers, meat hygiene inspectors, careers staff, cleaners and environmental health officers
• Many are low paid. For instance over 250,000 local government staff are part-time workers earnings at or below £6 each week
• This means that their pensions are already low, before the Government proposed moving the retirement goalposts without giving them the same protection as other public sector workers

According to actuaries employed by the Government:
• 66% of women are covered by the 85 Rule, which the LGA and the Government want to remove without protection for those under 53. Those under 53 will not have the right to retire at 60 or lower, as is the case for all other public sector pension schemes How much pension do women get?  The short answer is ‘not a lot’. The enormous gender pay gap in local government and other LGPS sectors obviously affects the level of women’s pensions. Moving in and out of the workforce to care for children and older relatives also affects benefits. But higher paid men in senior jobs are more likely to be allowed to retire with high unreduced pensions on grounds of ‘efficiency’ or redundancy than low paid women.

According to Government appointed actuaries, retirements in 2004-5 show that …

• The average woman’s pension is just £1,616 a year, compared to £5,699 for the average man
• The average overall is £3,700 – hardly a fortune!
• 75% of women have a pension below £3,600
• 75% of men have a pension below £7,000

This means that most women’s pensions fall below the Government’s Minimum Earnings Guarantee and Pension Credit levels. They are therefore paying into the LGPS and drawing on its funds for no more basic pension than they would get if they did not join. UNISON believes our members should stay in and contribute to an independent income as the Government wants, without having to rely on benefits, but the choice for many is tough.

• 22% of men retire early on ill health grounds with a pension of £6,110
• 19% of women do the same, with a pension of just £2,576
• 24% of women retire at their normal retirement age with a deferred pension of just £874
• This compares to 14% of men , who have a pension of £1,923
• 20% of women retire before 65 with a reduced pension of £1,012
• Just 6% of men do the same, with a pension of £1,935, but…
• The level of pension for those allowed to retire early on the grounds of ‘efficiency’ was £9,506 and for redundancy £7,427
• A small minority of those getting the highest pensions under these circumstances will have been women

Poorer pensioners die younger
The Faculty and Institute of Actuaries has said that “people on pensions of less than £4,500 a year are twice as likely to die early than those drawing more than £13,000”. Actuaries for the government have shown that poorer LGPS pensioners often die before their estimated life expectancy. Forcing women on low pensions to work even longer in physically and emotionally stressful jobs calls into question the Government’s claims of increased life expectancy!!

Are all eligible women in the LGPS?
No. According to a survey by the Employers Organisation for Local Government in 2003…

• 83% of full-time women, compared to 90% of full-time male workers were members
• Only 66% of women in part-time jobs were in the scheme
• 46% of those not in the LGPS said it was because their earnings were too low
• 44% said they didn’t belong because they needed to maximise take home pay
• 88% of those in the LGPS said they placed high value on it as part of the remuneration package and wouldn’t want it reduced

What about the state pension?
Removing the 85 Rule without protection will impact particularly badly on women, who are less likely to have a decent state pension. This particularly applies to LGPS members, many of whom were unable to join the LGPS before 1993 and have low earnings.

According to the Department of Work and Pensions…
• Only 30% of women get a full state pension at 65, compared to 84% of men
• 52% of women, compared to 2% of men get a state pension of £55 at 65
• Over 40% of women get less than £50 at age 60

UNISON wants…
• Equal treatment with members of other public sector schemes – all of which are overall more favourable than the LGPS. That means protection of retirement age and benefits for existing LGPS members as a starting point for future negotiations

• The same protection for women in the LGPS as men in other schemes like the uniformed police and armed forces schemes, where the retirement age is already much lower than 60!
• A fairer, equality proofed scheme for the future, which gives women equal access to LGPS benefits and recognises their caring commitments
• And equal treatment with members of the NHS, civil service and teachers’ schemes, who our members work alongside every day of the week
• A serious commitment to equality for women from Government and
employers which is applied to women in the LGPS…now!
• If you would like to join our campaign, e-mail us on
LGPS@unison.co.uk  or log on to the UNISON website