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Public sector pension proposal revealed

Local Government Employers has written to Communities Secretary Eric Pickles with its plan to save the Government £900m a year from public sector pensions without raising workers’ contributions for two years.

The plan suggests that, starting in two years’ time, employees would have the option to either pay more into their pensions to keep their benefits, or to pay in the current amount and receive less when they retire, if they are unwilling or unable to contribute more now.

The group stated that the proposal “delivers the required level of savings, other than wholly through an increase in employee contributions, minimises the impact on the lower paid and offers choice to individuals”.

The proposals put forward could affect two million workers. They include an increase in the normal pension age from 65 to 66 from April 2014, saving a predicted £300m a year, and an increase in contribution rates, saving another £600m a year.

Unison issued a statement saying it could not accept the proposals. Heather Wakefield, the national secretary for local government, said the plans “are proposed to raise nothing more than a £900m 'tax' on local government pension scheme members for the Government in the short term”.

Unions have already threatened to go ahead with ballots for mass strike action on November 30 over pensions, after talks with ministers have failed to reach a breakthrough.

However, that was on the basis that millions of workers will have to pay more from next April while they are still on a pay freeze. If the plans proposed by Local Government Employers are put into effect, workers would no longer face an immediate rise in pension contributions.

The Department for Communities and Local Government now has to decide whether to adopt the latest proposal or launch its own proposals for pension changes at the end of the month.

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