Trade union leader Brian Strutton says ministers at the Department for Communities and Local Government are at odds with Whitehall over plans to hike pension contributions in the Local Government Pension Scheme.
Last week, the Local Government group, which represents local authority employers, wrote to communities secretary Eric Pickles outlining proposals it says will deliver the 3.2 per cent annual savings policymakers have demanded.
Under the Local Government group’s plans, contribution increases of up to 2.5 per cent would not take place until April 1, 2014, two years later than had been originally proposed by the Treasury.
Employees would be given the opportunity to reduce their accrual rate if they decide they cannot afford to pay more into their pension.
Speaking to Money Marketing, GMB national secretary for public services Strutton says the plans to increase contributions risk “mass opt-outs”.
He says: “The DCLG has always been very unwilling to concede on increases in contributions, which is quite surprising because ministers in the central Government talks have been quite amenable to it and recognise the risk of mass opt-outs.”
Hargreaves Lansdown pension investment manager Laith Khalaf says: “The contribution increase will stick in the craw of public sector members. However, I think it will happen and the unions will need to make sure members know that opting out is not the right option.”