Coun­cil lead­ers call on min­is­ter to fund pen­sions

Cynon Valley - - NEWS - MARTIN SHIPTON martin.shipton@waleson­line.co.uk

COUN­CIL lead­ers in Wales fear their au­thor­i­ties could be tens of mil­lions of pounds worse off from next year as a re­sult of nec­es­sary fund­ing in­creases to some pub­lic sec­tor pen­sion funds.

All 22 of them have writ­ten to Liz Truss, the Chief Sec­re­tary to the Trea­sury, ex­press­ing se­ri­ous con­cern and urg­ing her to en­sure that in­creases in em­ploy­ers’ con­tri­bu­tions to the Teach­ers’ Pen­sion Scheme and other pen­sion funds will be paid for by the UK Govern­ment.

The con­cerns come at a dif­fi­cult time for coun­cils in Wales, which over­all are fac­ing real-terms cuts of 1.8% to their bud­gets af­ter in­fla­tion is taken into ac­count.

An­drew Mor­gan, the Labour leader of Rhondda Cynon Taf Coun­cil, tweeted: “UK Govern­ment changes to the Teach­ers’ and Fire & Res­cue Ser­vice pen­sion funds will cost Welsh lo­cal au­thor­i­ties al­most £80m a year ex­tra, al­most £5m off RCT coun­cil’s bud­get next year. All 22 coun­cil lead­ers have writ­ten to the UK Govern­ment as it’s for them to fund this!”

In their let­ter to Ms Truss, the coun­cil lead­ers state: “The Welsh Lo­cal Govern­ment As­so­ci­a­tion (WLGA) Coun­cil met last week and dis­cussed the im­pli­ca­tions for non­funded pen­sion schemes of the Trea­sury’s draft amend­ing val­u­a­tion direc­tions.”

In non-funded or un­funded schemes, no con­tri­bu­tions are made to the scheme in ad­vance and no in­vest­ment fund is built up. In­stead the ben­e­fits are paid out by the em­ployer when they fall due, along­side the salaries of cur­rent em­ploy­ees.

The coun­cil lead­ers’ let­ter states: “For teach­ers, we un­der­stand that the Govern­ment Ac­tu­ary’s De­part­ment [re­spon­si­ble for as­sess­ing the level of con­tri­bu­tions re­quired to en­sure pub­lic sec­tor pen­sion funds are ad­e­quately re­sourced] have now com­pleted their cal­cu­la­tions and have pro­vided in­dica­tive re­sults for the 2016 val­u­a­tion of the Teach­ers’ Pen­sion Scheme to the De­part­ment for Ed­u­ca­tion (DfE).

“The change to the em­ployer con­tri­bu­tion rate will com­mence from Septem­ber 1, 2019.”

The DfE han­dles the Teach­ers’ Pen­sion Scheme for both Wales and Eng­land.

The let­ter goes on to state that the WLGA un­der­stands from its sis­ter or­gan­i­sa­tion in Eng­land that the cur­rent em­ployer con­tri­bu­tion rate of 16.48% will be in­creas­ing to 23.6% for the pe­riod Septem­ber 1, 2019, un­til March 31, 2023.

It says: “In Eng­land there will be fund­ing from the DfE for the fi­nan­cial year 2019-20 to help main­tained schools and academies meet the ad­di­tional costs re­sult­ing from the scheme val­u­a­tion. A con­sul­ta­tion process will take place to de­ter­mine fi­nal fund­ing ar­range­ments.”

In a di­rect ap­peal to Ms Truss, the coun­cil lead­ers state: “As lo­cal govern­ment in Wales, which has re­spon­si­bil­ity for schools, we would urge you to fol­low your State­ment of Fund­ing pol­icy, which re­quires that the UK Govern­ment funds any fi­nan­cial im­pli­ca­tions of its own pol­icy changes.

“For teach­ers’ pen­sions, we es­ti­mate the part-year im­pli­ca­tion in 2019-20 as £41m and £71m in 2020-21. We are also re­spon­si­ble for fund­ing the Fire and Res­cue Ser­vices in Wales, and cal­cu­late the ef­fect for 2019-20 as £6m. The fund­ing of this needs to be ad­dressed as a mat­ter of ur­gency, as the bud­get cy­cle for the next fi­nan­cial year starts this week.”

The coun­cil lead­ers con­clude by ask­ing Ms Truss to fund other pub­lic sec­tor pen­sion fund in­creases in the same way, in­clud­ing those for civil ser­vants and NHS staff.

For­mer Brid­gend Coun­cil leader Jeff Jones, now a po­lit­i­cal con­sul­tant, said: “It’s highly un­usual to see a let­ter of this kind writ­ten to a UK Govern­ment min­is­ter by ev­ery coun­cil leader in Wales, re­gard­less of their party. It shows the level of con­cern.

“For a coun­cil leader like An­drew Mor­gan, al­ready fac­ing a cut in his al­lo­ca­tion, to have an ex­tra headache of a fur­ther bill for £5m is aw­ful. It can only mean fur­ther cuts from the ser­vices the coun­cil has to pro­vide to­day.

“This prob­lem stems from the fact that pub­lic sec­tor pen­sion schemes are hav­ing to pay guar­an­teed pen­sions based on fi­nal salaries. Such schemes hardly ex­ist any more in the pri­vate sec­tor.

“Peo­ple are liv­ing longer and the schemes are hav­ing to pay out pen­sions for longer. I’m a mem­ber of the Teach­ers’ Pen­sion Scheme, and if I live as long as my fa­ther, I’ll re­ceive my pen­sion for 29 years.”

A spokesman for HM Trea­sury said: “Pub­lic sec­tor pen­sion val­u­a­tions will be fi­nalised later this year, but early in­di­ca­tions are that work­ers will see im­proved ben­e­fits.

“We will ap­ply the prin­ci­ples set out in the State­ment of Fund­ing to de­ter­mine any ad­di­tional fund­ing for the Welsh Govern­ment.”

Rhondda Cynon Taf Coun­cil leader An­drew Mor­gan

Chief Sec­re­tary to the Trea­sury Liz Truss

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