Industrial Action On Pensions - Scotland

24th October 2011

Most trade unions are asking their members to support a national campaign of industrial action over pensions. Public sector pensions are in the news. The position in Scotland is different from England and Wales, which is causing some confusion.

As things stand:
The Scottish Government has confirmed that it does not intend to raise pension contributions for the Local Government Pension Scheme (LGPS). Members of the LGPS in Scotland will not be affected by the UK Government decision which is likely to see pension contributions rise for council employees in England and Wales.

The default retirement age for the LGPS is 65 for men and women. Due to people living longer, the Hutton report recommended raising this in future (by linking it to the state retirement age) to 66, 67 and then 68. In Scotland, there has been no consultation or decision about whether the LGPS retirement age will change or not. If it does change, the rise to 66 would not happen until 2020.

Since April 2011, all occupational pension schemes and social security benefits have been linked to the Consumer Price Index (CPI) instead of the Retail Price Index (RPI). This was a UK Government decision and local government in Scotland has no control over this. The trend in recent years has been for the CPI to rise more slowly than the RPI, but it is difficult to predict whether this trend will continue and what impact this will have on pensions in the future.

The situation is different for Teachers, uniformed Fire employees and Police. They have different pension schemes and may have to pay increased pension contributions. Unlike rates for members of the Local Government Pension Scheme which has a 5 tier contribution rate (ranging from 5.5% to 12% dependent on salary), currently there is a flat rate contribution for all teachers which is 6.4%. The Scottish Government has confirmed that it has no option but to start consulting on how pension contributions can be increased in these schemes in 2012/13. The average increase equates to 3.2% of salary. Consultation on proposals for the second and third year increases will take place later.