Council Pension Porkies Again

That the right-leaning part of the Fourth Estate has all too little real news to present to its readers was underscored over the Christmas and New Year period, as a series of stories appeared attacking local Government workers who are members of the Local Government Pension Scheme (LGPS), although of course there was no organised campaign to do so. I mean, perish the thought, eh?

Guess where this porkie started out? 

The articles, as one, take the usual line of telling readers that anyone in the LGPS is “enjoying” scheme membership, that the benefits are “gold plated”, that the costs of the scheme are “unsustainable”, and that any reader not employed by the public sector is having their pockets emptied by a bunch of grasping lefties, who by definition may be taxpayers, but cannot be “hard-working”.

Sadly, though, the fact of the matter is rather different. When both Mail and Telegraph tell that “an official report has found”, what they don’t say is that this information has been out there since mid-October (all the figures are in a Word document). And when the usual suspects at the so-called Taxpayers’ Alliance (TPA) bleat “unsustainable”, they have once again forgotten that Hutton Report graph.

It doesn’t get any better when costs are analysed. “The cost of town hall pensions to the public is equivalent to £386 a year for every household paying the benchmark Band D council tax” thunders the Mail, but we already know that council tax only pays around 25% of the total cost of local Government, and if the Dacre attack doggies were to correct their figure to £96.50, it would not look scary enough.

And, as the man said, there’s more: when the figures are examined more closely, we find that the LGPS has a total income significantly in excess of what is paid out. For instance, in 2011-12, while £8.592 billion was paid out by the scheme, £11.547 billion came in – a surplus of almost £3 billion. The funds available to the LGPS are now more than 50% greater than three years ago, at almost £148 billions.

Moreover, the proportion of employers’ contributions is not “three quarters”, as the press is inferring, but 52%, as this helpful chart points out. This is because, as so often, the reality is rather more complex than portrayed: there are other factors to consider, such as new rules to ensure the robustness of all pension funds, together with the prospect of members with deferred benefits starting to claim.

All of that doesn’t mean the LGPS is about to run dry – indeed, the membership numbers are now falling, and with many retirees having been made redundant, their potential benefits will be less than time served members – but nor does it make the scheme “unsustainable” in the longer term. But the press coverage does mean that rich editors never tire in their search to demonise the softest looking targets.

And, of course, that beats paying out for real journalism. No change there, then.