Monday, 22 March 2010

Taxpayers' Alliance gets its sums wrong (again)

Earlier this month the so called Taxpayers Alliance (aka the Taxdodgers Alliance) put out some misleading figures about the Local Government Pension Scheme (LGPS).

It is clear they deliberately manipulated figures to suit their claims that local government pensions face a black hole. In comparing liabilities to assets, they are deliberately making a ridiculous assumption that everyone will retire at once, tomorrow.

The local government pension scheme is affordable and sustainable and its income exceeded expenditure by almost £6 billion in the last year. UNISON National Secretary, Heather Wakefield, said:

    “The Taxpayers’ Alliance deliberately distorts the true picture to suit their claims and their low-tax aims. With pensions you have to take the long view. Their claims are based on the nonsensical supposition that everyone is going to retire at once and tomorrow.

    Local government pensions are affordable and sustainable. We spent many months in lengthy negotiations to agree a scheme that did just that. These pensions do not cost £1 of every £5 of council tax, because council tax makes up only a small percentage of funding. They are funded by employers, employees and by investment income. The LGPS generates one-third of its own income.

    Remember, too, that we are not talking about gold-plated pensions, here. The average pension for women (the majority of employees) is £2,600 a year. If local government workers didn’t save for their retirement by paying into their pension scheme, they would have to rely on state benefits, funded by the taxpayer. What we need is some perspective here and a move away from a race to the bottom on pensions.

    The real pensions scandal in this country is that the boardroom fat cats vote each other ludicrously generous retirement packages, while plotting to cut the pensions of their workforce.

The real facts about the LGPS are below.

1. It is funded by employer contributions, employee contributions and investment income.

2. It is cash positive – member benefits paid out in 2008-2009 were £5.6 billion against gross income of £10.2 billion.

3. The total value of combined assets in England, Wales, Scotland and NI was £143 billion (in 2008).

4. That’s 5 times greater than the largest single pension fund in the UK.

5. Total assets of the 89 LGPS funds are equivalent to 10% of GDP.

6. 60% of the fund is invested in equities or shares – in UK and global stock markets.

7. By 2008, more than £1 billion was invested in each of the top four FTSE companies and it owned 1.3% of seven of the top nine companies in
the UK.

8. £4.7 billion
is invested in the big four banks – Barclays, HBOS, HSBC, RBS and £2.3 billion in the 49 largest companies delivering UK public services in local government, the NHS and the utilities.

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