The new local government pension deal

With perfect timing considering the threatened doctors' strike over their pensions the Local Government Association and the town hall unions have announced today at midday their own agreement over pension reform after months of negotiations.
On the face of it, it's a good deal all round especially for lower paid workers. The biggest surprise is that local government employers have agreed that council staff transferees can keep their pensions not just after transferring to a private sector or non-local authority employer but after further transfers as well. At the moment the decision to keep on paying final salary pensions is a matter for the employer.This flies directly in the face of attempts by the Cabinet Office to make it easier for private companiies, mutuals and the voluntary sector to take on council staff without being saddled with large pension liabilities. The impact of this could be huge especially for smaller companies and mutuals which may find the costs make any bid for services unpalatable.
But council employers don't do badly out of the new pensions deal either. From now on pensions will be decided on career average pay rather than final salary and based on the Consumer Prices Index. They will also be paid at whatever the state retirement age is, rather than 65. Contributions for the higher paid will go up.Overall lower paid employees come out well from the new deal. As their wages tend to rise far more modestly over a career than senior managers the career average criterion should make little difference to their final pension. If they transfer to a new employer their pensions are protected. And they will not be hit by having to make higher contributions.