In this section we consider the NJC conditions of service and how they compare with benefits offered by other employers. It is a complex exercise to make comparisons of ‘total remuneration’ between employers. In order to compare both levels of entitlement and to estimate the value of particular conditions of service we commissioned new research from IDS. This research compares holiday entitlement, pensions, sick pay, Building and Pest Inspections Melbourne travel and subsistence allowances, cars, private medical insurance and London allowances for a range of public and private sector organisations.
Comparisons were made on the basis of provision in industry level and organisation level agreements. We also talked to Hay Management Consultants about their system for measuring total remuneration. The local authority pension scheme (LGPS) is a statutory, public service, final salary scheme funded by employer and employee contributions which are invested in equities with pensions paid out of the returns. There is a single scheme but 87 separate funds. The pension builds up at 1/80th per year of service and maximum pension entitlement at normal retirement age is half final salary after 40 years’ service (40/80ths).
In addition there is a final lump sum payment based on 3/80ths per year of service (see Appendix 6). There are currently 2.7 million members of the scheme, including pensioners. School teachers and firefighters have separate pension schemes. Employees pay six per cent per annum towards the cost to their individual pension authorities (some protected workers continue to pay five per cent) but employers’ contributions vary. The ODPM estimates a current average employer’s contribution of 13 per cent of pensionable pay. The EO evidence suggested a figure of 13-14 per cent.
Perceptions of the value of the LGPS have changed many times over the years. Currently, with many employers closing their final salary schemes due to rising costs, the LGPS is an attractive benefit, which is probably undersold by local government in its recruitment advertising. IDS compared 15 local authority schemes with 14 large private sector schemes and the universities scheme and found little difference in employer contribution rates. However, the standard employee contribution rate in the LGPS was higher than the average for private sector final salary schemes. Comparing the various scheme benefits, the study found that the various local authority schemes examined were generally slightly below the median when it comes to a ranking of average pensions in payment.