Pension plan 'to save millions'

Published on Thursday 14 February 2008 21:08

A NEW pension scheme for Scotland's local-government workers will save taxpayers £20 million a year, John Swinney said yesterday.

Covering nearly a quarter of a million people, it is based on final salaries and years of service. For the first time, cohabiting partners will be able to receive benefits.

Mr Swinney, the Finance Secretary, said the scheme will see average employee contributions increase from 5.9 per cent of their pay to 6.3 per cent.

But employers' contributions will drop from an average of 13.9 per cent to 13.3 per cent.

The scheme keeps the present retirement age of 65 but ends a concession which allows some council employees to retire early without penalty.

The announcement in 2006 that this concession was being removed prompted a furious backlash.

Transitional arrangements announced later by Tom McCabe, then finance minister, mean the removal of the concession will not come fully into effect until 2020.

Mr Swinney said the new scheme, developed by Scottish Government officials, the Convention of Scottish Local Authorities (Cosla), and unions delivered "excellent" benefits while being fair and affordable.

Pat Watters, the president of Cosla, said: "I think it is fair to say that when we started these negotiations nobody thought that we would achieve such a good result. We have a scheme which is affordable and sustainable."