Social workers and librarians are among employees who could be thousands of pounds worse off due to new measures to cap public sector exit payments, UNISON has revealed.
The union said middle-income workers are likely to be caught out by a law designed to put a £95,000 cap on pay-offs for high-earning staff.
Anyone over the age of 55 who pays into the local government pension scheme and is made redundant has to take their pension early.
But doing so before the state retirement age, which currently varies from 65 to 68, can incur tens of thousands of pounds in charges that can reduce the size of the pension for local government staff.
A long-standing agreement with local authority employers has meant they covered these charges, in part as recognition of workers’ years of public service.
But the new law, expected to be in place as soon as next month, classes the early retirement support from employers as an ‘exit payment’ to the worker.
The £95,000 cap could in many cases be exceeded when this fee is combined with the worker’s redundancy payoff, says UNISON.
Staff earning around £20,000 to £30,000 a year who’ve worked for decades to build up their pensions are potentially being put in the same category as those earning six-figure salaries, the union says.
People affected will either have to pay the fee themselves or face a pension cut. It will cost them thousands of pounds at a time when many are having to cope with the strain of losing their jobs, UNISON added.
Yet high earners who’ve not been in their jobs long enough to build up significant pensions can walk away with payments up to the government’s £95,000 limit.
UNISON assistant general secretary Christina McAnea said: ‘This is yet another attack on public service workers, many of whom will have been working hard throughout the pandemic.
‘Ministers have made a terrible mistake that’s going to blight the retirement of long-serving, loyal employees.
‘Including the payments made by employers in the cap and not exempting lower earners from the law will hit older, middle-income workers hard.
‘Ministers have reversed other decisions once the harm to ordinary working people has become clear. The government must not punish those they should be supporting and UNISON will be fighting to change this policy.’
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