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Anger over massive pensions gulf between local authority bosses and ordinary workers
Katharine Barney, Evening Standard24.03.09
At least seven London local government bosses are heading for final salary pensions of more than £100,000 a year, the Evening Standard has learned.
They are the first of a new generation of high-earning council chiefs, now in their fifties, who can look forward to six-figure retirement incomes once their careers are over.
The size of the pensions has angered union leaders, who have drawn attention to the vast gap between the "fat cat" bosses at the top of the local authority earnings league and the average London council worker pension of around £4,000.
And three of those due for a windfall have been criticised for serious failings in their social services department after children died.
The Evening Standard has had to use pension experts to estimate the likely retirements benefits of London council bosses as local authorities - unlike major quoted companies - are not yet obliged to disclose the figures in their accounts. The biggest pension pot has been accumulated by Kensington & Chelsea chief executive Derek Myers, 54, who has worked in local government all his career.
At 65 he will be entitled to an annual pension of about £135,000 and a lump sum of about £267,000. A pension income of this size would need to be funded from a pot of around £2.7million.
Second comes Lambeth's boss Derrick Anderson, another career local government worker, who will be entitled to draw more than £125,000 from his council's pension fund when he reaches 65.
The fund will need to put aside about £2.5million to fund a retirement income of that size. Campaigners against wasteful government spending said they were shocked by the size of the pensions.
Susie Squire, campaign manager for the Taxpayers' Alliance, said: "This is an absolutely staggering amount of money and illustrates the apartheid between the public and private sector.
"What makes it all the worse is that many ordinary Londoners are facing redundancies and seeing their own pensions reduced beyond belief - if they can afford them at all. And all the time they're struggling to put food on the table while paying for these council fat cats to retire into the lap of luxury." Under the old local government pension arrangements, retirement benefits accumulated at the rate of 1/80 of pay for every year served. On top of that a council worker got a tax-free lump sum equivalent to three times the pension.
But this was changed last April to bring local authority schemes more in line with the surviving private sector final salary schemes. Every year is now calculated at 1/60th of the final salary multiplied by the number of years. A tax-free lump sum of up to 25 per cent of the pot is allowed but this will reduce the level of annual pension.
The Government has said it wants to give local taxpayers the right to find out how much their council bosses are being paid and will get as pension.
John Healey, minister for local government, said: "I want the public to have the full picture about what their council chiefs earn in pay, perks and pensions. That is why I have decided to legislate to make that information public. This will help stop the spiral of pay and pay-offs and make councils think much harder about top pay decisions and their impact on frontline staff pensions."
The main local government union, the GMB, has also said it is worried that top earners will soak up so much of the money in their pension funds that they will jeopardise payments to the low-paid. The union has asked the Government to require local government workers on six-figure salaries to raise their contributions from six per cent to 10 per cent of salary.
But councils said the pensions were justified. A spokeswoman for Camden council, where chief executive Moira Gibb is set to retire on a pension of more than £109,000, said: "All local government pension holders pay a proportion of their own wage into these pension schemes and for some people these reflect years of service.
"Councils provide more than 800 different services for local residents and chief executives do a hugely important job, leading highly complex organisations with billion-pound turnovers, for a lot less than their private sector counterparts."
A spokesman for Brent council said: "It is the local government pension scheme which sets the rules for officers in local councils regardless of their seniority. Brent council and its officers in the scheme follow those rules."
Moira Gibb
Chief executive of Camden
Age: not disclosed
Salary: £210,000
Estimate local government career at retirement: 40 years
Annual pension: £109,375 (£2,187,500 pot)
Lump sum: £267,750
Moira Gibb qualified as a social worker after a short teaching career. She has worked in social services departments in Newcastle, Surrey, Ealing and Kensington and Chelsea.
Since being appointed as Chief Executive of Camden, four serious case reviews have been carried out into the death or serious injury of a child as a result of abuse or neglect. One, a six-year-old girl, was murdered in 2005 by her mother's boyfriend, despite being on the child protection register. Ms Gibb announced a restructuring of children's services “to improve the welfare of all children”. The next year a two-month-old boy died after “horrific” abuse.
Gareth Daniel
Chief executive of Brent
Age: 54
Salary: £180,000
Local government career at retirement: 43 years
Annual pension: £105,750 (£2,115,000)
Lump sum: £209,250
A graduate of Jesus College, Oxford, he began as a social worker in Ealing council in 1976. Worked for four years as a planning and policy manager in Brent's social services department from 1986. Chairman of Ealing council's planning and economic development committee from 1986-90. He was head of Brent's corporate policy, planning and projects team from January 1990 and became chief executive in September 1998.
Derrick Anderson
Chief executive, Lambeth
Age: 52
Salary: £220,000
Estimated local government career at retirement: 41 years
Annual pension: £125,583 (£2,511, 660)
Lump sum: £222,750
Formerly from the West Midlands, Derrick Anderson has been in post since 2006 having moved from the same role at Wolverhampton City Council. Educated at the prestigious King Edward VI Grammar School, in Birmingham, Mr Anderson has a degree in psychology and physical education and an MA in social work.
Derek Myers
Chief executive, Kensington and Chelsea
Age: 54
Salary: £230,000
Estimated local government career at retirement: 43 years
Annual pension: £135,125 (£2,702,500)
Lump sum: £267,375
Mr Myers has spent all his career in local government including 20 years in the field of social care. He has degrees in law and economics and post-graduate qualifications in social work and management. He worked in Essex and Hillingdon before becoming Hounslow's director of social services in 1992, and its chief executive in 1997.
Leo Boland
Chief executive, Greater London Authority
Age: 56
Salary: £205,000
Annual pension: £109,614 (£2,192,280)
Lump sum: £222,916
Local government career at retirement: 39 years
Newly appointed to his current position, Leo Boland had been chief executive of Barnet since January 2001, after being assistant chief executive at Newham and, for five months, seconded to work as deputy managing director at the London Borough of Hackney. He started at Ealing in 1974 but joined the pension scheme in 1979.
Andrew Kilburn
Chief executive, Waltham Forest
Age: not disclosed
Salary: £190,000
Estimated local government career at retirement: 43 years
Annual pension: £110,833 (£2,216,660)
Lump sum: £228,000
Mr Kilburn's local government career began in 1976 with Leicestershire County Council's social services department. He held posts within the chief executive's department at Manchester City Council (1979-90). He moved to Oldham council, becoming chief executive in 1999, before joining Waltham Forest last year.
Mary Ney
Chief executive, London Borough of Greenwich
Age: not disclosed
Salary: £180,000
Estimated local government career at retirement: 40
Annual pension: £95,250 (£1,905,000)
Lump sum £222,750
Ms Ney began her career with Westminster City council and then worked at Haringey as a corporate planner. She worked for Southwark social services for 12 years as assistant director. In 1992 she became director of social services for Harrow, and was responsible for housing, environmental health and commissioning trading standards. She took up her current post in October 2000.
Ita O'Donovan
Chief executive, Haringey
Age: not disclosed
Salary: £160,000
Estimated local government career at retirement: 23 years
Annual pension: £92,000 (£1,840,000)
Lump sum: £132,000
Before arriving at Haringey Ms O'Donovan was City Manager and Chief Executive of Stoke-on-Trent and prior to that was Deputy Manager of neighbouring Hackney. Has said she considered resigning after the Baby P scandal last year but said council needed stability.
Bruce McDonald
Chief executive, Royal Borough of Kingston
Age: not disclosed
Salary: £180,000
Estimated local government career at retirement: 40 years
Annual pension: £102,000 (£2,040,000)
Lump sum: £162,000
Bruce McDonald joined Kingston as a personnel officer more than 20 years ago and was swiftly promoted to head of personnel in 1984. In 1991 he became director of personnel and he was appointed borough chief executive in April 2000.
Doug Patterson
Chief executive, Bromley
Age 54
Salary: £140,000
Estimated local government career at retirement: 41 years
Annual pension: £78,750 (£1,575,000)
Lump sum: £152,250
Doug Patterson began his career in local government in the late Seventies. He was originally a teacher in Glasgow and has also spent three years as Chief Executive of Harlow in Essex. He has also filled an equivalent position at Wokingham, a unitary council in Berkshire.
Reader views (15)
Not talked about? Public sector pensions are nothing but talked about in media so amenable to the Taxpayers Alliance. Similarly a term like 'council fat cats' blurs how distinct are they from ordinary public sector workers of whose employment, pay and conditions the TA also disapproves, if you read its propaganda, while this TA with its political-leanings is not against 'private sector fat cats' who ponce off all and sundry. It's 'fat cats' generally that individuals and society generally have come to resent as brazen, arrogant, exploitative and antisocial, all the more as public and private sector workers alike now struggle to survive. Both sectors produce wealth or the means for its creation, and both sectors enable the civilisation we have, but no dogmatist or narrow lobbyist wants to acknowledge that simple truth when there's petty prejudice to be indulged instead. One way or the other in recent years, the undermining of both private and public sector pensions has caused so many millions of people great dismay. Has a long-deindustrialising country, for example, really provided a basis for well being and prosperity in the proper sense? What has been established in its place? These big questions and more are surfacing once again as the scale of financial crisis registers and ways out of it have to be found.
- Peter, London W11
Raise the retirement age to 72. If they want to stop working before then, let them save for it.
- Bloke, London
We did not get where we are today by employing numpties. No, we payed for the best and ... er ,um..
- Wills, Soton
Final Salary schemes are morally indefensible. The Unions are right. The pension should be based on the the salary you pay your contributions on. ie. the (weighted) average during your career, adjusted for inflation
- R Jones, Bristol UK
further evidence that some very shrewd operators have been farming a dubious system.
far from serving the ratepayer they have been self serving and their 'expertise and abilities' are questionable to say the least. if questioned, they always state that in the private sector they are worth a lot more and we are fortunate that they are public spirited enough to work for 'peanuts'.
enough, let them regain their freedom and seek lucrative employment out in the jungle. the ratepayer will settle for dedicated 'lesser lights' willing to serve and settle for a decent and moral salary.
- M.O'Brien, london.uk
In 1997 Gordon Brown raided taxpayers pensions, STEALING £100 Billion, as well as increasing tax in real terms, for every one of us, by 51%.
Lets just contemplate that figure shall we? £100 BILLION.
And yet they continue to treat the public purse as though its their personal goody bag.
We are all totally impotent to do anything about it. The kind of action that needs to be taken would inevitably lead to you being arrested.
- Dan, London
No one can argue against any form of funded pension, if you and your employer pay in – that is your pot.
Most government schemes however, require that state employees and taxpayers fund the pensions of those that have gone before them. i.e. people working in public sector positions are not even funding their own future scheme – that’s the cycle that has to be broken.
This is the scheme as run by Bernie Madoff, a ponzi scheme, it is illegal everywhere but when it is performed by the state.
- Ian, Reading, England
The problem is that the rate payers have to support this. The unions can complain about the pension available to the average council worker but it is based on final salary and index linked. Over the years I have put significantly more into a money purchase scheme. Because it is linked to share valures and annutity rates my predicted pension is now 7% of final salary at 65! I could put in more but it seems more like a black hole than an investment!
Everybody should go onto money purchase and the government introduce a scheme that makes it possible to predict one's pension. Currently those not in a final salary scheme are major losers!
- Michael, London
These individuals should have their Pension capped at the same level as Taxppayer funded 'failed' Pension schemes.
This would give them a very decent £26,000 a year, rather than their obscene payments - all funded by the Taxpayer.
- Cap, london
I wonder if these Union Leaders will happily publish their "fat cat" pensions paid for by their members?
- Frank, Home Counties, England.
Since the pension schemes producing these vast sums are not fully funded and rely on the public over paying for council services, I wouldn't count my chickens if I were these leaders just yet.
- Doug Watt, london
As the crunch unfolds it is exposing the scale of the mess that nuLabour has created. Billions of pounds of taxpayers money has been poured into all kinds of public sectors without ensuring those working there did not simply hand much of it to themselves - which by all accounts they have done unchalleneged and in great style.
FACT - These pensions are not sustainable. FACT no one has the courage to tell those affected their pensions are just not going to happen.
- Marc, Bournemouth England
stories like these together with bank and ministers and general public sector employment has been making this country look more and more like a banana republic,completely submerged in massive corruption.the rest of us?we'll carry on paying the rent
- Joe Martins, london
This is a complete scandal. I can't believe that the local government schemes have been made even more generous! Six percent employee contributions - should be 60% !!
Finally given existing annuity rates your calculations are incorrect - the pot should be calculated on the basis of rates of 3% not 5% - this makes the pots 67% bigger than what you state.
- P Hall, UK
For a long time public sector pensions have been the elephant in the room. Everyone knows its there, but no one wanted to talk about it. For a long time we have know the retirement age was too low and the terms too generous. At the last election there was half hearted attempt by the government to address this, but no real meaningful changes were made (A substantial donation by UNISON to the Labour Party (who was almost bust at the time) was pure coincidence). Even if the credit crunch had not come, Public Sector were unaffordable and now even more so. The mantra that wages are below market rates is no longer valid – in many cases wages rates are much better, as is job security. This is particularly true in the more senior levels. Even if the credit crunch had not come, Public Sector were unaffordable and now even more so.
- Jeremy E, London
