LLG President Quentin Baker, Thoughts on the Cap on Exit Payments

Publish date: 15/11/2021

A person wearing glasses Description automatically generated with low confidence

As the cap on exit payments is once again in the news with rumours of imminent announcements, I for one remain hopeful of a sensible and fair outcome for public sector workers. Surprising you may think, with the success of our Judicial Review still fresh in our minds. The challenge we launched alongside ALACE highlighted the impact of the Governments proposals would have in relation to pension rights accrued over many years and subject to legal protection against retrospective change. This aspect of the so called 'exit cap' was particularly pernicious in its effect on long standing local government employees and it is hoped that the Government will remove that element from any future proposals.

The government consultation on guidance for severance payments, with one simple tweak, would provide an uncontroversial way forward that would leave pension entitlements protected. All that needs to happen is that any rules or guidance around severance payments should exclude the pension strain element from the cap.

Local authority pensions have been a positive benefit to those of us in local government and one which has helped to recruit and retain staff. A promise made at the start of a career, a contractual right that should be upheld. It is disheartening to see the scheme's reputation tarnished publicly by linking pension entitlements to so called town hall 'fat cats'. Pension payments do not create 'fat cats', they create a future for loyal, long-serving employees in their retirement. And as we know, it is not just those in senior positions who lose out if the pension strain on redundancy is capped, it has an impact on a significant percentage of the workforce.

In this debate we need to draw a simple distinction between pension payments and severance payments. That way, the government can seek to cap the costs of exit, without undermining the quality of retirement of those made redundant at the latter stages of their working life.

Otherwise, loyal, and long serving staff may end up struggling, underfunded in their pension. Is that proper payback for a lifetime of public service?

Quentin Baker

President of LLG