Mayor Sadiq Khan is to block plans for a new taxpayer-funded, private sector pension scheme for him and the 25 London Assembly Members.
Ministers justified the move on the grounds that councillors are only part-time and were not intended to get paid.
However, in recognition of the fact that City Hall’s 26 politicians do serve in a full-time capacity, they left it open for the mayor and Assembly Members to buy into a private pension scheme if they wished.
Last year officials put together plans for such a scheme which it’s understood would cost at least £760,000 to set up, although some estimates put the total price tag closer to £2m over the current four year City Hall term.
With an election looming, former Mayor Boris Johnson decided to leave the final decision to his successor and the new Assembly who discussed the plans in July.
As revealed by this site at the time, Mr Khan told AMs he was concerned that going ahead with the scheme would look like he and they were benefitting while Londoners were seeing wage freezes and cuts to frontline services, and that he was therefore minded to veto it.
Several AMs, including some of his own Labour colleagues, criticised this stance saying that while the Mayor’s £143,000pa salary allows him to save for retirement, their own £55,000 wage makes this much harder.
AMs had hoped to persuade Mr Khan to let the new scheme go ahead while personally opting out. However City Hall insiders now say this will not happen and confirmed Mr Khan will stop the plans from going ahead.
A source said: “It is impossible to justify spending hundreds of thousands of pounds of taxpayers money on pensions at a time of severe public sector cuts and wage freezes.”
The source acknowledged AMs were likely to be disappointed, but said the Mayor was keen to avoid bad publicity, adding: “There is a real risk that it would look like Assembly Members were lining their own pockets at taxpayers expense – and Sadiq is simply not willing to do that.”
Mr Khan, who as an MP voted against closing the local government scheme to politicians, has previously spoken of the importance of everyone having access to a pension.
It’s understood he’s offered to support efforts to persuade ministers to re-open the local government scheme to AMs.
However Len Duvall, leader of the Labour group on the Assembly, has publicly criticised the Mayor’s decision and called on him to reconsider.
Mr Duvall said London taxpayers would not “pay a single penny more” if the new scheme was set up. He added: “Whilst the government took away Assembly Members’ access to the local government pension scheme, the right to a pension remains firmly in place.
“With widespread consensus about the necessity of workplace pensions, the Mayor risks going against the grain by removing access for Assembly Members.
“Any concerns that we are lining our pockets can only be based on myth or misunderstanding. Everybody deserves to be secure in their old age, those in public office are no exception.”
In a strongly worded letter sent to the Mayor in July, Duvall said: “Removing pensions, when legally not bound to do so, flies against any principle and values held by the Labour movement about fairness and provision for retirement.”
Last week he wrote again, pointing out “the GLA Act 1999 gives the Authority power to make provision for payment of pensions to its elected Members and Mayor” and stressing that despite the Government’s actions, “that power has not been rescinded.”
He continues: “The Government’s intent was very clear – it was to deny Assembly Members (and others) access to the Local Government Pension Scheme – it was not to deny access to pension provision.”
The most recent letter also warns that failure to ensure adequate pension arrangements for AMs could put off many potential candidates from standing for election.
It states: “Independent financial advice has suggested that the cost to an AM to buy his or her own personal pension (the most expensive option and not one we would be recommending that the GLA adopt) would be approximately £11k per annum. On a Mayoral salary of £143,911 this may well be affordable.
“On an Assembly Member salary of £55,161 it is more difficult and challenging. There is a very real concern, therefore, that withdrawing pension provision could deter many from considering the role, thus weakening the candidate pool.
“In order to fulfil that role and remain an excellent scrutiny body we need to ensure we attract the best possible calibre and mix of candidates – your decision carries the risk that only the wealthy or those in no need of a pension will consider standing for election to the London Assembly.
“If, as a result, we do not have a strong and diverse pool of candidates in the future, the work of the London Assembly could be substantially weakened.'”
Duvall has called on the Mayor to reconsider his position.