George Osborne has been attacked by Baroness Eaton, Tory chair of the Local Government Association, over plans to increase pension contributions for council staff.
The Tory head of local government warns of "strong evidence" employees will opt out en masse, with disastrous economic consequences, the Observer reports.
In a letter, written last week and leaked to the Observer, Eaton demands urgent talks. She says a "significant level of opt-outs" from the Local Government Pension Scheme (LGPS) - which has 3.5 million members - would call into question its "sustainability and viability" as well as harming the economy.
She also warns that with fewer people making provision for their retirement, the government would be left to pick up the bill in the long term as a result of "further reliance on the state via means-tested benefits in retirement".
Eaton adds an average increase of three percentage points in contributions at a time of pay freezes and rising inflation is also "likely to lead to a significant worsening in industrial relations".
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