Reforms agreed for Local Government Pension Scheme

The Local Government Association (LGA) and trade unions Unison and GMB have reached an agreement on how to take forward the reform of the Local Government Pension Scheme (LGPS), to take effect from 1 April 2014.

The proposals will now be communicated to scheme members, employers, funds and other scheme interests. The unions will consult their members over the proposals and the LGA will consult employers.

The government has confirmed that a favourable outcome of these consultations will enable them to move directly to a statutory consultation later in the autumn to implement these proposals.

The LGPS 2014 project’s proposals include:

  • A career average revalued earnings (Care) scheme using the consumer price index (CPI) as the revaluation factor (the current scheme is a final salary pension scheme).
  • An accrual rate of 1/49th (the current scheme is 1/60th).
  • Each member’s normal pension age (NPA) would be their state pension age (the current scheme has an NPA of 65.
  • Average member contributions to the scheme would be 6.5% (the same as the current scheme) with the rate determined on actual pay (the current scheme determines part-time contribution rates on full-time equivalent pay).
  • Members who are have already, or are considering, opting out of the scheme could instead elect to pay half contributions for half the pension, while still retaining the full value of other benefits (the current scheme has no such flexible option).
  • For current scheme members, benefits for service prior to 1 April 2014 are protected.

Merrick Cockell, chairman of the LGA, said: “The LGA’s objective in this process has been to ensure that the LGPS continues to be sustainable into the future by developing a set of proposals that are affordable for employers and council taxpayers while being fair to members.

“Our aim in reaching agreement on these proposals was to give employers the future cost stability they need.

“In my view, employers can be confident that these proposals coupled with forthcoming cost control mechanisms meet that aim.

“Along with the LGPS unions we shared the goal of encouraging existing members to stay within the scheme and new employees to join, these proposals are an example of us working together to achieve such shared goals.”

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