The London Pensions Fund Authority (LPFA) has set out proposed measures to reduce the costs associated with the Local Government Pension Scheme (LGPS).
LPFA's recommendations include linking pension payments to the consumer prices index (CPI), rather than retail prices index (RPI), increasing the retirement age to 66 from 2016 and changing accrual rates from 60ths to 65ths. ††The authority also wants to raise employee contributions in a way that has minimal impact on the lowest paid employees.
The “quick wins”, which could be introduced as early as April 2011, also include limiting pensionable pay to £75,000 or £100,000 per year, protecting existing rights in any new scheme through a CPI-indexed preserved benefit.
In its submission to the Independent Public Service Pensions Commission, the LPFA said that the reforms would have an immediate positive impact on local authority spending plans.
Mike Taylor, chief executive, LPFA, said: “Our aim in drawing up these proposals has been to promote a recognition that change is necessary whilst challenging unsubstantiated and potentially misleading perceptions about the LGPS.
“These proposals set out a cogent, affordable and practical approach to reform.
“If implemented, we believe these changes would ensure the long-term affordability of the scheme whilst securing a decent income in retirement for scheme members.”
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