Stop press.....Stop press.....Stop press.....Stop press.....
Update on the Future of the Scheme
We provided information on the future of the Local Government Pension Scheme (LGPS)
on page 2 of your Annual Benefit Statement.
Consultation paper
We drew your attention to the Government’s consultation paper that was issued on 7
October 2011. This includes two proposals for changes to the LGPS which are outlined
below:
Proposal 1
• An average increase in member contributions of 1.5% from 2014/15, with increases
phased in from 2012/13
• With this proposal, the accrual rate will remain at the current 1/60th of pensionable
pay for 2012/13, then fall to 1/64th for 2013/14 and then to 1/65th in 2014/15.
Proposal 2
• An average increase in member contributions of 1.0 % from 2014/15, with increases
phased in from 2012/13
• With this proposal, the accrual rate will remain at the current 1/60th of pensionable
pay for 2012/13 and 2013/14, then fall to 1/67th in 2014/15.
Under both proposals there will be protections for the lower paid. Members with full time
equivalent earnings under £15,000 will see no increases in their member contributions.
The maximum increase in member contribution will be 5%, resulting in a member
contribution of 12.5% for those in the highest pay band.
More detailed information on the sliding scale of increases in contributions is contained in
the consultation paper, which can be found at http://www.clg.heywood.co.uk/homepage
New offer on Public Sector Pensions
Whilst printing your Annual Benefit Statement, we received an update on the possible
changes. Because of this, we held back release of your Statement so that we could advise
you of the latest position.
On 2 November 2011, the Government issued a document through HM Treasury entitled
“Public Services Pensions: good pensions that last”. This document contains revised
proposals for changes to public sector pensions from 2015 and can be found on the HM
Treasury website at http://hm-treasury.gov.uk/tax_pensions_index.htm
The revised proposals include:
•
A preferred scheme design based on “career average revalued earnings”, known as
CARE, with an accrual rate of 1/60th of average salary for each year worked
•
A Normal Pension Age linked to State Pension Age
•
Special linking and transfer arrangements for those rejoining public services
schemes within five years of leaving
•
Transitional protections for members within ten years of retirement on 1 April 2012
that ensure that such members have no change in when they can retire and what
they would receive
•
Special linking and transfer arrangements for those rejoining public services
schemes within five years of leaving
•
Transitional protections for members within ten years of retirement on 1 April 2012
that ensure that such members have no change in when they can retire and what
they would receive
•
For younger members, a choice about when to retire, with adjustments for those
choosing to retire earlier or later than State Pension Age
•
A cap on employer contributions that would provide protection to the tax payer
against unforeseen costs.
No final decision on the LGPS
These proposals are known as a “reference scheme” and they provide a framework for the
structure of each of the public sector schemes. The design of each scheme can include
features that are specific to that scheme.
The cost of proposed changes to the LGPS will be compared to the cost of the reference
scheme. So, depending on cost, there is no certainty over which of the proposals will be
included in the new LGPS.
Changes from 2012
It is understood that these new proposals from HM Treasury may lead to changes to the
LGPS that start from 2015.
The separate proposals in the Government’s consultation paper issued on 7 October, that
we referred to in your Statement, are still under consideration so changes to contributions
and benefits may also take place from 2012.
Further information
Page 3 of your Statement includes website addresses through which you can find further
information on the proposals for the LGPS. The national website for the LGPS includes
information for members produced by the Local Government Employers organisation which
provides guidance to employers and their employees.
Please contact our Pensions Helpline on 0191 424 4141 if you have any queries or are
unable to access any of the documents we have referred to.
ABS2011/Insert