LPFA Green Paper: “A New LGPS by 2015: Reality or Aspiration?”

 

 

 

The LPFA launched a Green Paper on proposals for a fair, adequate and affordable Local Government Pension Scheme on Tuesday 6h September at a specially convened symposium held at the Southbank Centre in London.  The purpose of the Green Paper is to stimulate debate around the ingredients of the reformed LGPS, to be implemented from 2015 and the practicalities necessary for its successful implementation.

 

 

 

The proposals follow the Government’s announcement last July that negotiations could begin on the proposed reforms on a scheme by scheme basis to agree the savings which would be implemented in April 2012.  The Government’s proposals included increasing employee contributions by an average of 3.2%, increasing the retirement age and moving to career-average defined benefit schemes. The LGPS is a funded scheme and the Government has said that it can consider other ways to make the initial savings. The sector’s response is being debated by the LGG and the unions.

 

 

 

Delegates attending the symposium came from HR, Pensions and Finance teams from around the country. They listened to a panel which included: Sir Merrick Cockell, Chair of the LGG, Terry Crossley, DCLG, Brian Strutton, GMB, Mike Taylor, LPFA.

 

 

 

A number of questions were put to the panel by delegates.  Both Sir Merrick and Brian Strutton said discussions were continuing between LGG and unions.  Both speakers had the opportunity to hear a number of views from delegates and other panel members on the 3.2% issue and on other proposed changes to the LGPS.  In particular delegates were concerned that primary legislation was unnecessary and would slow down the process, that increasing employee contributions was not the answer in a funded scheme and that the LGPS should continue to be treated differently from the other unfunded public sector schemes.

 

 

 

The proposals in the Green Paper cover scheme design, cost mechanism, the structure of LGPS funds and practical ideas on implementation.  Key proposals include:

 

 

  • Accepting the switch from a final salary to career average basis
  • A change in accrual rates from 60ths to 70ths
  • The introduction of a new ‘low start scheme’ to help low paid and younger employees
  • The setting of contribution cost ceilings for employers
  • The creation of an LGPS chamber combining the roles of scheme board and policy group (as recommended by Hutton) into one unit
  • Centrally led and resourced communication and training programmes and project management to support individual funds

 

Financial incentives for funds to implement shared administration models

 

 

 

The LPFA said that the fundamental long term issue affecting all schemes including the LGPS was increasing longevity.  The short term pressures on the LGPS regarding the Government’s savings targets combined with the long term issues meant that a combination of options was required. The key aim was to ensure that the scheme remained sustainable by providing a level of cost certainty and therefore not requiring further changes in the foreseeable future.”

 

For more information see http://www.lpfa.org.uk or email communications@lpfa.org.uk

 

Susan Martin

PPMA Policy Lead Officer - Pensions