Protect our pensions lgps update
Download
1 / 14

Protect our Pensions LGPS Update - PowerPoint PPT Presentation


  • 161 Views
  • Uploaded on

Protect our Pensions LGPS Update. Dave Watson Scottish Organiser. Don’t Panic!. Nothing happened yet (except CPI/RPI) LGPS value for money you pay (average) 6.4% of gross pay tax relief of 20% and NI saving of 1.6% actual cost 4% net. Match benefits in private scheme 25%+ salary

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about 'Protect our Pensions LGPS Update' - Pat_Xavi


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
Protect our pensions lgps update

Protect our Pensions LGPS Update

Dave Watson

Scottish Organiser


Don t panic
Don’t Panic!

  • Nothing happened yet (except CPI/RPI)

  • LGPS value for money

    • you pay (average) 6.4% of gross pay

    • tax relief of 20% and NI saving of 1.6% actual cost 4% net.

  • Match benefits in private scheme 25%+ salary

  • If opt-out

    • NI contributions go up

    • No pension

    • No ill health and other benefits

  • Unions not advising opt-out


Pensions key issues we face
Pensions - Key Issues We Face

Hutton 27 recommendations

Retirement age increases

Benefit changes to career average

Fair Deal/2TW – TUPE transfers and pensions

UK measures

Change to the way pension increases are calculated – RPI/CPI

Scheme contribution increases

State pension & National Insurance


A new state pension
A New State Pension

  • UK Govt consulted on combining the Basic State Pension with the Second State Pension and phase out Pensions Credit possibly from 2015 no decisions yet.

  • One flat rate State Pension of around £140 per week.

  • Members after the change is introduced would pay around 1.4% additional NI contributions and the employer would pay another 3.4%.

  • Even more pressure on reasonable pension scheme to close


Pension benefit increases robbing pensioners today and scheme members tomorrow
Pension Benefit Increases – robbing pensioners today and scheme members tomorrow

The UK Govt increasing public service pensions by Consumer Price Index (CPI) instead of Retail Price Index (RPI) from April 2011

CPI on average, 0.7% per year lower than RPI

Average public service pensioner loses £117 this year

Lord Hutton - a 15% cut in benefits

Not private sector schemes ‘breach of contract’

UK legal challenge


The move away from a final salary scheme to career average
The move away from a final salary scheme to career average

Pension benefits calculated on average service earnings rather than final salary

Hutton - final salary schemes favour high flyers

Step 1 - Earn % of salary as pension for each year you work

Step 2 –Then “re-valued” every year until you retire by a specified Index – Hutton recommended average wages

Step 3 – Add up all the “re-valued” pots at retirement and this is your final pensionable pay that is used to calculate your pension

Benefit? Depends on accrual rate & revaluation

Need 1/55th to maintain value. UK Govt 1/65th to 1/100th


Making us work longer
Making us work longer

UK Govt b/f State Pension Age (SPA) - from November 2018 the SPA will be 65 for both men and women

April 2020 the SPA will be 66 for both men and women. Rise to 67 between 2034-2036 and 68 between 2044-2046

Hutton - retirement should increase in line with SPA

For those now 34 or younger it would be 68.

For those between 34 and 42 it is 67.

For those between 42 to around 57 it will be 66.

Careers of 50 years plus!


Fair deal over making it cheaper to privatise
Fair Deal Over? – Making it cheaper to privatise

Fair Deal enables TUPE transferred staff from public services to either remain in LGPS or be provided with a “certified” broadly comparable scheme.

Scotland PPP & s52 regulations.

UK Government consultation on Fair Deal. Changes to Scottish provisions for Scottish Govt.

UK Government scrapping because of the relative cost to companies bidding for public service contracts

Leave staff at the pensions mercy of private contractors


Hutton scheme governance
Hutton - Scheme Governance

Only public sector workers in the new schemes

Improved governance & representation on LGPS investment boards.

Scottish LGPS Regs & IORP Directive

Incentives to merge LGPS funds.

CoSLA/IS project & UNISON report

Scheme administration

Fund management


Contribution increases a pension tax to pay back the bankers debt not to support your pension
Contribution Increases – a pension tax to pay back the bankers debt not to support your pension

UK Government cut in funding of £2.8 billion a year by 2014/15: Contributions 1.2%, 1.2%, 0.8%

This equates to a 3.2% contribution increase on average for members – a 50% increase

UK Govt: Under £15kpa no inc. £15k - £18kpa 1.5% inc.

Rest pay more than 3.2%. Based on WTE salary

Scottish Government – Barnett formula

Expected savings: NHS £137-143m. LGPS £140m

LGPS not scored against Barnett



Key issue contribution increase
Key Issue – Contribution Increase

Tax to pay back UK government debts that were raised to bail out the banks

None of the money will go into the LGPS

Threatens whole system – members opt-out

NI increase for councils, pension fund cost, welfare benefits

Not necessary in Scotland – No Barnett consequence

2008 LGPS deal – cost sharing is way ahead

Pensions costs reducing as share of GDP.


Next steps
Next Steps

  • UK negotiations – crunch point

  • Scottish Govt – pensions tax options

    • Find Barnett consequential elsewhere budget

    • Apply to NHS (& others) but not Local Govt

    • Spread the pain – cash transfer from Local Govt

    • ‘opportunity cost’ tax on Local Govt

  • No negotiations yet in Scotland on Hutton

  • Pensions campaign

    • Organisation – Champions & Contacts

    • Communication – internal & external

  • Industrial action if necessary


  • Where can you find everything
    Where can you find everything?

    Scottish Pension Web Pages

    http://www.unison-scotland.org.uk/pensions/index.html

    UK Campaign Web Pages

    http://www.unison.org.uk/pensions/protectour.asp

    Advice on Pensions

    http://www.unison.org.uk/pensions/index.asp

    There is a Better way

    http://www.thereisabetterway.org/


    ad