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Future of the Local Government Pension Scheme. Secure - for now. But public service schemes under review New schemes coming in April 2008 Negotiations at critical stage High proportion of non joiners Public pension envy?.

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Future of the Local Government Pension Scheme


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Secure - for now

  • But public service schemes under review

  • New schemes coming in April 2008

  • Negotiations at critical stage

  • High proportion of non joiners

  • Public pension envy?


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Why did members strike over the Local Government Pension Scheme (LGPS) on 28 March

  • Thousands of members’ retirement plans are in jeopardy

  • LGPS treated unfairly compared to other public service schemes covered by the Public Service Forum Agreement

  • Should be no change to existing benefits without agreement


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What were the Public Service Forum agreed principles? Scheme (LGPS) on 28 March

  • Existing scheme members should suffer no detriment in normal retirement age and benefits

  • New Schemes for new staff providing defined benefits, pensions continuing to go up in line with price inflation

  • Normal Retirement Age increased to 65 for new scheme – half the savings ploughed back for scheme improvements


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Why does Government not apply PSF deal to the LGPS? They say:

  • LGPS is ‘funded’ therefore real deficits caused by people living longer and past under-funding

  • 85 Rule breaches age discrimination Regulations


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The LGPS is no gold say:standard

  • Good average final salary scheme

  • But average pension in payment only £3,800 per annum. For women only £1,600 per annum

  • Minimum Income level for pension credit is currently £5,930 per annum for a single person

  • Large numbers of low paid members can’t afford to join


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Where are we now with the LGPS? say:

England and Wales

For those who will satisfy the Rule of 85:

  • The Rule will remain for existing members until the ‘New Scheme’ comes in April 2008

  • Those who are 60 by 31 March 2016 will be protected on service up to that date

  • Those 60 between 1 April 2016 and 31 March 2020 will have the early retirement reduction tapered


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Where are we now with the LGPS? say:

Scotland

  • The proposed protections are better than what is now law in England and Wales – those 60 by 31 March 2020 will be protected on service up to that date


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What are the next stages? say:

  • DCLG Discussion Paper on New Scheme for England and Wales - Consulting to 29 September

    Option A

    • Is the existing final salary scheme i.e. pension builds up at the rate of 1/80th (1.25%) of pensionable pay for each day of pensionable service

    • Plus a lump sum of three times the pension (i.e. 3/80ths)


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What are the next stages? say:

  • Option B

    • As requested by the TU side this option is included

    • It is a final salary option where benefits build up at the rate of 1/60th (1.66%) of pensionable pay

    • There is no additional lump sum but members have the option to exchange some of their pension for cash.

    • A 1/60th scheme has been proposed for the new Teachers and NHS Pension Schemes


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What are the next stages? say:

Option C1

  • Is a career average option where the benefits build up at the rate of 1.85% of averaged pay

    (in the paper it is expressed as a % but for comparison purposes it is roughly equivalent to a 1/54th)

  • Each year would be revalued in line with prices i.e. the Retail Prices Index (RPI)

  • There is no additional lump sum but members have the option to exchange some of their pension for cash


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What are the next stages? say:

Option C2

  • Is a career average option where the benefits build up at the rate of 1.65% of averaged pay (in the paper it is expressed as a % but for comparison purposes it is roughly equivalent to a 1/61th)

  • Each year would be revalued in line with RPI plus 1.5%

  • There is no additional lump sum but members have the option to exchange some of their pension for cash


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What are the next stages? say:

Option D

  • Based on either C1 or C2 but would allow the member to opt for a final salary option if the member pays significantly higher contributions


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Negotiations Continue (1) say:

TU Side initial position

  • Good defined benefit scheme

  • Preferred option 1/60th final salary scheme

  • End discrimination against unmarried partners

  • Improve death in service cover


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Negotiations Continue (2) say:

TU Side initial position

  • Support variable employee contributions to be fairer to the low paid

  • Increase member representation

  • Extend Admitted Body Status on outsourcing

  • Equality proofed


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What is happening with other public service negotiations say:

  • Final Salary schemes for new members may be the preferred choice for most of the new schemes

  • Most - but not all - schemes appear to be heading for two tier provision

  • Discussions on future risk sharing taking place in some schemes

  • Issues around future transfers between schemes not really started

  • Trend to allow options for members to take a larger part of their benefits as cash


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Meeting Employers and Government say:

  • Negotiations start again on 2 August

  • Will continue as long as necessary

  • We will press for more protection and a good new scheme for all members – no two-tier

  • GAD figures will be carefully examined


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Judicial Review say:

  • Hearing will be 18 and 19 September

  • We say that full protection is lawful and affordable

  • If we win – we expect full protection

  • If we lose – we will carry on negotiating


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More Industrial Action? say:

  • We want full protection

  • Or a combination of protection and scheme improvements which amount to it

  • If final proposals not acceptable we will re-ballot for industrial action


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What can you do? say:

  • Recruit new members

  • Get membership records up to date

  • Circulate “Campaign News” and briefings

  • Keep an eye on the website

  • Most important! Discuss “new look” proposals with members


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JOIN US say:0845 345 845

www.unison.org.uk/pensions


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