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Scottish Local Government P ension S cheme

Scottish Local Government P ension S cheme. Scottish LGPS 2015 Ballot. Dave Watson Head of Bargaining and Campaigns. Background. UK Public Service Pensions Act CARE scheme Pension age linked to state pension age Cost capping Negotiation strategy

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Scottish Local Government P ension S cheme

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  1. Scottish Local Government Pension Scheme Scottish LGPS 2015 Ballot Dave Watson Head of Bargaining and Campaigns

  2. Background • UK Public Service Pensions Act • CARE scheme • Pension age linked to state pension age • Cost capping • Negotiation strategy • Focus on main benefit – accrual rate • Keep contributions stable - Pay restraint, economy, NI contributions 2016 • Strengthen governance of funds

  3. Career Average Revalued Earnings • Final salary scheme based on salary in final year(s) • CARE – pension pot each year • Retains commutation at £12 for every £1 of pension • Generally fairer - CARE spreads scheme benefits • Key issues: • Revaluation of annual ‘pot’ by CPI • Accrual rate • Only applies to pensions earned after April 2015

  4. Accrual Rate • Main factor in setting cash amount of pension • Current Scottish LGPS – accrual rate 60ths • Typical public sector CARE scheme 50ths • E&W LGPS - 49ths • New Scottish LGPS – 49ths • Comparison with E&W • Higher cost ceiling and mortality rate • Balanced by better benefits, ill health, death in service & age profile

  5. Contribution bands unchanged No change to five-tier employee contribution rate structure, delivering an average employee contribution rate of 6.3%. Tiers operate on a banding system, like income tax (not cliff edge), as follows: Part-time contributions at actual not WTE salary Pensionable pay Rate (%) On earnings up to and including £19,800 5.5%  On earnings above £19,800 and up to £24,200 7.25%  On earnings above £24,200 and up to £33,500 8.5% On earnings above £33,200 and up to £44,200 9.5%  On earnings above £44,200 12%

  6. Other elements • Pensionable pay = total pay up to full time • Part-time workers regularly doing additional hours • Still excludes non-contractual overtime over normal full time working • Pay less, get less 50:50 option • 50% contributions, 50% accrual rate • Contingent dependents benefits & death in service not affected • Aim to attract new members (1/4 workforce not in), but review 2017 • Ending requirement to nominate cohabitee • Civil partners treated as married • Other benefits unchanged

  7. Transitional protections • Pensions in payment or deferred no change in benefits • Rule of 85 transitional protection to 2020 retained • Final salary at April 2015. Pension on last year of service • Underpin for members within 10 yrs retirement at 2012 • Accrued benefits pre-2015 & CARE added together and compared with what would have got under final salary. Better of two.

  8. Governance • Scheme Advisory Board • Statutory SLOGPAG • Pension Board at fund level • One or two boards • Review fund structure • Separation from local authorities • Number of funds in Scotland or shared services to cut costs • Cost control – 2% cap

  9. Next Steps • Initialed draft Heads of Agreement • Ballot paper issued 16 October • Ballot closes 7 November • Leaflet and recruitment initiative • More detail on web site • Regulations. Consultation and parliamentary process • Implementation April 2015 • Joint communications

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