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New Scheme LGPS 2014 and Contribution Setting. Mike Allen Director of Pensions. New LGPS 2014. New LGPS 2014. Summary of Changes What’s next. Summary of Changes. Increased Retirement Age. Linked to State Pension Age SPA: currently 65 66 by October 2020 67 by 2028 68 by 2046.

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New scheme lgps 2014 and contribution setting

New Scheme LGPS 2014 and Contribution Setting

Mike Allen

Director of Pensions



New lgps 2014
New LGPS 2014

  • Summary of Changes

  • What’s next



New scheme lgps 2014 and contribution setting

Increased Retirement Age

  • Linked to State Pension Age

  • SPA: currently 65

    66 by October 2020

    67 by 2028

    68 by 2046



New scheme lgps 2014 and contribution setting

50/50 Scheme

  • 50% contributions

  • 50% service accrual (1/98th)

  • 100% death cover

  • Re-enrolled into full scheme every three years


New scheme lgps 2014 and contribution setting

Pensionable Pay

  • For benefits accrued after 1/4/2014

  • To calculate contribution rate to be paid

  • Non-contractual overtime

  • Allowances

  • Arrears of pay

  • ‘Assumed Pensionable Pay”

    Separate pay figures will be required for Actual Pay (new scheme) and Final Pay (protected benefits) e.g.:

  • A member leaving employment

  • End of Year contribution returns


New scheme lgps 2014 and contribution setting

Protections

  • Pre 2008 service

  • 2008 to 2014 service

  • Post 2014 service


New scheme lgps 2014 and contribution setting

Protections - continued

  • All retirees within 10 years of age 65 at 31 March 2012

  • 2 calculations to pay the better of

    • Old benefits (Pre 2014 scheme for all service)

    • New benefits (Pre 2014 & Post 2014)


New scheme lgps 2014 and contribution setting

Unchanged

  • Ill health

  • Redundancy early retirement

  • Death benefits

  • Additional contributions


New scheme lgps 2014 and contribution setting

Summary

  • CARE

  • 1/49th

  • NRD=State pension age

  • Actual pay for benefits and contributions

  • New contribution rates

  • 50/50 scheme

  • Protection for all service to 31/3/2014

  • Best of both for those within 10 years of retirement


New scheme lgps 2014 and contribution setting

Summary

Current Situation:

  • Benefit and Administration Regulations published

  • Transitional Regulations (Protections etc.) due shortly

    Further Regulations/Consultations due on:

  • Cost Control

  • Governance


New scheme lgps 2014 and contribution setting

Support for Employers

Newsletters

Briefing note on key issues

Website

Workshops

Guidance Notes

Revised on-line notifications and Guides


New scheme lgps 2014 and contribution setting

Support for Members

Newsletter/formal notification of changes

Website

Benefit Modellers

Posters



New scheme lgps 2014 and contribution setting

The valuation process

  • Once every three years

  • Sets employer contribution rates for the next 3 years

  • Aims to ensure fund solvency


New scheme lgps 2014 and contribution setting

What determines contribution rates?

  • Funding level

  • Recovery period for past service deficit

  • Covenant strength

  • Type of employer

  • Open or Closed to new members


Lpfa s aims
LPFA’s aims

  • Ensure appropriate contribution rate for each employer

  • Recognise individual employer strength

  • Identify how covenant strength can be improved

  • Reduce risk of employer debt falling on other scheme employers


New scheme lgps 2014 and contribution setting

Next Steps

  • Results finalised

  • Employers notified of contribution rate payable

  • Discussions on phasing options for any increases

  • Discussions around security and covenant strength

  • New rates payable from April 2014