Seminar gets down to business on new-look Local Government Pension Scheme

by John Stevenson

Discussions are well under way on the new-look Local Government Pension Scheme and branches were briefed at a seminar in Glasgow on 13 February.

It will be a distinctly Scottish scheme with timescales and issues which are separate from the England and Wales talks. Savings from the loss of the 'Rule of 85' will be ploughed back into the scheme.

New regulations also give full transitional protection to 2020 for existing members who would have reached age 60 and satisfied the Rule. A new timetable has been agreed with decision time coming somewhere around the summer with UNISON putting the package out to ballot before the autumn.

Draft regulations will be out by December and the new scheme would go to the Scottish Parliament by April 2008, coming into force in April 2009. Up for discussion in the new scheme are contributions, percentage of qualifying pay in benefits, ill-health retirement, flexible retirement and lump sums along with payments to partners.

Underpinning the scheme is the need for it to be affordable but it presents opportunities for real benefits for members. Among the issues branches heard about at the seminar were:-

What you put in...

A key issue for the new scheme will be changes to the contribution rates of both employees and employers. Currently employees pay 6% of their salary (with some manual workers paying 5%) while the employers contribution varies to ensure that the fund remains in balance.

The employers want to move to some form of cost sharing future liabilities based on a 2:1 ratio. Current employer contributions in most funds are planned to rise to around 3:1 - but this includes funding for past deficits.

There is a possibility of graduated contributions with the lower paid paying less and the higher paid paying more (which would be offset by tax).

What you get out...

The drive is still towards a final salary scheme. Currently benefits are paid on the basis of 1/80 of final salary for each qualifying year of service. The possibility is there to move to 1/60. This would mean higher benefits.

In line with the Finance Act, there would be no automatic lump sum on retirement. However, you could transfer some of your pension to get a lump sum.

The seminar also backed moves to get more flexible retirement. Members could take a more gradual approach to retirement, adjusting their work/life balance by reducing their hours or stepping-down to a less onerous job but, at the same time, able to draw some of their pension and accruing further pension rights.

Partners' pensions and an improved death in service grant has been built into the initial costing for the new scheme. A multi-tier approach to ill-health retirement is also a possibility. Currently you only get this if you are permanently unable to work.

A multi-tier scheme would cover those who are incapable of continuing in their current job, but who are capable of undertaking other employment.

The main issue for delegates was a concern about how the current scheme was being applied and the need to have transparent criteria and some form of appeal or dispute resolution.

This is just a brief breakdown of the issues discussed by delegates. See more details at www.unison-scotland.org.uk/pensions.

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