There are a number of schemes within the scope of this review.  They have developed and they have been reviewed over time with the aim of making them affordable and sustainable.  The estimated cost of the “New Look LGPS” by GAD was 18% - 20% of payroll with employees meeting around 6% of this cost and employers 13%.  The outcome of the recent change to CPI from RPI for determining pension increases will significantly reduce the estimated cost of the Schemes.  These Schemes have different rules, benefit structures and costs to employees and employers.

The nature of different public sector jobs necessitates some differences in scheme design. Where the type of work enables a comparable retirement age and capacity to do the job up to that retirement age, there may be a case for rationalising the Schemes. The benefits of standardisation/rationalisation would need to be compared with the consequences of such an approach.

The key questions for all public sector schemes are :

• what cost (to the employer and employee) is considered affordable; and
• what variability of cost is acceptable?

These are questions best agreed between Government, employers and employees, but in later sections, there is further background information to help address these issues. From an administrator’s perspective, it feels like the Scheme has been subject to constant change in pursuit of affordability and sustainability over the last decade. The new LGPS regulations, effective from April 2008 were aimed at delivering an affordable scheme. There is a danger that the feeling of constant change in what is effectively a long term savings arrangement could undermine the perceived value of the “pension package”.  It is important to provide long term stability to the system.

You can also view each chapter using the links to the left of this page

Next Page

Back