New scheme a step closer

In October the Department for Communities and Local Government, being the Department that writes the Scheme’s rules, started a consultation about increasing employee contribution rates. We have replied to this, and you can find our response via the link below. To a great extent however this consultation has been overtaken by events, not least by the Government agreeing to leave the existing Scheme essentially unchanged until 2014, with the plan that it will be replaced by a new Scheme.

Letter to the DCLG (48KB)

You can find the written Ministerial statement about the agreement via the link below but in summary the 2014 Scheme:  

• will provide a single solution to both the short and long term issues by the early introduction of the new Scheme in April 2014
  
  
• be based on career averaging rather than final salary
  
  
• can include zero increases in employee contributions for all, or the vast majority of members, provided that overall financial constraints set by the Government are met
  

• will include some elements of choice to encourage retention of the existing membership and encourage new membership, and
  
  
• will have a flexible retirement age built around the Scheme’s normal retirement age equal to the State pension age or age 65, whichever is later, that will apply to both active members and deferred members (new Scheme service only).
  

Full copy of the Ministerial statement

The Ministerial statement refers to changes relating to the retirement age applying to service from 2015, but we think this should read 2014, as this is when the new Scheme will commence.

The Ministerial statement also refers to the Heads of Agreement signed by both the local government trades unions and the Local Government Association. You can find this via the link below. If you have a look at it you will see that much remains to be decided, not least the so called big ticket items, including employee contribution rates and the rate of accrual. We will however publish further newsflashes as the detail becomes known.  We also refer to the 2014 changes in this month's Pension Power newsletter for employee members.

Heads of Agreement
Pension Power - issue 31, January 2012

Back