Local Government Pension Scheme - Employers Proposals Print E-mail
The employers initial 'without prejudice' proposals represent a worsening of the position prior to the successful industrial action ballot which resulted in revocation of the Amendment regulations.

The proposals are:

  • Removal of the 85 Rule to comply with Age Discrimination legislation from 1st April 2006. The result according to the employers would be to reduce employer rates by 1.6% to 2% and by 2.0% to 2.75% by 2013.
  • No phased protection - designed to effect immediate savings and be fairer and more equitable to all members. The employers recognise that this could be controversial.
  • Incease the minimum benefits age from 50 to 55 from 1st April 2006. This will be required under the Finance Act 2004 by 2010.
  • Increase employees contribution rate by 1% in 2006/7 and 2007/8. The employers stated that this could fall again 'everything else being equal'
  • Provide incentives for people to work longer through a possible actuarial increase in benefits after age 65.
In return for this package - the employers proposed

  • Flexible retirement linked to reducing hours/grade. This would be at the employers discretion with the ability to waive any actuarial reduction based on any shortfall to age 65 or age 60 for protected members. The current abatement rules would probably have to be removed otherwise flexible retirement would be a non starter.
  • Ability to buy out actuarial reduction to benefits before 65 by emplyee paying voluntary increased contributions. There could be discretion for employers to share the cost of buying out the reduction.
  • Removal of the current 15% contribution limit to fit in with Inland Revenue changes from April 2006. There would need to be a 10% contribution limit on added years contracts or a limit on added years to protect funds from very high purchases from employees who for example are aware of an impending substantial pay increase.
  • Removal of the service limits at age 60/40 years and age 65/45 years.
  • Ability to take up to 25% of value of benefits as a lump sum. The employers would want to ensure that members take a minimum 3/80ths lump sum.
 
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