Pensions Update Feb 2007
Discussions begin on "new look"
LGPS
UNISON and the other trade unions have agreed with CoSLA and
the Scottish Executive a timetable for discussions on the "new look"
Local Government Pension Scheme in Scotland.
The unions and CoSLA will work up details of the new scheme with
the aim of reaching agreement by June 2007. There will then be a
consultation period whilst the trade unions ballot members on the
proposals.
"Although we would like to ballot in June, if this is not feasible
it is likely that a ballot will be deferred until after the holiday
period, around late August, early September," said Mike Kirby, Scottish
Convenor and one of UNISON's negotiators.
Formal consultation on the draft regulations will take place in
the Autumn, to allow the new regulations to be laid before the Scottish
Parliament in April 2008. If approved, it is planned that these
will come into force in April 2009.
Branch delegates, Ian Macdonald and Kate Ramsden attended a pensions
seminar on 13th February which looked in detail at the key issues
to be considered in drawing up a new scheme.
We heard that the Finance Minister has agreed there should be a
"distinctive Scottish scheme". Underpinning this is the need for
it to be affordable. However, he has confirmed that the savings
from the scrapping of the Rule of 85 will go towards meeting the
cost of the new scheme. The Minister also wants a level of consistency
with other Scottish public sector pension schemes such as the teachers'
scheme and the NHS scheme.
We also heard that the average age of membership of the LGPS is
44 and the average salary is £16,000.
Up for discussion for a "new look" pension scheme were the following
issues:
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 1/80th of final salary for each
qualifying year of service. The possibility is there to move to
1/60th. 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 have
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.
This would cover those who are incapable of continuing in their
current job, but who are capable of undertaking other employment.
- An issue for delegates was a concern about how the current scheme
was being applied to ill-health retirement and the need to have
transparent criteria and some form of appeal or dispute resolution.
UNISON's negotiators have pledged to continue to push for improved
pension benefits for members.
This is just a brief breakdown of the issues discussed by delegates.
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