In December 2011, the government, local-government employers and unions agreed on a plan to change the Local Government Pension Scheme (LGPS) from 1 April 2014.

The deal they made should mean that there will be no changes to the pension scheme until 2014. And most members won't have to pay higher pension contributions when the new scheme begins.

In a statement to the House of Commons on 20 December, chief secretary to the Treasury Danny Alexander said that the fine details of the potential new scheme would be negotiated over the next three months.

The unions and the Local Government Association (LGA) will negotiate this with the government's Communities and Local Government department.

The main points of the new deal are as follows.

• There will be a new LGPS from April 2014, with all the new rules in place by 2013
• The pension scheme is to be based on an employee’s career-average earnings instead of their final salary
• Members’ contributions could be frozen at today’s rates for all members (or at least the vast majority) as long as the scheme, overall, meets the financial limits that the Government sets.
• Members will be given choices to encourage them to stay in the scheme and to tempt new members to join
• The retirement age will be flexible and linked to the state pension age

The Local Government Association, LGA Workforce Board, Unison, GMB and Unite issued a joint statement covering the agreement and here it is in full.

Joint agreement reached on a way forward for a new Local Government Pension Scheme (LGPS)

Unison, GMB and Unite on behalf of the local government unions together with the Local Government Association have put forward an agreement on the principles of and implementation timetable for the introduction of a new LGPS in 2014.This agreement has been accepted by government and supplants previous proposals.

The objective of the agreement is to roll the requirements for short term savings and long term reform into a ‘one step' process. This process envisages regulations by March 2013, in time for the next scheme valuation, with the new scheme in place by April 2014.

The principles cover both scheme design and the ongoing cost management and governance of the scheme. Discussions on the details including accrual rates and contributions will start in the new year with the 'big ticket' items due to be settled on by April 2012.

In reaching this agreement all those involved have demonstrated their commitment to and belief in the continuing value of Local Government Pension Scheme to both members and employers. For its part the Government has recognised that the distinctive funded nature of the LGPS allows for a different approach than may be taken by the other public service schemes.

Joint statement:

"We firmly believe that this joint and cross party agreement, which has been discussed with both government ministers and officials during its development provides the best possible route to a simple and sustainable scheme which is affordable for both members and employers.

Furthermore we are in agreement that the principles and timescale set out are a robust, sensible and reasonable way of achieving the savings and reforms by which the long term sustainability of the LGPS may be ensured.

We are committed to the successful conclusion of this process, which will require a constant focus on the timetable established by this agreement.

Whilst the implementation of these principles are in progress we are confident that no actions need be taken as a result of the current consultation on LGPS reform.

In reaching the outcomes of this process and final agreement there will continue to be proper consultation with and endorsement from our respective memberships.

We understand that scheme members may be finding this process both confusing and unsettling and we will ensure that regular communication takes place in order to keep all informed. We believe the LGPS is and will continue to be an excellent scheme and the best way to ensure a financially secure future."

Sir Merrick Cockell, chairman, Local Government Association
Mayor Sir Steve Bullock, chairman, LGA Workforce Board
Heather Wakefield, national secretary of local government, police and justice, Unison
Brian Strutton, national secretary, GMB
Peter Allenson, national officer for local government, Unite

 

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