The government has set out the changes it wants to make to the Local Government Pension Scheme (LGPS) over the next few years, starting in April 2012.

 The government is also looking at alternative suggestions that come out during the meetings and negotiations that the government, unions and employers continue to have.

Employers, trade unions and anyone else with an interest have until 6 January 2012 to feed their thoughts on the government’s ideas into the decision-making process. The government will not make any firm decisions until the consultation process ends.

You can read the proposals in full here:
www.communities.gov.uk/documents/localgovernment/pdf/2004147.pdf

What the government suggests

The government has come up with two options. But under both options:

• you'll pay more towards your pension, and
• your pension will build up at a lower rate.

The pension contributions you pay will go up in three stages over the next three years. The more you earn, the more your contributions will go up. See the tables below for how this works.

If the full time pay for your job is less than £15,100 your contributions won’t go up.

At the moment your pension builds up at the rate of 1/60 of your pay for each year of your membership.

Option1 – you pay a bigger increase in contributions but with less of a reduction in the rate your pension builds up

The rate you build up pension would change to:

• 1/64 from April 2013, then

• 1/65 from April 2014

Your contributions would go up as follows

Tariff band (% of membership) Current	Current contribution	2012/13	2013/14	2014/15
£0 - £12,900	5.5%	5.5%	5.5%	5.5%
£12,901- £15,100	5.8%	5.8%	5.8%	5.8%
£15,101- £19,400	5.9%	5.9%	6.0%	6.0%
£19,401- £21,000	6.5%	6.7%	7.2%	7.7%
£21,001- £32,400	6.5%	7.2%	8.0%	8.3%
£32,401- £43,300	6.8%	7.5%	8.3%	8.7%
£43,301- £60,000	7.2%	8.2%	8.7%	9.0%
£60,001- £81,100	7.2%	8.7%	9.2%	10.0%
£81,101- £100,000	7.5%	9.0%	9.8%	11.0%
£100,001- £150,000	7.5%	9.5%	11.0%	12.0%
More than £150,001	7.5%	10.0%	12.0%	12.5%

Option2 – you pay a smaller increase in contributions but with more of a reduction in the rate your pension builds up

The rate you build up pension would change to 1/67 from April 2014

Your contributions would go up as follows.

Tariff band (% of membership)	Current contribution	2012/13	2013/14	2014/15
£0 - £12,900	5.5%	5.5%	5.5%	5.5%
£12,901- £15,100	5.8%	5.8%	5.8%	5.8%
£15,101- £19,400	5.9%	5.9%	6.0%	6.0%
£19,401- £21,000	6.5%	6.5%	6.8%	6.8%
£21,001- £32,400	6.5%	6.8%	7.2%	7.5%
£32,401- £43,300	6.8%	7.1%	7.8%	8.2%
£43,301- £60,000	7.2%	7.8%	8.4%	8.8%
£60,001- £81,100	7.2%	8.7%	8.8%	9.5%
£81,101- £100,000	7.5%	9.0%	9.8%	10.5%
£100,001- £150,000	7.5%	9.3%	10.8%	11.5%
More than £150,001	7.5%	9.5%	11.8%	12.5%

Background

The Independent Public Service Pension Commission said earlier this year that public-sector pension scheme members should pay more of the cost of the scheme to reduce the cost for employers and taxpayers.

The government accepted their report and said they wanted to make a series of changes to the scheme rules up to 2015 when they would introduce an entirely new scheme.

The government also promises that the pension you earn up to 2015 ‘will be protected’ and that ‘public-service pensions, including the LGPS, will continue to be amongst the best pensions available’.

You can print out this article here

Published by West Yorkshire Pension Fund – 12 October 2011

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