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New Scheme LGPS 2014 and Contribution Setting

New Scheme LGPS 2014 and Contribution Setting. Mike Allen Director of Pensions. New LGPS 2014. New LGPS 2014. Summary of Changes What’s next. Summary of Changes. Increased Retirement Age. Linked to State Pension Age SPA: currently 65 66 by October 2020 67 by 2028 68 by 2046.

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New Scheme LGPS 2014 and Contribution Setting

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  1. New Scheme LGPS 2014 and Contribution Setting Mike Allen Director of Pensions

  2. New LGPS 2014

  3. New LGPS 2014 • Summary of Changes • What’s next

  4. Summary of Changes

  5. Increased Retirement Age • Linked to State Pension Age • SPA: currently 65 66 by October 2020 67 by 2028 68 by 2046

  6. Contributions Payable

  7. 50/50 Scheme • 50% contributions • 50% service accrual (1/98th) • 100% death cover • Re-enrolled into full scheme every three years

  8. Pensionable Pay • For benefits accrued after 1/4/2014 • To calculate contribution rate to be paid • Non-contractual overtime • Allowances • Arrears of pay • ‘Assumed Pensionable Pay” Separate pay figures will be required for Actual Pay (new scheme) and Final Pay (protected benefits) e.g.: • A member leaving employment • End of Year contribution returns

  9. Protections • Pre 2008 service • 2008 to 2014 service • Post 2014 service

  10. Protections - continued • All retirees within 10 years of age 65 at 31 March 2012 • 2 calculations to pay the better of • Old benefits (Pre 2014 scheme for all service) • New benefits (Pre 2014 & Post 2014)

  11. Unchanged • Ill health • Redundancy early retirement • Death benefits • Additional contributions

  12. Summary • CARE • 1/49th • NRD=State pension age • Actual pay for benefits and contributions • New contribution rates • 50/50 scheme • Protection for all service to 31/3/2014 • Best of both for those within 10 years of retirement

  13. Summary Current Situation: • Benefit and Administration Regulations published • Transitional Regulations (Protections etc.) due shortly Further Regulations/Consultations due on: • Cost Control • Governance

  14. Support for Employers Newsletters Briefing note on key issues Website Workshops Guidance Notes Revised on-line notifications and Guides

  15. Support for Members Newsletter/formal notification of changes Website Benefit Modellers Posters

  16. Contribution Setting

  17. The valuation process • Once every three years • Sets employer contribution rates for the next 3 years • Aims to ensure fund solvency

  18. What determines contribution rates? • Funding level • Recovery period for past service deficit • Covenant strength • Type of employer • Open or Closed to new members

  19. LPFA’s aims • Ensure appropriate contribution rate for each employer • Recognise individual employer strength • Identify how covenant strength can be improved • Reduce risk of employer debt falling on other scheme employers

  20. Next Steps • Results finalised • Employers notified of contribution rate payable • Discussions on phasing options for any increases • Discussions around security and covenant strength • New rates payable from April 2014

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