Future of the Local Government Pension Scheme

2. Future of the Local Government Pension Scheme

3. Secure - for now • But public service schemes under review • New schemes coming in April 2008 • Negotiations at critical stage • High proportion of non joiners • Public pension envy?

4. Why did members strike over the Local Government Pension Scheme (LGPS) on 28 March • Thousands of members’ retirement plans are in jeopardy • LGPS treated unfairly compared to other public service schemes covered by the Public Service Forum Agreement • Should be no change to existing benefits without agreement

5. What were the Public Service Forum agreed principles? • Existing scheme members should suffer no detriment in normal retirement age and benefits • New Schemes for new staff providing defined benefits, pensions continuing to go up in line with price inflation • Normal Retirement Age increased to 65 for new scheme – half the savings ploughed back for scheme improvements

6. Why does Government not apply PSF deal to the LGPS? They say: • LGPS is ‘funded’ therefore real deficits caused by people living longer and past under-funding • 85 Rule breaches age discrimination Regulations

7. The LGPS is no gold standard • Good average final salary scheme • But average pension in payment only £3,800 per annum. For women only £1,600 per annum • Minimum Income level for pension credit is currently £5,930 per annum for a single person • Large numbers of low paid members can’t afford to join

8. Where are we now with the LGPS? England and Wales For those who will satisfy the Rule of 85: • The Rule will remain for existing members until the ‘New Scheme’ comes in April 2008 • Those who are 60 by 31 March 2016 will be protected on service up to that date • Those 60 between 1 April 2016 and 31 March 2020 will have the early retirement reduction tapered

9. Where are we now with the LGPS? Scotland • The proposed protections are better than what is now law in England and Wales – those 60 by 31 March 2020 will be protected on service up to that date

10. What are the next stages? • DCLG Discussion Paper on New Scheme for England and Wales - Consulting to 29 September Option A • Is the existing final salary scheme i.e. pension builds up at the rate of 1/80th (1.25%) of pensionable pay for each day of pensionable service • Plus a lump sum of three times the pension (i.e. 3/80ths)

11. What are the next stages? • Option B • As requested by the TU side this option is included • It is a final salary option where benefits build up at the rate of 1/60th (1.66%) of pensionable pay • There is no additional lump sum but members have the option to exchange some of their pension for cash. • A 1/60th scheme has been proposed for the new Teachers and NHS Pension Schemes

12. What are the next stages? Option C1 • Is a career average option where the benefits build up at the rate of 1.85% of averaged pay (in the paper it is expressed as a % but for comparison purposes it is roughly equivalent to a 1/54th) • Each year would be revalued in line with prices i.e. the Retail Prices Index (RPI) • There is no additional lump sum but members have the option to exchange some of their pension for cash

13. What are the next stages? Option C2 • Is a career average option where the benefits build up at the rate of 1.65% of averaged pay (in the paper it is expressed as a % but for comparison purposes it is roughly equivalent to a 1/61th) • Each year would be revalued in line with RPI plus 1.5% • There is no additional lump sum but members have the option to exchange some of their pension for cash

14. What are the next stages? Option D • Based on either C1 or C2 but would allow the member to opt for a final salary option if the member pays significantly higher contributions

15. Negotiations Continue (1) TU Side initial position • Good defined benefit scheme • Preferred option 1/60th final salary scheme • End discrimination against unmarried partners • Improve death in service cover

16. Negotiations Continue (2) TU Side initial position • Support variable employee contributions to be fairer to the low paid • Increase member representation • Extend Admitted Body Status on outsourcing • Equality proofed

17. What is happening with other public service negotiations • Final Salary schemes for new members may be the preferred choice for most of the new schemes • Most - but not all - schemes appear to be heading for two tier provision • Discussions on future risk sharing taking place in some schemes • Issues around future transfers between schemes not really started • Trend to allow options for members to take a larger part of their benefits as cash

18. Meeting Employers and Government • Negotiations start again on 2 August • Will continue as long as necessary • We will press for more protection and a good new scheme for all members – no two-tier • GAD figures will be carefully examined

19. Judicial Review • Hearing will be 18 and 19 September • We say that full protection is lawful and affordable • If we win – we expect full protection • If we lose – we will carry on negotiating

20. More Industrial Action? • We want full protection • Or a combination of protection and scheme improvements which amount to it • If final proposals not acceptable we will re-ballot for industrial action

21. What can you do? • Recruit new members • Get membership records up to date • Circulate “Campaign News” and briefings • Keep an eye on the website • Most important! Discuss “new look” proposals with members

23. JOIN US0845 345 845 www.unison.org.uk/pensions