The Local Government Pension Scheme

1
The Local Government Pension Scheme

• Managers Briefing
• 1 December 2004

2

• Stocktake comments in 2001
• Background government paper
• Simplicity, security and choice
• Working and saving for retirement
• Inland revenue simplification proposals
• Increasing choice and flexibility

3
Key objectives of stocktake exercise

• LGPS must be able to respond to ongoing changed
  in local government, pension and related
  developments
• LGPS must remain focused on the advantages and
  responsibilities arising from its statutory basis
• LGPS must remain affordable and sustainable for
  all interested parties - scheme members,
  sponsoring employers and local tax payers
• Conclusion - it cannot remain as it is - some
  change to the LGPS is inevitable

4

• Phase I Regulatory effect - April 2004
• Phase II Regulatory effect - April 2005

5
Phase I

• Immediate Vesting - 3 month refund
• Amalgamation of LG service
• 12 months of joining as a new member
• Existing members by 30 September 2005
• (KCC changed policy for non LG transfers)
• (Effective from 1 April 2004)
• 12 months from date of joining for new members
• Existing members by 30 September 2005

6
Phase II

• Increase in earliest date of pension payment from
  50 years to 55 years
• Abolition of 85 year rule for new members
• Phasing out of 85 year rule for existing members
• (Effective from 1 April 2005)

7

• Tax Simplification - April 2006
• Abolish existing multi tier arrangement
• Earnings Cap
• 15 Tax relief on contributions
• Replace with Lifetime Allowance 1.5m
• Annual Allowance 215k
• 100 relief on contributions
• How does this fit LGPS?

8

• Age legislation 2006
• How will this affect Pensions?

9
2008 New LGPS

• Partners Benefits?
• Flexible Retirement?
• Increase in Employee Contributions?
• Tiered rates
• 60th, 621/2th scheme?

10

• Commutation?
• 3 x death in service?
• Ill Health Retirement?
• AVCs? Additional Contributions?