Presentation on theme: "Proposed Changes to Local Government Pension Schemes (LGPS) Steven Lewarne."— Presentation transcript:
Proposed Changes to Local Government Pension Schemes (LGPS) Steven Lewarne
Proposed changes to Local Government Pension Schemes (LGPS) Public sector pension myths and facts Timetable What you can do about the proposals Questions
Pay more – up to 50% more contribution Retire later – for some it will be 68 years Receive less – average salary not final salary Lose protection – for privatised jobs Lower annual increases – CPI inflation measure replaced RPI PROPOSAL IMPLEMENTED
Average contribution of salary will increase by 3.2% from 6.0% to 9.2% No contribution increase for those earning less than £15,000 per annum Contribution increase of 1.5% for those earning up to £21,000 per annum Maximum contribution increase of 6% for high earners Recent update (7 th Oct 2011): http://www.communities.gov.uk/news/newsroom/2004266 http://www.communities.gov.uk/news/newsroom/2004266
Proposal to link the Local Government Pension Scheme (LGPS) to the State Retirement Age (SRA) Aged between 42 and 57? Retire with pension at 66 years old Aged between 33 and 42? Retire with pension at 67 years old Younger than 33? Retire with pension at 68 years old
An end to final salary schemes Switch to an average salary scheme Current accrual rate of 1/60 th of final salary for every year worked. For example: A pension of 50% of final salary could be received after 30 years service Accrual rates could be reduced to 1/90th for every year worked
Under current provisions, private sector firms have to establish a broadly comparable pension scheme The proposal includes an end to the Fair Deal scheme that protected the pensions of public sector workers outsourced to the private sector under TUPE
Annual increases were calculated using the Retail Price Index (RPI) until April 2011 Now calculated using the Consumer Price Index (CPI) This change will reduce pension benefit values by an estimated 8.5% by 2017 Over the next 15 years this could reduce pension payments by £84 Billion. IMPLEMENTED
Public Sector Pensions Are Gold-Plated The average public sector pension is £7,800 per annum - Hutton Report (10 th March 2011) http://www.hm-treasury.gov.uk/indepreviw_johnhutton_finalpress.htm
Public Sector Pensions Are Unsustainable Public pensions are affordable - Public Accounts Committee Changes made in 2007-08 will reduce scheme costs by £67 Billion over 50 years Public pensions are affordable - Public Accounts Committee Changes made in 2007-08 will reduce scheme costs by £67 Billion over 50 years http://www.parliament.uk/business/committees/committees-a-z/commons-select/public-accounts-committee/news/pensions-report/
New Pension Income Will Make Schemes Stronger All additional revenue will be returned to the Treasury
People are Living Longer Local Government Schemes were revised 3 years ago – costs are now 25% lower Life expectancy has increased but not by 25% Local Government Schemes were revised 3 years ago – costs are now 25% lower Life expectancy has increased but not by 25%
Were All In This Together These proposals are the equivalent of an average 3% tax on public sector pension scheme members.
The Proposals Have Widespread Support Government Heath Secretary, Andrew Lansley (Conservative MP) described the proposals as inappropriate and unrealistic http://www.telegraph.co.uk/news/politics/8658168/Andrew-Lansley-attacks-governments-public-sector-pension-reforms.html
UNISON ballot opens 11 th October, closes 3 rd November Possible strike action on 30 th November End of 2011 – discussions on detail of new scheme completed January 2012 – Ministers approval sought for next steps February 2012 – Parliamentary stages for amending regulations April 2014 – target date for regulations being laid setting out new scheme April 2015 – target date for new scheme starting
Support UNISON, encourage non-members to join Vote in the national ballot Write to your Council Leader, Councillors and MP
Pensions are effectively deferred wages. Public sector workers do not generally receive bonuses and therefore the stability of their retirement income is a major employment consideration. Pension changes are effectively an enforced contract change. If these proposals are implemented, will this be the last attack on public sector pensions?
Your consent to our cookies if you continue to use this website.