2014 LGPS Proposals Fire Brigades Union 2014 LGPS proposals

2014 LGPS Proposals Background recap Government endorses Hutton Proposes £900million savings Increase contributions Link with state pension age Career Average Revalued Earnings Change from RPI to CPI ‘Work Longer Pay More Get Less’

2014 LGPS Proposals LGPS Negotiations Government recognise ‘funded schemes’ different Separate negotiations – Unite, GMB, Unison Early versions of HOA – agreed Dec ‘11 FBU position: HOA unacceptable No protection for lowest paid NPA unworkable

2014 LGPS Proposals Talks continued From January 2012 – 31 May no details released as talks continued LGPS trade union side meetings cancelled 31 May – first details released Joint statement – LGA – 3 Unions 2014 LGPS proposals Consult with members report back to future TU side meeting

2014 LGPS Proposals 2014 proposal in brief England and Wales only Introduced one year earlier CARE scheme No increases in contributions until 2014 No NPA – individually linked to SPA Protection Options

2014 LGPS Proposals Summary of changes ElementLGPS 2008LGPS 2014 StructureDefined Benefit Basis of pensionFinal SalaryCARE Accrual Rate60ths49ths Revaluation rateN/ACPI NPA65Increased by linking to individuals SPA (Min 65) Contribution flexibilityNoOption to pay 50% contributions for 50% benefits

2014 LGPS Proposals Summary of changes (cont.d) ElementLGPS 2008LGPS 2014 Commutation option12:1 Death in service3x pay Survivor benefits160 th accrual based on tier1 ill health enhancement IndexationCPI Vesting period (Timeframe for members to get their contributions refunded rather than waiting for pension at retirement age) 3 months2 years

2014 LGPS Proposals Summary of changes (cont.d) ElementLGPS 2008LGPS 2014 Ill health provisionTier 1 – immediate payment enhanced to 65 Tier 2 – immediate payment 25% enhanced to 65 Tier 3 – temporary payment for up to 3 years Tier 1 – immediate payment enhanced to 65 Tier 2 – immediate payment 25% enhanced to 65 Tier 3 – temporary payment for up to 3 years

2014 LGPS Proposals 2008 v 2014 Contributions LGPS 2008Gross2014 LGPSGross ( Net ) Up to £13,5005.5%Less than £13,5015.5% (4.4%) £13,501- £15,8005.8%£13,501- £21,0005.8% (4.64%) £15,801- £20,4005.9%£21,001- £34,0006.5% (5.2%) £20,401- £34,0006.5%£34,001- £43,0006.8% (5.44%) £34,001- £45,5006.8%£43,001- £60,0008.5% (5.1%) £45,501 - £85,3007.2%£60,001- £85,0009.9% (5.94%) Over £85,3007.5%£85,001 - £100, % (6.3%) £100,001- £150, % (6.84%) Over £150, % (6.88%)

2014 LGPS Proposals What this means to me Role (Salary FF Dev£20,9356.5%5.8% ( - 0.7%) FF Comp£26,7906.5% CM Dev£28,4726.5% CM Comp£29,7006.5% WM Dev£30,3456.5% WM Comp A (B)£31,187 (£33,211)6.5% Stn M Dev£34,5476.8% Stn M Comp A (B)£35,583 (£38,104)6.8% GM Dev£39,7886.8% GM Comp A (B)£40,980 (£44,108)6.8%6.8% ( 8.5%) (+1.7%)

2014 LGPS Proposals Changes to way contributions are calculated LGPS contributions based on actual pensionable pay – inc. non contractual overtime and any additional hours (p/t) Part – time workers will have contributions based upon actual pay not full time equivalent e.g. previous proposal part time earning £13,395 pays 6.5% Now £13,395 pays 5.5%

2014 LGPS Proposals 2014 Normal Pension Age LGPS will have NPA based on individuals’ own SPA SPA increasing to; 66 between 2018 and between 2026 and 2028 (34-36) 68 and beyond in line with future rises in life expectancy (44-46)

2014 LGPS Proposals Impact on LGPS 2014 members Can still retire before from SPA ( from age 55) but with actuarial reductions applied No. of years before SPA Reductions for Men Reductions for Women 16%5% 211% 316%15% 420% 525%24% 1042%40%

2014 LGPS Proposals Protection Accrued rights protected All pre 2014 pension will be 1.Final salary link 2.Accessible at current NPA 3.Rule of 85 protection remains

2014 LGPS Proposals CARE – revaluation and Accrual rate Career Average Revaluated Earnings Pension value for earnings each year Revalued until retirement Starting point AWE ~ CPI +2.25% and 60ths Balancing act 2014 LGPS CPI and 49ths Professional advice

2014 LGPS Proposals CARE Vs Final Salary CARE depends on revaluation rate being better than any rise in earnings and flat career Rise in earnings better than RR or promoted Final Salary more rewarding Assess whether pay will grow more than CPI over career (FBU using 1 st Actuarial for advice)

2014 LGPS Proposals Flexible options 50/ 50 option available Try to avoid opt outs on low paid 50% contributions – 50% pension Ancillary benefits same Short term option

2014 LGPS Proposals Example of 50/50 Individual earning £15,000 Full member50/50 option Net monthly contribution£58£29 Accrual rate1/49th1/98th Pension value per year before revaluation £306£153 Death in service3x salary (£45,000)

2014 LGPS Proposals Transitional protection Applies to members within 10 years of age 65 in Individuals may see their NPA move due to changes in SPA Protection – calculation done on retirement at age 65 so pension is at least equal to what they would have received under 2008 scheme

2014 LGPS Proposals Consultation TU’s involved consulting members before reporting back Unison, Unite & GMB joint statement with LGA Unison, Unite and GMB consultative ballot July – August FBU Consultation method meetings and consultative ballot

2014 LGPS Proposals Recap LGPS 2014 changes instead of 2015 CARE – revalued using CPI – 49 th accrual Same contributions for majority & based on actual earnings NPA linked to SPA Indexed using CPI Option of 50/50 with same ancillary benefits Protection – accrued and transitional Outsourced individuals protected

2014 LGPS Proposals Executive Council 17 July 1.Noted the outcome of the LGPS negotiations. 2.Recognised some positive progress has been made. E.g contribution rates 3.Concerned at the proposed accrual rates and revaluation rates - seeking further professional advice 4.Opposed to any increase in NPA. Believe an NPA of 68 is unrealistic and unworkable for firefighters (control). 5.Seek the support of colleagues in other unions to establish with the employers a working group to examine the specific occupational needs of FRS control staff and any other identified occupational groups with particular needs. 6.Continue to attempt to gain access for firefighters control into a fire service pension scheme

2014 LGPS Proposals Recommendations Consultative ballot 2 straight forward questions 1.Is the proposed 2014 LGPS acceptable ? Yes or No? EC recommend – No 2.Do you wish the FBU to continue trying to achieve access for firefighters control into a specific fire service pension scheme ? Yes or No Attend meeting before responding