Aberdeenshire UNISON

Pensions Update 2 Nov 2007

Progress on pensions

Three way talks between the Trade Unions, CoSLA and the Scottish Government on the "new-look" Local Government Pension Scheme have resulted in agreement on most of the outstanding aspects of the scheme.

Contribution rate
It has been accepted that the average contribution rate for members should be 6.3% with actual contributions paid on a tiered basis which would ensure that staff earing below 18K will pay a lower contribution than in the current scheme for improved benefits. Good news for many of our lower paid members who make up half of the local government workforce.

Ill-health retiral
One of the most difficult issues to resolve has been ill-health benefits. The UK Finance Act requires that ill-health retirement provisions in all pension schemes have to meet the "permanent incapacity" test. This has limited the scope for real improvements in this area and the focus of the negotiators has been on protecting the entitlement of members who currently qualify for benefits, without falling foul of the law.

So, enhancements to service have been targetted on those who are most unlikely to be able to return to gainful employment before they are 65. This is Level 1 of the ill-health retirement provisions. They will receive 100% enhancement up to age 65 which means they will be able to retire on a full pension and is an improvement on the current scheme.

Members who meet the "permanent incapacity" test but don't qualify for Level 1, presumably because they are not quite as "permanently incapacitated" as the Level 1 members, will be on Level 2 which will attract a 25% enhancement up till 65. This is not quite as good as UNISON was hoping for, but the best that can be done under the law. However, if any scheme members will be worse off under the new scheme they will get transitional protection. This will be reviewed along with the scheme every 3 years.

Discretionary payment proposals
Because of the UK Finance Act, it was not possible to include a Level 3 in the scheme, for employees who are not "permanently incapacitated" but are unable to go back to their jobs in the foreseeable future. Any provision has to be made outwith the pension scheme. The employers have proposed that discretionary payments be made available to these employees, based on one week's salary for every year worked, tax free up to 30,000. These would need to be negotiated with each local authority and so UNISON has some reservations about this proposal. However, it would apply to all employees and not just those in the LGPS.

Where scheme members move to a lower paid post for reasons of ill-health it has been agreed that they will get extended protection for service accrued on the previous higher salary.

The consultation period ended on 31st October and UNISON's response will be posted on the UNISON Scotland website. Members will be balloted on the new scheme in the New Year.

It is proposed that when the new LGPS comes into force, (likely to be April 2009) a line will be drawn under the old scheme and those retiring after that date will have two pension calculations, one on benefits accrued under the old scheme and one for benefits accrued under the new. This will be reviewed every 6 years.

The next pensions delegate meeting will be held on 18th January 2008 to consider the draft regulations and to plan the ballot.

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