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
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.
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
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.
here for further information