Aberdeenshire UNISON

Pensions Update Feb 2007

Discussions begin on "new look" LGPS

UNISON and the other trade unions have agreed with CoSLA and the Scottish Executive a timetable for discussions on the "new look" Local Government Pension Scheme in Scotland.

The unions and CoSLA will work up details of the new scheme with the aim of reaching agreement by June 2007. There will then be a consultation period whilst the trade unions ballot members on the proposals.

"Although we would like to ballot in June, if this is not feasible it is likely that a ballot will be deferred until after the holiday period, around late August, early September," said Mike Kirby, Scottish Convenor and one of UNISON's negotiators.

Formal consultation on the draft regulations will take place in the Autumn, to allow the new regulations to be laid before the Scottish Parliament in April 2008. If approved, it is planned that these will come into force in April 2009.

Branch delegates, Ian Macdonald and Kate Ramsden attended a pensions seminar on 13th February which looked in detail at the key issues to be considered in drawing up a new scheme.

We heard that the Finance Minister has agreed there should be a "distinctive Scottish scheme". Underpinning this is the need for it to be affordable. However, he has confirmed that the savings from the scrapping of the Rule of 85 will go towards meeting the cost of the new scheme. The Minister also wants a level of consistency with other Scottish public sector pension schemes such as the teachers' scheme and the NHS scheme.

We also heard that the average age of membership of the LGPS is 44 and the average salary is £16,000.

Up for discussion for a "new look" pension scheme were the following issues:

What you put in...

  • A key issue for the new scheme will be changes to the contribution rates of both employees and employers. Currently employees pay 6% of their salary (with some manual workers paying 5%) while the employers contribution varies to ensure that the fund remains in balance.
  • The employers want to move to some form of cost sharing future liabilities based on a 2:1 ratio. Current employer contributions in most funds are planned to rise to around 3:1 - but this includes funding for past deficits.
  • There is a possibility of graduated contributions with the lower paid paying less and the higher paid paying more (which would be offset by tax).

What you get out...

  • The drive is still towards a final salary scheme. Currently benefits are paid on the basis of 1/80th of final salary for each qualifying year of service. The possibility is there to move to 1/60th. This would mean higher benefits.
  • In line with the Finance Act, there would be no automatic lump sum on retirement. However, you could transfer some of your pension to get a lump sum.
  • The seminar also backed moves to get more flexible retirement. Members could take a more gradual approach to retirement, adjusting their work/life balance by reducing their hours or stepping-down to a less onerous job but, at the same time, able to draw some of their pension and accruing further pension rights.
  • Partners' pensions and an improved death in service grant have been built into the initial costing for the new scheme.
  • A multi-tier approach to ill-health retirement is also a possibility. Currently you only get this if you are permanently unable to work. This would cover those who are incapable of continuing in their current job, but who are capable of undertaking other employment.
  • An issue for delegates was a concern about how the current scheme was being applied to ill-health retirement and the need to have transparent criteria and some form of appeal or dispute resolution.

UNISON's negotiators have pledged to continue to push for improved pension benefits for members.

This is just a brief breakdown of the issues discussed by delegates.

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