LGPS update

June 2013

The new look LGPS was agreed in summer 2012, with overwhelming support from unions and employers. The consultations to approve the regulations and operational details are largely completed with further consultation on future governance to close at the end of August 2013.

The concerns that ATL has over the reformed LGPS for 2014 are largely the same as those that will affect the Teachers' Pension Scheme via the Public Service Pensions Act, around scheme and state pension ages and consultation over any material changes in future.

In our response to the LGPS 2014 consultation specifically, ATL criticised the provision to exclude a deferred member from commuting part of their pension for a lump sum. We await the outcome of the consideration of that consultation.

The contribution rates for the LGPS 2014 are as below. Part-time workers will be placed in the band for their actual salary, not full-time equivalent, which ATL is pleased to see. All members will be transferred to the new LGPS on 1 April 2014 and there will be a protective underpin on retirement, for anyone within 10 years of 65 on 1 April 2012, to ensure they do not receive a lower pension than they would have had in the 2008 scheme. Further information can be accessed on the dedicated website.

Who is affected?

The latest offer applies mainly to ATL members working as support staff, Soulbury-paid staff and some AMiE college members in England and Wales. Information here does not apply to Scotland as there are no plans, currently, to alter the scheme there.

In Northern Ireland, NILGOSC – the body which administers LGPS (NI) – has recommended that a similar approach as in England and Wales is taken to redesigning the scheme, and the Northern Ireland Executive has accepted that it has to make savings to all public sector pension schemes. The Department of the Environment, which makes the regulations for the LGPS (NI), has yet to set out any details of changes to the scheme or increases to employees' contribution rates.

Details of the offer

Measured against ATL's slogan 'pay more, work longer, get less' the proposals for the LGPS in England and Wales are a good compromise. ATL and the other unions believe this is the best that can be achieved through negotiation. We are reassured by statements from all those involved in the negotiations that the agreed offer achieves a fair balance between the needs of you, the members, and the government.

Key proposed changes to the LGPS from April 2014:

  • Career Average Revalued Earnings (CARE) using the Consumer Price Index (CPI) as the revaluation factor. The current scheme is a final salary scheme. This reflects a move to CARE in other public sector pension schemes.

  • An accrual rate of 1/49th. The current scheme is 1/60th.

  • There will be no normal scheme pension age; instead, each member's Normal Pension Age (NPA) will be their State Pension Age. The current scheme has a NPA of 65.

  • The average contribution rate in the new scheme will be 6.5%. ATL members can find a table showing all the contribution rates here. The lowest paid members of the scheme will pay the same or less; the higher paid members will pay higher contributions based on a sliding scale. For part-time staff, contribution rates will be based on actual salary, as opposed to full-time equivalent salary. In the current scheme members pay contributions based on their full-time equivalent salary.

  • Members who are considering opting out of the scheme could instead opt to pay half contributions for half the pension. This is a new flexibility; it does not exist in the current scheme.

  • For current scheme members, benefits for service prior to 1 April 2014 are protected, including remaining 'Rule of 85' protection. Protected past service continues to be based on final salary and current NPA. Members who leave the scheme prior to 2014 will retain their current NPA and there will be no change in the way their benefits are calculated.

  • When you are transferred to another employer, the new employer must allow you to remain in the new scheme, and this is the case on subsequent transfers too. In the current scheme you could remain in the scheme, but your employer did not have to let you do so.

Member contributions in the proposed new LGPS scheme in England and Wales

Pay Contribution 'Real' contribution after tax relief
Up to £13,500 5.5% 4.4%
£13,501 to £21,000 5.8% 4.64%
£21,001 to £34,000; 6.5% 5.2%
£34,001 to £43,000; 6.8% 5.44%
£43,001 to £60,000 8.5% 5.1%
£60,001 to £85,000 9.9% 5.94%
£85,001 to £100,000 10.5% 6.3%
£100,001 to £150,000 11.4% 6.84%
More than £150,000 12.5% 6.88%

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