New Local Government Pension Scheme 2014

An update has been produced by the Local Government Association (LGA), UNISON and GMB in order to keep members up to date with the progress against the joint principles document published just before Christmas. This update along with all of the project documentation can be found on the LGPS members’ website.

CPI/RPI ruling appealed by unions

Question & Answers on reform of the LGPS

The Local Government Employers organisation has issued a Question & Answers document which attempts to answer some of the questions which have been raised about the agreement reached between the employers, trades unions and the government in December 2011 on reform of the LGPS (Local Government Pension Scheme).

LGPS negotiators begin series of crunch meetings

Public Sector Pensions Reform

It has been announced that Unison, GMB and Unite on behalf of the local government unions together with the Local Government Association (LGA) have put forward an agreement on the principles of and implementation timetable for the introduction of a new Local Government Pension Scheme (LGPS) in 2014. This agreement has been accepted by government and supplants previous proposals.

Read more: Professional Pensions News

The full agreement can be downloaded from the LGA website at: Employer & Union Agreement on the Future of the LGPS

Read more: HM Treasury press statement

Further discussions will start in the New Year on the details of reforming the LGPS, including employee contributions and the accrual rate (the rate at which scheme benefits are built up)

Avon Pension Fund will update the Latest News section with further information as developments arise.

RPI/CPI – the judicial review judgment

Eversheds 5/12/2011

Avon Pension Fund
Annual Report 2010/11

The Avon Pension Fund has published its Annual Report 2009/10.
The report includes the accounts for the year, changes to the LGPS together with details of membership and changes to basic scheme details that have either taken place during the year or are proposed for the future. In addition, the report includes the Actuarial Statement applicable for the year and a report on Investments and Investment performance for the year.  Read More

NEW ISSUE!
Avon Pension News - Autumn 2011
Now available online!

NEW ISSUE!
atease Retired Members Newsletter - Autumn 2011
Now available online!

The Effect of Industrial Action on Pension Benefits

I am going on strike. How will my pension benefits be affected?

If you are involved in industrial action and are absent from work without your employer’s consent (a Trade Dispute Absence) for a period of one whole day or more, the period of absence will not count as a period of pension scheme membership.

What this means is that the period of absence will not be included in the calculation of your pension benefits. To put this in perspective, for a member retiring with a final pay of £20,000, a one day strike absence would reduce the annual pension by 91 pence.

In addition, the period of absence will not count towards attaining 3 months membership (at which time you qualify for pension benefits), or towards the Rule of 85 (which, although now abolished, for some members will dictate when they can take some or all of their benefits without reduction).

Can I pay additional contributions so the period of absence counts as pension scheme membership?

Yes, you can elect to pay contributions of 16% of the pay that you would have received but for your absence. If you wish to make this payment, you must give your employer written notice within 30 days of your return to work, although your employer has the discretion to extend this period.

I pay additional contributions for ARC’s, AVC’s or Added Years. How will these be affected?

Any additional contributions you pay for ARC’s or Added Years must be deducted in full as normal. AVC payments for the period of absence are optional.

Further information

If you would like further information please contact the Avon Pension Fund, Riverside, Temple Street, Keynsham BS31 1LA.

Government announce enhanced offer on Public Sector Pensions Reform

Following a meeting between the Government and Unions on 2 November 2011, HM Treasury has announced an enhanced offer on Public Sector Pensions Reform in relation to the cost-ceiling and the long-term changes to apply from 2015.

• HM Treasury press statement
• Statement by Chief Secretary to the Treasury, Rt Hon Danny Alexander MP
• HM Treasury supporting document ‘Public Service Pensions: good pensions that last’

Option to transfer-in previous LGPS Membership

The option for LGPS Members to transfer previous LGPS Membership into current LGPS Membership even if they have been in their current pensionable employment for more than 12 months, which was outlined in the Spring 2011 edition of Avon Pension News, ceased on 1 October 2011.

The right to transfer-in previous LGPS Membership has now reverted to the former position under the LGPS Regulations which give active contributing Members the option to transfer-in previous pension rights within 12 months of starting pensionable employment. A Member’s employer can choose to permit them to transfer-in previous pension rights after the 12 month period has expired.

Unions challenge indexation switch under human rights legislation

Consultation Paper: Short term changes to the LGPS from 2012

On Friday 7 October 2011, the Department for Communities and Local Government [CLG] published the statutory consultation on the changes to the LGPS from 1 April 2012

The primary aim of the exercise is to achieve a cost saving of £900m by 2014-15.

The initial directive from the Treasury was for public sector departments to find savings by increasing employee pension contribution rates.

During discussions it was agreed that because of its funded nature the LGPS could consider other approaches to achieve the savings.

The consultation sets out 2 options from CLG and also includes proposals submitted by Local Government Employers.

Comments on the consultation will be allowed up to 6 January 2012

As expected the consultation on the changes is centred around the following principal areas:

• increasing member contributions from 1 April 2012

• a reduced rate of benefit accrual from 1 April 2013and/or 1 April 2014 [NB benefit accrual rate was 80ths until April 2008 and is currently 60ths]

• an increase in the normal pension age

The CLG give 2 options that focus entirely on changes to employee contributions and reductions in benefit accrual.

Option 1: [Higher contribution rate increase with lower accrual rate reduction]

i) An increase in the employees’ contribution tariff from April 2012, to raise an additional £450m (1.5 per cent of pensionable pay bill), and

ii) A change in the scheme’s accrual rate from April 2013, to raise an additional £450m (1.5 per cent of pensionable pay bill)

Option 2: [Lower contribution rate increase with higher accrual rate reduction]

i) An increase in employees’ contribution tariff from April 2012, to raise an additional £300m (1 per cent of pensionable pay bill), and

ii) A change in scheme’s accrual rate from April 2014, to raise an additional £600m (2 per cent of pensionable pay bill) A more detailed breakdown of these options will be provided shortly.

The LGE proposals set out by increasing the normal retirement age to 66 from 1 April 2014 and then give options to achieve the balance of savings from either increasing employee contributions or by reducing the benefit accrual rate from 1 April 2014.

For employers to achieve savings their fund actuary would need to revise employer contribution rates already assessed in the 2010 valuation and a change in regulations would be required to allow a reduction during a valuation period.

Respondents are invited to put forward alternative and suitably costed proposals but must confirm their intention by the 28 October 2011 and supply supporting cost information by 25 November 2011.

This consultation is separate from the pending scheme changes as a result of the Hutton recommendations due to take effect from April 2015. Details of this are due out once CLG have submitted their headline proposals to the Treasury by the end of October 2011.

APF is currently considering the consultation document and will shortly give further details of what each option means to scheme members.

Further information can be accessed via the link below:

Are you paying AVC's?

Government review of Public Sector Pensions - the Local Government Pension Scheme (LGPS)

Local Government Group proposals

Following a review of the other public sector pension schemes, the government has stated that it intends to raise pension contribution levels by 3.2% (excluding the Armed Forces). Recognising that the LGPS is different to the other public sector pension schemes, the government is currently considering whether it might be possible to make cost-savings in the LGPS which are equivalent to a 3.2% increase in contributions. If cost-savings can be made then the government may consider that it is not necessary to increase contribution levels in the LGPS by 3.2%.

The government invited the Local Government Group to discuss with trades unions establishing a package of short-term savings in the LGPS by 2014/15. On 21 September 2011, the Local Government Group submitted its proposals to the government; the key elements are:

Retirement Age -

• Raising the normal pension age from 65 to 66 for benefits built up from April 2014. Benefits built up prior to then would retain a normal pension age of 65.

Contributions -

• no increase in employee contributions for staff with full-time equivalent earnings of less than £15,000.
• a moderate increase for those earning between £15,000 and £21,000 of 1.5%
• an increase of between 2% and 2.5% for those earning over £21,000

Choice for Employees -

• giving those with full-time equivalent earnings of £15,000 or more who feel they cannot afford an increase in contributions the option of taking a reduced pension accrual rate instead for future service from April 2014.
• Any employees with full-time equivalent earnings of less than £15,000 who may find it difficult to meet the current level of contribution would have the option of taking a reduction in their contribution rate but would, as a result have a reduced pension accrual rate for future service from April 2014.

It is important to note that these are the Local Government Group’s proposals to the government for achieving cost-savings in the LGPS and not a statement of changes which will necessarily be made the LGPS.

The government is expected to publish its proposals for achieving cost-savings in the LGPS in a statutory consultation document in October.

The Local Government Group’s full proposals to the government can be accessed via the link below:

Unions to ballot for ‘sustained’ campaign of strikes

Changes to the LGPS - Timetable for Consultations

Letter from Terry Crossley, Deputy Director, Workforce Pay and Pensions, Department for Communities and Local Government (DCLG)

Update for LGPS (Local Government Pension Scheme) Members on the negotiations to reform public sector pension schemes.

On 19 July 2011, the Chief Secretary to the Treasury issued a Statement on the government's proposals for public sector pension schemes. The Statement confirmed that the government recognises that the LGPS is different to other public sector pension schemes and will, therefore, be looked at separately. Following this, on 28 July 2011 the government announced increases in employee contributions for the other public sector pension schemes.

The DCLG issued a letter on 28 July outlining the process being undertaken for the LGPS, which is as follows:

• The Local Government Group is in discussions with the Trades Unions (which are representing Members' interests) to establish a package of measures to achieve savings in the LGPS equivalent to a 3.2% increase in Member contributions.
• The outcome of these discussions are to be reported to the Secretary of State for the DCLG by 9 September 2011 in time to allow the formal, statutory consultation exercise to begin by the end of September.
• This will enable Ministers to consider the consultation responses in early 2012 so that any changes to the LGPS can come into force on 1 April 2012.

In addition, the letter from the DCLG provides more detail regarding the separate timetable for implementing the Hutton reforms as follows:

• The Public Service Pensions Commission or Hutton Commission has proposed changes to public-sector pension schemes to address their long term affordability and sustainability (outlined in previous 'Latest News' items on the Avon Pension Fund website).
• In order to ensure ongoing affordability and sustainability, the government will set a cost-ceiling for each of the public sector pension schemes including the LGPS.
• Importantly for LGPS Members, the letter from DCLG confirms the government's commitment when setting these cost ceilings that the pension individuals receive at normal retirement age will be broadly as generous as they are now for low and middle earners.
• The timetable for this exercise is that the initial reform proposals for the LGPS will be provided by the end of October 2011. Detailed design elements will need to be finalised so that relevant legislation can be introduced in the 2012-13 Parliamentary session, allowing for full implementation of a new scheme for the LGPS in April 2015.

We will continue to keep scheme members and employers updated with information as the two exercise progress over the coming months.

A copy of the Letter from DCLG and a copy of the Chief Secretary to the Treasury's Statement can be downloaded via the links below:

Public Service Pensions Update

The Chief Secretary to the Treasury, Danny Alexander, issued a Statement on 19th July regarding the reform of public sector pensions, a copy of which can be accessed via the link below.

The main points of the statement are:

• That initial negotiations regarding the Hutton recommendations are going to take place on a scheme by scheme level. The government will set the overall cost “envelope” but each scheme will initially propose the scheme terms and how the scheme will manage such risks as life expectancy. The Local Government Group will be invited by Department for Communities & Local Government (DCLG) to facilitate the discussions with the relevant trade unions to agree the package of reforms for the Local Government Pension Scheme (LGPS).
• Confirmation that the government is committed to retaining Defined Benefit pension schemes in the public sector. This type of pension scheme provides valuable guaranteed benefits to members.
• Confirmation that the benefits which members have already built up in public sector pension schemes, up to the point of change, will be protected.
• The initial proposals for reform will be issued by the government in October, following which there will be a formal consultation process.

In addition, the Statement addressed the proposed rise in employee contributions as follows:

• The government remains committed to achieving short term cost savings equivalent to 3.2% of pension contributions across the public sector Schemes by 2015..
• However, importantly for the LGPS, in this statement the government recognises that, as a funded scheme, the LGPS is different to the other public sector pension schemes and is therefore willing to discuss ways in which these cost-savings may be achieved in the LGPS through a package of measures. Any package will provide protection from contribution increases for the lowest paid. These discussions will also take into consideration other issues important to the long-term sustainability of the LGPS.
• Once the package of measures is agreed, the DCLG will begin a consultation exercise in order to implement the changes with effect from 1 April 2012.

The Fund will continue to keep Fund members and employers informed of developments as the negotiations and consultation exercises progress.

Important message to all active members of the Avon Pension Fund!

Government proposals on the future of public sector pensions
Speech by the Chief Secretary to the Treasury, Rt Hon Danny Alexander MP

Avon Pension Fund Submission on the Consultation on the Fair Deal Policy
(March 2011)

NEW ISSUE!
atease Retired Members Newsletter - Spring 2011
Now available online!

Welcome to the Spring 2011 edition of atease, our newsletter for Pensioner Members of the Avon Pension Fund. We hope you will enjoy the range of articles. The effect of the Hutton Commission report is included opposite. Also there have been changes in the online access service we provide (see back page).
Read More

Friends Provident has become Friends Life

Pensions Increase for 2011 updated

LGPS Update - Public Service Pension Commission

Avon Pension Fund - Administration Strategy Statement 2011

An Introduction to Councillors Pensions
Revised & Updated

This is an updated  short guide to LGPS Councillors Pensions, included in the guide is the LGPS1 Membership Form. Read More

Options available if you have previous LGPS benefits

In this leaflet we look at the options available if you have re-joined the Local Government Pension Scheme (LGPS) and you have previous LGPS pension rights as an employee in England or Wales which are currently held in the scheme – called deferred benefits.

You can normally choose whether to:

• join your previous LGPS pension rights from your old job to your new membership, enabling you to enjoy one set of benefits based on your entire membership and linked to your final pay in your new job, or
• keep them separate.

Service Plan 2011-14

Statement of Investment Principles - March 2011

The Statement of Investment Principles has been updated to reflect the changes made to the investment management structure during 2010. The revised Statement was approved by the Committee on 18 March 2011. Read More

Hutton Report 10 March 2011

Lord Hutton of Furness today sets out his proposals for comprehensive, long-term structural reform of public service pension schemes

The final report of the Independent Public Services Pension Commission follows a comprehensive nine-month review. It sets out a number of detailed recommendations to the Government on how public service pensions can be made sustainable and affordable in the future, while providing an adequate level of retirement income.

The main recommendation of the report is that existing final salary public service pension schemes should be replaced by new schemes, where an employee’s pension entitlement is still linked to their salary (a “defined benefit scheme”) but is related to their career average earnings, with appropriate adjustments in earlier years so that benefits maintain their value.

The report suggests that it should be possible to introduce these new schemes before the end of this Parliament, in 2015, while allowing a longer transition, where needed, for groups such as the armed forces and police.

Other key recommendations in the report include:

• Linking Normal Pension Age (NPA) in most public service pension schemes to the State Pension Age;
• Introducing a Normal Pension Age of 60 for those members of the uniformed services – armed forces, police and firefighters – who currently have a NPA of less than 60;
• Setting a clear cost ceiling for public service pension schemes – the proportion of pensionable pay that taxpayers will contribute to employees’ pensions – with automatic stabilisers to keep future costs under more effective control;
• Honouring, in full, the pension promises that have been earned by scheme members (their “accrued rights”) and maintaining the final salary link for past service for current members;
• Introducing more independent oversight and much stronger governance of all public service pension schemes;
• Encouraging greater member involvement in consultations about the setting up of new schemes, and in the running of schemes; and
• Overhauling the current legal framework for public service pensions to make it simpler.
• That the LGPS remains a funded scheme.

Publishing the report, Lord Hutton said: “These proposals aim to strike a balanced deal between public service workers and the taxpayer. They will ensure that public service workers continue to have access to good pensions, while taxpayers benefit from greater control over their costs.

“Pensions based on career average earnings will be fairer to the majority of members that do not have the high salary growth rewarded in final salary schemes. “The current model of public service pension provision is clearly not tenable in the long-term. There is a clear need for reform. Getting the decisions right on the most appropriate structures and designs will be crucial to making any changes work in the future. This will only be achievable if there is effective dialogue between public service employers, employees and unions.”

As regards the cost of implementing the new schemes, the report notes that additional resources – people and money – will be needed to implement these reforms, but the details will be for the Government to determine.

Hutton Report

Frequently Asked Questions - Pensions

Nominated Cohabiting Partner Pension 'Buy Back'

If you are currently paying into the Local Government Pension Scheme (LGPS), have membership before 6 April 1988 and have a nominated cohabiting partner* then this article may be of interest to you. This article does not apply to anyone who is married to, or in a civil partnership, with their partner.

A survivor's pension for a nominated cohabiting partner was introduced into the LGPS from 1 April 2008 (provided that you paid into the scheme on or after that date) and is based on your LGPS membership after 6 April 1988. If you have LGPS membership before 6 April 1988 (and are under the age of 64) you can now choose to pay extra contributions to 'buy back' all of your pre-6 April 1988 membership (or a number of whole years not to exceed that period) so that it will also count in calculating your nominated cohabiting partner's survivor's pension in the event of your death. This will increase the pension payable to them.

The buy back is paid for by additional pension contributions. The additional percentage payable for each year bought back depends on the gender of the member and their nominated partner, the member's age and the number of years over which they elect to pay. This option is time-limited and an election must be made before 31st March 2011. Members interested in buying back should contact the Avon Pension Fund team which deals with their Employer, you can find your contact via the link find your contact by Employer

* What is a nominated cohabiting partner? If you live with a partner, as if you were married or in a civil partnership with them (i.e. a "common law" partner), then you may nominate them to receive a survivor's pension from the LGPS in the event of your death, by completing a nomination form which you can download via the link LGPS19A The form outlines who you may nominate and the conditions which apply in order for the nomination to be valid.

If you live with a partner that you are not married to, or in a civil partnership with, and have not completed a nomination form then Avon Pension Fund cannot pay a survivor's pension to your partner in the event of your death. If you are married to, or in a civil partnership with, your partner then they will automatically receive a survivor's pension in the event of your death.

LGPS Update - February 2011

Website Update
NEW! April 2011 Pay Bands

CLG - 2011 Pensions Increase and Multiplier Tables

NEW ISSUE!
Avon pension News - Spring 2011
Now available online!

Welcome to the latest edition of Avon Pensions News. In this issue we include highlights from the 2009/10 Scheme Annual Report and Accounts. There are articles on some significant events which have happened since our last Newsletter:

• Changes to the way your pension benefits will be increased in future – by the rise in the CPI instead of the RPI – we explain what this will mean for you
• The issue of the long awaited Hutton Report on the future of public service pensions – what changes we might expect
• The announcement that the Government will compensate at least some of the Equitable Life policyholders – could be good news for some of our AVC payers.

Following Press comment, we also include 10 Facts about LGPS benefits to put these into perspective. Read More

Avon Pension Fund publishes
Statement of Compliance with FRC Stewardship Code

The Fund has published a compliance statement describing how it has applied the principles of the Financial Reporting Council's Stewardship Code. The Stewardship Code is a set of best practice principles that are intended to frame both shareholder engagement with companies, and the disclosure of such activity.

The Fund's compliance statement can be found here.

LGPS Update - November 2010

NEW ISSUE!
atease Retired Members Newsletter - Autumn 2010
Now available online!

Welcome to the Autumn 2010 edition of atease, our newsletter for Pensioner Members of the Avon Pension Fund. We hope you will enjoy the range of articles. As usual with the Autumn edition there is an update on this year’s pay dates. There are also details about the government’s change from RPI (Retail price index) to CPI (Consumer price index) and changes in the online access service we provide. Read More

Transferring Pension Rights

When you first join the Local Government Pension Scheme (LGPS), you have 12 months to elect to transfer previous pension rights in with your current membership. This can be pension rights held in other LGPS funds, private company pension schemes, personal pension schemes, stakeholder or AVC schemes. In certain cases your employer may allow a transfer after the 12 month deadline.

Combining Previous LGPS Pension Rights With Current Membership

However, the LGPS (Miscellaneous) Regulations 2010 now allow members, who elect before 1 October 2011, the chance to transfer in any LGPS pension rights currently held separately.

• Do you have deferred pension rights held in the Local Government Pension Scheme (either the Avon Pension Fund or another LGPS fund)?
• Are you an active member of the Avon Pension Fund?
• Is it more than 12 months since you joined the Avon Pension Fund?

If the answer to all of these questions is yes, then any deferred benefits held within an LGPS fund may be transferred in alongside your current period of membership with the Avon Pension Fund, and be calculated on your final pay when you leave or retire. Please note that this only applies to previous pension rights held in the LGPS, and not any other type of pension scheme. Read More

New & Updated
A guide for Eligible Councillors in England & Wales

New & Updated
Employee Guide to the LGPS

This guide gives a breakdown of the key areas of the scheme in a manageable format. These sections cover most aspects of the scheme from joining to retirement. Read More

Avon Pension Fund
Annual Report 2009/10

The Avon Pension Fund has published its Annual Report 2009/10.
The report includes the accounts for the year, changes to the LGPS together with details of membership and changes to basic scheme details that have either taken place during the year or are proposed for the future. In addition, the report includes the Actuarial Statement applicable for the year and a report on Investments and Investment performance for the year.  Read More

Independent Public Service Pensions Commission
(the Hutton Commission)

The Hutton Commission launched a 'Call for Evidence' consultation on 1 November 2011.

The 'Call for Evidence' document (which can be accessed via the link below) list a number of issues and questions which the Commission will consider before it publishes its final report on public service pension provision, which will look at structural reform. Responses to the 'Call for Evidence' should be submitted to the email address pensions.commission@hmtreasury.gsi.gov.uk by Friday 17 December 2010.

Independent Public Service Pensions Commission - Call for evidence for final report