LGPS 2014: Further government consultation

The Department for Communities and Local Government have issued a further consultation on the Local Government Pension Scheme.

Details of the consultation can be found via the link: Final LGFSR PDF

The consultation comprises:

Avon Pension Fund will be considering the implications of this consultation and respond accordingly

Updates will appear here on any key findings, where appropriate.

LGPS 2014 Project Board – update 17 January 2013

A Joint Statement has been issued by the LGPS 2014 Project Board on the progress to agree the design of a new Local Government Pension Scheme (LGPS) in England & Wales from April 2014. The LGPS 2014 Project Board is a joint collaboration between the Local Government Association and the UNISON, Unite and GMB trade unions.

You can download the Joint Statement via the link: http://lgps2014.org/pdf/js17jan13.pdf

The January 17 statement includes an overview of the Statutory Consultation on LGPS 2014 which closes on Friday 8 February 2013: Local government pension scheme 2014: draft regulations on membership, contributions and benefits

LGPS 2014 Draft Regulations now available

In the November update, it was also reported that the next stage of the process although expected September/October time, had been delayed. The statutory consultation (including draft regulations) on the benefit structure only has now been issued and can be found at https://www.gov.uk/government/consultations/local-government-pension-scheme-2014-draft-regulations-on-membership-contributions-and-benefits

These confirm the basis benefit structure laid out by Local Government Association and the Unions earlier this year

The main parameters are:

• A start date of April 2014 with core elements of the new scheme regulations in place by Spring 2013
• A pension scheme design based on career average and actual pay
• An accrual rate of 1/49th of pensionable earnings each year
• Revaluation of active members’ benefits in line with a price index (currently Consumer Prices Index)
• A Normal Pension Age equal to the State Pension Age, which applies both to active members and deferred members (new scheme service only). If a member’s State Pension Age rises, then Normal Pension Age will do so too for all post-2014 service
• A low cost optional arrangement allowing 50% of main benefits to be accrued on a 50% contribution rate
• Pensions in payment to increase in line with a price Index (currently Consumer Prices Index)
• Benefits to increase in any period of deferment in line with a price index (currently Consumer Prices Index)
• Average member contribution yield of 6.5%, with tiered contributions
• Optional lump sum commutation at a rate of £12 of lump sum for every £1 per annum of pension foregone in accordance with HMRC limits and regulations
• Early/late retirement factors from age 55 on an actuarially neutral basis
• A vesting period of two years
• Spouse and partner pensions to continue to be based on an accrual rate of 1/160 and three times death in service benefit
• Ill-health retirement pensions to be based on the current ill-health retirement arrangements.

There will be transitional protection in respect of:

• All accrued rights are protected and those past benefits will be linked to final salary when members leave the scheme
• Protection underpin for members aged 57 to 59
• Rule of 85 protection as in the current scheme.

The revised timetable is as follows:

The Public Service Pension Bill 2012 is currently being considered at the Committee Stage in Parliament. There are some issues within this bill that impact on the LGPS 2014 Scheme and clarification is being sought, on conflicting points, by Department for Communities and Local Government from H M Treasury. It is expected that the statutory process on Workstream 2 will be finalised once the Public Service Pension Bill is on the statute books sometime during 2013.

Avon Pension Fund will be providing sessions for scheme members at workplace venues explaining the scheme changes. These will be held once the regulations have been finalised and nearer the new scheme implementation date of April 2014.

Please visit this website to keep informed of any further progress on the new scheme and to find out when scheme member sessions will be held.

Further updates will be made in the new year on any specific details that need to be communicated once the consultation document has been analysed.

LGPS 2014: What’s happening?

As reported previously, a joint informal consultation was released by the Local Government Association and the Trade Unions in June 2012. The proposals were subsequently endorsed by employers and members. It was also indicated that the next stage of the process was expected September/October time, however delays have occurred for a number of reasons and the current timetable of events is listed below.

The Public Service Pension Bill 2012 is currently being considered at the Committee Stage in Parliament. There are some issues within this bill that impact on the LGPS 2014 Scheme and clarification is being sought, on conflicting points, by Department for Communities and Local Government from H M Treasury.

Any further updates and their impact will be notified accordingly.

Avon Pension Fund Committee -
Annual Report to Council 2011-12

Each year the Avon Pension Fund Committee reports on its activities to Bath & North East Somerset Council. The report for the year ending 31 March 2012 was presented at the Council meeting on 13 September 2012. The report covers the scope of the work considered by the Committee, decisions taken by the Committee, training undertaken by Committee Members and the future work programme. The report can be accessed via the link below.

Avon Pension Fund Committee - Annual Report to Council 2011-12

New Scheme Regulations from 1 October

The LGPS (Miscellaneous) Regulations 2012 have amended the LGPS with effect from 1 October 2012. There are a number of changes to the Scheme, the most notable is concerning employees with a contact of employment of under 3 months - these employees can now opt to join the Scheme by applying in writing to their employer. We are working to update all of the information held on the website, and aim to have this completed by the end of October 2012.

Pensioners Social Group (LARN) – Coach trip 1st October 2012

LARN is planning a day trip for its members’ on 1st October, from central Bristol to Sand Bay near Weston-super-Mare, including two course lunch at the Commodore Hotel.

The itinerary is:

• 11am - coach departs Whitefriars, Broadmead, Bristol for Sand Bay
• Luncheon – The Commodore Hotel, Weston-super-Mare
• Afternoon - Cadbury Garden & Leisure Centre, Congresbury
• 5pm (approx.) – coach arrives back at Whitefriars, Broadmead, Bristol

The cost of the trip is £22 (including lunch). For further details, or to book places, please contact Terry Skipp the Chairman of LARN. Terry’s contact details can be found on the Pensioners Social News (LARN) website page via the link: http://www.avonpensionfund.org.uk/pensioners/socialnews.htm

LARN is a self-supporting social group run by pensioner members of the Avon Pension Fund themselves. Membership of LARN costs £15 a year and is open to retired employees of the organisations which participate in the Avon Pension Fund, and also their spouse/partner and friends.

LARN (the Local Authority Retirement Network) is an independent organisation which is not run by Avon Pension Fund or Bath and North East Somerset (B&NES) Council; and neither Avon Pension Fund or B&NES Council are responsible for, or liable for, the activities of LARN.

Auto-enrolment information and guidance from The Pensions Regulator

Auto-enrolment is fast approaching for many of the Fund’s employers. The Pensions Regulator website provides information to help employers understand their obligations and prepare for this major event.

Their guidance on preparing for auto-enrolment can be accessed via the following link: http://www.thepensionsregulator.gov.uk/employers/preparing-for-auto-enrolment.aspx

Changes to Pension Starter Packs due to Auto-Enrolment

The Pensions Regulator has issued guidance called “Safeguarding Individuals”, effective from 1 July 2012 which relates to auto-enrolment.

Following this guidance, the Opt-Out forms will no longer be included in the Pension Starter pack. Therefore, members wishing to opt-out of LGPS may now only do so by contacting Avon Pension Fund direct to request an Opt-Out form (Form LGPS 04) or by downloading the form from the Avon Pension Fund website.

All employers that have a current supply of Pension Starter Packs have been requested to remove the Opt-Out form (LGPS 04) immediately and replace the existing Welcome letter with a revised version. The revised letter can be accessed via the Pension Starter Pack which can be found at: www.avonpensionfund.org.uk/employers/pensionpacks/default.htm

If you have any queries about Opt-Out forms please contact Geoff Cleak – Pension Benefits Manager Tel: 01225 395272 Email: geoff_cleak@bathnes.gov.uk

Short Guide to the LGPS 
Revised & Updated

This is a short description of the conditions of membership
and main scheme benefits that apply if you pay into the LGPS on or after 1 April 2008.

NEW ISSUE!
Avon Pension News - Summer 2012
Now available online!
This edition sets out the key proposed changes to the LGPS in 2014

Public Sector Pension Reforms

Following the Hutton review on public sector pension’s reform there was a consensus of agreement back in December 2011 on the key set up for each scheme. Negotiations on the proposed changes to certain public sector pension schemes have been continuing.

The three non-funded schemes [Civil Service/NHS/Teachers] were more or less set out in the December agreement but all have had final proposals released in the last few months. The new schemes are to commence from 1 April 2015

All three schemes are increasing employee contribution rates over the next three financial years [2012/13, 2013/14 and 2014/15].

There is still some unrest from unions on these proposals.

As the LGPS is a funded scheme it was able to look at different ways to implement a new scheme. As a result Employers and Unions have been working together to produce an acceptable solution going forward. The key differences from the other schemes were that the LGPS changes would be operative from 1 April 2014 including any employee contributions changes.

The problems that the other public sector schemes are encountering must not be considered when assessing the proposals for the LGPS.

New proposals for the Local Government Pension Scheme (LGPS) from 2014

The Local Government Association (LGA) and the Trades Unions have announced the outcome of their negotiations on new proposals to make changes to the LGPS with effect from 1 April 2014.

The main proposals to change the LGPS from 2014 are summarised in a Joint Statement which is published on the national LGPS website at: http://www.lgps.org.uk/lge/aio/17365170 and includes:

• A Career Average Revalued Earnings (CARE) scheme
• An accrual rate of 1/49ths
• An option to pay half contributions to build up half the pension
• Benefits for service prior to 1 April 2014 are protected for current LGPS members

Further details of the LGA and Union proposals can be viewed on the national LGPS website at: http://www.lgps.org.uk/lge/core/page.do?pageId=15431012 including an explanation of how the proposed ‘LGPS 2014’ CARE pension scheme would compare to the current Final Salary pension scheme known as ‘LGPS 2008’, via the links below:

• At a glance
• Overview
• Protection
• A Career Average Pension
• Member Contributions
• The 50/50 Option
• Retirement
• Glossary
• Frequently Asked Questions

The LGA will now consult employers on the proposals and Unions will consult their members.

It is anticipated that the Government will initiate a Statutory Consultation Exercise in the autumn on proposals to make changes to LGPS from 2014.

New EARLY Retirement Reduction Factors

In the LGPS, if you retire before the normal retirement age of 65 your pension benefits are reduced to take into account the fact that they will be paid for a longer period of time than anticipated. (However, certain protected members may be able to take some or all their benefits with no reduction if they retire before age 65. No reduction will apply if you retire on the grounds of ill-health, or are retired on the grounds of redundancy or efficiency of the service and are age 55 or over).

The reductions that apply to these “early” retirements are determined by the Government Actuary’s Department.

On 29 March 2012 the Government Actuary’s Department issued revised factors, to be implemented with immediate effect. A number of the factors applied a member’s pension benefits to reduce it for early payment have increased by 1% resulting in lower pensions.

Please note that any “early” retirement pension forecasts you may have received prior to 29 March 2012 will have been calculated on the previous guidance and may marginally overstate the value of your benefits namely by up to 1%. Also, if you were aged between 60 and 65 at the date of any of the previous Annual Benefit Statements, the “Current Benefits” shown may be incorrect as they would have included the early retirement reduction under the previous guidance. If you would like a new quotation please contact the Avon Pension Fund.

New LATE Retirement Actuarial Factors

If your pension benefits are brought into payment after your normal retirement age of 65, your benefits will be increased to take into account of the fact that they will be paid for a shorter length of time than anticipated.

The increases that apply to these “late” retirements are determined by the Government Actuary’s Department.

On 14 February 2012 the Government Actuary’s Department issued revised guidance, to be implemented with immediate effect:-

• Pension is now increased by 0.014% for each day after age 65 but before the retirement date (previously this figure was 0.02%)
• Lump sum (if payable) is now increased by 0.007% for each day after age 65 but before the retirement date (previously this figure was 0.01%)

Please note that any “late” retirement pension forecasts issued prior to 14 February 2012 will have been calculated under the previous guidance and will OVERSTATE the value of your pension benefits. If this applies to you, please contact the Avon Pension Fund to request a revised forecast under the new guidance. Figures given on Annual Benefit Statements will also overstate the value of your pension benefits if you were over age 65 at the statement date.

NEW ISSUE!
atease Retired Members Newsletter - Spring 2012
Now available online!

Pension switch challenge is lost by unions

Time running out for employers to convert “Compensatory Added Years” into pension

The Avon Pension Fund previously notified employers that the Local Government Pension Scheme (Miscellaneous) Regulations 2009 introduced a new provision allowing authorities to convert “compensatory added years” and other forms of compensation awarded in respect of a former employment under old compensation provisions, into pre-funded additional pension rights.

This option is only available until 31st March 2012, so if the Avon Pension Fund is recharging you on a monthly basis for compensatory added years or other forms of compensation and you would like to pay a lump sum to convert this into pre-funded pension, you must act quickly.

The cost to convert the payments mentioned above into pre-funded pension rights must be calculated by the Fund actuary. The actuary estimates that their charge to provide this service will be between £400 and £500 per case. However, this figure may reduce if enough employers take up this option.

In order to take advantage of this provision, you must express an interest by 31 March 2012 at the latest.

Please contact the Avon Pension Fund if you have any questions.

RPI/CPI legal challenge reaches Court of Appeal

Government confirms 5.2% increase for LGPS pensions in payment

The Chief Secretary to the Treasury made a written ministerial statement to the House of Commons regarding the uprating of public service pensions. The statement confirmed that public service pensions will be increased by 5.2 per cent from April 9th 2012.

This announcement is reflected in the multiplier tables and covering note on the Treasury website later today at the following link:

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