The following statement has been issued by DCLG with regard to “Brexit” and the LGPS:
“The Local Government Pension Scheme (LGPS) - Implications of the EU referendum
"The question of how, if at all, the result in favour of 'Brexit' will impact on the LGPS has been raised by scheme members and employers as well as the press and other 'commentators' on all things LGPS.
In the July 2015 budget the government announced that they wanted the 89 Local Government Pension Scheme funds to pool their investments into larger pools in order to achieve savings in investment management costs. Following this in the Autumn Statement, the government published the criteria for the pooling of LGPS investment assets.
In response to the government agenda, the Avon Pension Fund has explored options for the pooling of its investment assets with the other eight LGPS funds in the south west*, a group that has already worked collaboratively over a considerable period of time. Two other funds, Oxfordshire and Buckinghamshire have joined the group which is now called “Project Brunel”, with collective assets of c. £23 billion.
A key feature of the change in the Local Government Pension Scheme from Final Salary to Career Average from April 2014 was that each year the cost of living is factored into members’ pension accounts so that over the years a current value is reflected.
The annual cost of living revaluation from 1 April 2014 is based on the Consumer Prices Index (CPI) set by the Government in September of the previous year.
The calculation of all transfers into and out of the Local Government Pension Scheme (LGPS) has been suspended as a result of the change to the discount rate from 16 March 2016, as announced in the recent Budget. The Government sets the discount rate for all public service pension schemes.
The Government is proposing a cap of £95,000 on the total value of exit payments, such as those made on voluntary and compulsory redundancy. The proposal is that the cap is set to apply to all forms of exit payments but in particular to voluntary and compulsory redundancy payments and including any potential strain on the fund costs due to early payment of pension after age 55. The government is proposing to limit the potential benefits to employees who are offered early access to pension in place of, or in combination with, a lump sum compensation payment to within £95,000. Any costs in excess would need to be either given up or funded by the member.
A new single tier, flat rate State Pension is being introduced for people who reach State Pension age on or after 6 April 2016. This means that most members of the LGPS are currently paying a lower amount of National Insurance contributions. From 5 April 2016 you will no longer receive this National Insurance rebate which means you will start to pay a higher amount of National Insurance contributions. The following Q&A document has been produced to help LGPS members understand what the changes to the State Pension will mean for them.
Q&A for LGPS members - The New State Pension and National Insurance Changes
If you are paying into the local government pension scheme (LGPS) you will receive an Annual Pension Benefit Statement from the Avon Pension Fund during August.
It shows the pension you have built up to 31 March 2015 as well as a future projection of your benefits to your Normal Pension Age (NPA). This is the age you would retire and take your benefits without any reduction to your pension.
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 2015 was presented at the Council meeting on 16 July 2015. The report covers the scope of the work considered by the Committee during the year and the decisions taken as well as the training undertaken by the Committee members. It also highlights the future work programme of the current committee.
Avon Pension Fund Committee - Annual Report to Council 2014-15
There are amendments to the LGPS which came into force on the 11 April 2015. The amendments are in the following areas:
Over recent months there has been a great deal of information in the media and elsewhere about the Government's announcement in the 2014 Budget that reforms to workplace pensions would be made, effective from 6 April 2015. These reforms offer greater flexibility (‘Freedom and Choice’) in the way individuals aged 55 and over can access any Defined Contribution (DC) pension savings they may have.
