Headlines: October 5th, 2004

Consultations have begun on the future of the Local Government Pensions Scheme with the Office of the Deputy Prime Minister stressing that affordability and sustainability have to be the key to development. The proposals include increasing the contributions paid by staff.Ministers have already voiced their commitment to keeping a final salary arrangement for local government workers. The consultation, launched by ODPM minister Phil Hope, will run until the end of March next year. As part of the review a Development Group is to be established to represent a number of organisations including the Local Government Association, the TUC and professional bodies such as the Chartered Institute of Public Finance and Accountancy.

The proposals which have gone out for consultation following a stocktaking exercise, have been designed with the aim of developing a modern, new-look LGPS that can better serve the future needs of local government, its workforce and taxpayers, on an affordable and sustainable basis. It is proposed that any new arrangements for the scheme should be in place by 2008.

The consultation sets out a number of areas for discussion, including the idea of phasing the transition from work to retirement, the provision of pension benefits to partners of council employees, improving access to the scheme for workers in low pay bands and part time workers, as well as increasing overall the contributions paid by members to the scheme.

Phil Hope said changes made to the scheme already recognised the fact that people are living longer and that working patterns are changing, as well as acknowledging the need to tackle the shift in the ratio of those who are economically active to those in retirement. “Our agenda seeks to meet the social and economic challenges of these demographic changes by encouraging people to work longer, to help stabilise the affordability of pension provision for taxpayers and to provide an attractive and accessible pensions framework for all employees and employers,” he said.