Contact: Nick Weaver, (01962 847587); email: [email protected]

1 Summary

1.1 This report provides an update on the introduction of the new look Local Government Pension Scheme (LGPS) from 1 April 2008.

1.2 The Panel received reports at their May and November 2007 meetings concerning the progress towards the introduction of legislation for the new scheme which the Government had undertaken to have in place by 1 April 2007 to enable planning, member communication and systems to be updated.

1.3 Three sets of legislation were planned. These have now been received but amendments, guidance and clarification are still needed in a number of areas.

1 Recommendations

a) That the current position be noted.

b) That a further report be made when the full scheme is in place.

2 Background

2.1 The Government consulted fully on the options for a new scheme and in November 2006 decided the LGPS would continue as a final salary scheme with a higher accrual rate and no automatic lump sum.

2.2 The cost to members and employers was also to be amended to achieve the scheme's original costing basis of one third by members and two thirds by employers. A cost sharing mechanism was also to be introduced by April 2009 covering future changes.

2.3 The provisions for Councillors in the LGPS have not changed. They have retained the arrangements provided by the previous scheme with a 1/80th accrual for pension and 3/80ths lump sum for each year of service based upon career average pay.

3 Timetable

3.1 The reforms were to take place through three separate statutory instruments. It was planned these would be in place by April 2007 to allow one year for implementation. The three statutory instruments containing the new scheme arrangements are the:

· Benefit, Membership and Contributions Regulations

· Administration Regulations

· Transitional Provisions Regulations

3.2 The Benefits, Membership and Contributions Regulations were made on 3 April 2007, meeting the Government's timetable. However these contained many errors, amendments for which were not made until 14 April 2008, after the commencement date of the new scheme. In addition further amendments are still required.

3.3 The Administration Regulations and the Transitional Provisions Regulations were not made until 6 February 2008. These also require amendments and there is no indication of when these will be received.

4 Further amendments and guidance

4.1 The Government have produced a 58 page commentary on the new scheme but further amendments, clarification and guidance are still required in the following areas:

· amendments to the previous scheme (1997 Regulations) concerning HMRC tax changes

· amendments to the new Benefits, Membership and Contributions Regulations

· amendments to the new Administration Regulations

· amendments to the Transitional Provisions Regulations

· statutory Guidance on the application of the new ill health provisions

· statutory Guidance on the new Governance arrangements

· Government Actuary guidance on flexible retirement, transfers between local government pension funds, transfers to and from the private sector, late retirement benefit enhancement, pension sharing of pension rights upon divorce.

4.2 A third tier of benefits for permanent ill health retirement were consulted upon between 22 June and 23 August 2007. The new arrangements were introduced with the amendments to the Benefits Regulations on 14 April 2008. The statutory guidance for occupational health doctors has not been published.

4.3 A further consultation took place on extending the 85 year rule protections from 2016 to 2020, for all members who are age 60 by 31 March 2020.

4.4 The result of this consultation was that the cost of extending the protections would be re-assessed. The Government have asked for data following the 2007 valuations for this purpose but no deadline has been established for the outcome.

4.5 The Local Government Employers have made an official complaint to the Government concerning:

· how the original plan for a twelve month implementation period has not been provided

· that there has been very short notice of many provisions and amendments, and

· that some information is still required after the implementation which has placed both scheme administrators and employer in an impossible position.

4.6 This letter is attached in Appendix 1.

Section 100D - Local Government Act 1972 - background documents

The following documents discuss facts or matters on which this report, or an important part of it, is based and have been relied upon to a material extent in the preparation of this report.

NB: The list excludes:

None.