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ITEM CA14
CABINET – 19 SEPTEMBER 2006
LOCAL GOVERNMENT PENSION SCHEME
(LGPS) – FUTURE OPTIONS
Report by Director for Resources
Introduction
- There has been considerable debate over
the last few years around the LGPS in terms of the changes in the workforce,
the implications of increasing longevity – and the balance between members’
benefits and the cost to taxpayers.
- The Department for Communities and Local
Government (DCLG) have promoted discussion of these issues through a
tri-partite forum of Government, LGPS employers and Trade Unions and
the June 2006 consultation document "Where next? – Options for a new-look
Local Government Pension Scheme in England and Wales" is the product
of these discussions.
- The consultation document sets out four
options for a new look LGPS to be introduced from 1 April 2008, along
with a range of related issues and views are requested by 29 September
2006 – although stakeholders are encouraged to promote their own proposals
or variations on the core options suggested.
- The DCLG will consider all responses
in determining which option to take forward, through a statutory consultation
on draft Scheme regulations starting in late Autumn 2006.
Background
- The report attached at Annex 1 (download
as .doc file) was considered by Pension Fund Committee on 25
August 2006. The Committee’s views are currently being incorporated
into a draft response to the DCLG in consultation with the Committee’s
Chairman, Deputy Chairman and Opposition Spokesman and this will be
forwarded to the DCLG by 29 September 2006.
- In considering this report, the Cabinet
will be mindful of the significance of the LGPS arrangements for the
Council as employer (in terms of a tool to recruit and retain the workforce)
and as a representative of the local taxpayer (the likely cost of any
preferred option).
- In this context, Members’ attention is
drawn to paragraph 10 of the attached report which highlights the fact
that the costings in the DCLG consultation are derived from a sample
of pension funds. The Government Actuary’s Department (GAD) have strongly
advised individual pension schemes to obtain their own valuations which
are tailored to their own scheme demographics and investment performance
to provide costings which more accurately reflect local circumstances.
Hewitts, the pension fund actuaries have now produced this financial
perspective for the Oxfordshire Pension Fund. Unfortunately this was
received too late for incorporation into the report.
- This is currently being analysed and
it is therefore proposed to circulate a supplementary paper which sets
out the detailed financial implication of each option for the Oxfordshire
pension fund in advance of Cabinet on the 19 September. This supplementary
paper will also incorporate specific comments from Corporate HR on the
employment implications for the Council of the consultation proposals.
Financial and Staff Implications
- Financial and staff implications are
discussed in Annex 1 to the report.
RECOMMENDATION
- The Cabinet is RECOMMENDED to consider
the issues raised in Annex 1 to the report and authorise the Director
for Resources, following consultation with the Cabinet Members for Finance
and Change Management, to submit a response to the DCLG by 29 September
2006.
JOHN JACKSON
Director for Resources
Background papers: DCLG June 2006 Consultation document: "Where next?
– Options for a new-look Local Government Pension Scheme in England and
Wales".
Contact Officer: Ken Bell, Assistant
Head of Finance, Tel (01865) 815411
September 2006
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