ITEM CA11
CABINET – 18 MARCH 2008
CHANGES TO PENSIONS REGULATIONS – Revised NEW LOOK Local Government Pensions Scheme Regulations 2008
Report by Head of Human Resources & Organisational Development
Introduction
1. The New Look Local Government Pension Scheme (LGPS) Regulations 2008 have now been published, to become effective as of April 2008. This report sets out recommendations for the Council’s arrangements to implement and communicate these so far as is known at present. An amendment to the current Retirement Policy Statement is also proposed. A further report to Cabinet will be necessary when the outstanding information relating to ill health and flexible retirement is available.
What are the Changes to the LGPS?
2. A summary of the main features of the changes can be found at Annex 1 (download as .doc file).
Proposed Pension Policy
3. A draft Pension Policy has been attached at Annex 2 (download as .doc file). In some cases the new Regulations will directly govern the administration of the Scheme; in others the Council must decide on how to apply the new features. The new Policy makes proposals on:
· eligibility to join the Scheme; · how contribution rates will be assessed and applied; and · the Appeals process.
4. The proposed method of applying contribution rates takes into account the new Regulations and the impact on both the employee’s earnings and the revenue to the Pension Fund.
5. There are plans to communicate information about the changes to the LGPS before the changes impact on pay in April 2008. This includes pay slip messages; information on the Intranet; articles in in-house publications; including Unison’s newsletters; and advice. The matter has been discussed at the Employees’ Joint Consultative Committee on 28 February 2008 and a verbal update will be made to Cabinet on any outstanding issues.
Review of the Retirement Policy Statement
6. The Council’s agreed Retirement Policy Statement is attached at Annex 3 (download as .doc file) for information. The Retirement Policy Statement will continue to apply alongside the Pension Policy. This was revised in March 2007 and was due for review in March 2008. This review has taken place and has proposed two amendments to the policy. Further changes may be required when the remaining changes relating to ill health retirement and flexible retirement are published.
7. The first amendment in paragraph 5 c is proposed to clarify the Council’s position on flexible retirement. Further information on flexible retirement is expected.
8. In paragraph 8, it is made clear that the Council will not augment the membership of employees.
Financial and Staff Implications
9. The new Regulations will have an impact on both the employer and employees:
· Effective communications will be required to explain the impact of changes, including those to contribution rates and the benefits of the scheme. Lower contribution rates for lower paid employees are designed to encourage pension membership among lower paid groups. Some higher paid employees will experience an increase in their contributions and this may be unwelcome. Unison are aware of the issues, but have signed up on a national level to the new scheme. · The changes to the Employer contributions were included in the Tri-annual Actuarial Review and this has been taken into account in the budget from 1 April 2008.
10. Income to the Pension Fund depends on employee and employer contributions so efficient management of the new contribution rates is important to the Fund.
RECOMMENDATION
11. The Cabinet is RECOMMENDED to:
(a) adopt the Pension Policy at Annex 2;
(b) adopt the revised Retirement Policy Statement at Annex 3; and
(c) consider a further report when the remaining Regulations are published.
STEVE MUNN Head of Human Resources & Organisational Development Corporate Core
Background papers: LGPS Regulations
Contact Officer: Sue Corrigan, County Human Resources Manager Tel. 01865 810280 March 2008
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