|
ITEM PF11 - ANNEX 1PENSION FUND COMMITTEE – 24 FEBRUARY 2006THE LOCAL GOVERNMENT PENSION SCHEME (AMENDMENT) (No. 3) - REGULATIONS 2005: CONSULTATION DRAFT
Draft Response to the Consultation Nicola
Rochester Dear Ms Rochester The Local Government Pension Scheme (Amendment) (No. 3) Regulations 2005: Consultation Draft I am writing in response to Terry Crossley’s letter of 5 December inviting comments on the above draft Regulations. The response is on behalf of Oxfordshire County Council, acting as Administering Authority, who agreed this response at its meeting on 24 February 2006. The Authority wishes to offer its broad support for the Regulations. In particular it welcomes the removal again of the 85 year rule, having supported the initial removal in April 2005, and opposed the subsequent revocation. The Authority believes that this change needs to be made irrespective of the legal position on the rule in relation to the age discrimination legislation. The Authority believes that this change is a key requirement if we are to build an affordable and sustainable pension scheme, that is acceptable to the tax payer. For this reason, the Authority would argue that any transitional protections to be put in place cost no more than those proposals included in the initial Regulations introduced in April 2005. The Authority welcomes the proposal to fund the short term costs of the delay in removing the 85 year rule, through the increased flexibility around the tax free lump sum. This is seen as a better option to the alternative of increasing the employee contribution rate. However, the Authority reserves the right to seek further redress for the short term costs, if the take up of the increased lump sums does not deliver the expected savings. The Authority welcomes in principle the increased flexibility available to all scheme members to nominate their own retirement date between the ages of 60 and 65, and to offset the normal actuarial reduction by increased contributions during their employment. The Authority though has some concern over the practical and administrative arrangements associated with this proposal. In particular, it is not yet clear as to the implications of a member leaving the LGPS before they reach their nominated retirement date, whether voluntarily due to a career change, or though reason of redundancy or ill-health. It is also unclear about what flexibility the scheme member has to change their mind over the course of their working life, during which their personal and financial circumstances could change significantly. We would hope that these concerns are addressed in the detailed guidance, whilst maintaining the Government’s aim of increased simplification of the Scheme. The Authority also welcomes the proposals relating to flexible retirement at or after age 60 as an important means of enabling older workers to remain in the workforce for longer. There are two areas where the Authority does not support the implementation of the Regulations as currently drafted. The first is the proposal to delete Regulation 33, which currently allows a scheme member to surrender part of their pension to increase benefits paid to a nominated survivor. It is not clear to this Authority why this change is being brought forward, and it is felt that this should be deferred to be considered as part of the wider changes to the LGPS to be implemented in April 2008. The second issue is that of the changes to the employee contribution in the event of buying membership for a strike day. The Authority supports the proposal as drafted, but is concerned as to the timing of its implementation. It appears to be neither a direct consequence of the changes around the 85 year rule, nor the Finance Act 2004. In light of the likely reaction from the Unions, it is felt that this change should be deferred and brought forward again as part of the policy discussion document proposed for June 2006. Thank you for the opportunity to respond to the Consultation and for considering the comments above. Yours sincerely
Cllr
Rodney Rose
|