London plans 'fair and affordable' LGPS by 2015

The London Pensions Fund Authority said its ‘green paper’ was designed to produce ‘a fair, adequate and affordable’ scheme by 2015 in response to government reforms to public sector pensions.

A new LGPSby 2015: reality or aspiration? calls for acceptance of a switch from a final salary to career average basis pension, and for a change in accrual rates from 60ths to 70ths of average salary.

There should also be a new ‘low-start scheme’ to help lower-paid and younger employees and contribution cost ceilings for employers. Financial incentives should also be used to encourage funds to share administration.

The proposals follow the UK government’s announcement in July that scheme-by-scheme negotiations could begin on its proposed reforms. These include increasing employee contributions by an average of 3.2 percentage points by 2014/15, increasing the retirement age and moving to career-average defined benefit schemes. The independent Public Service Pensions Commission, chaired by former work and pensions secretary Lord Hutton, recommended these changes in March.

Ministers have told the Local Government Pension Scheme that it can examine other ways to make the initial savings, and LPFA chief executive Mike Taylor told Public Finance last month that a range of options would be examined.

Launching the green paper, he said: ‘The time is now right to start thinking about implementation of a new scheme. 

‘The green paper is not intended as a single blueprint for success, rather it attempts to stimulate debate concerning the key ingredients of a new LGPS and the practicalities necessary for its successful implementation.’

The authority said it was ‘acutely aware of the short-term pressures on the LGPS particularly with regard to government savings requirements’, and would fully support ‘a combination of options (including reduced accrual rates) designed to meet the government’s requirements while retaining employee contributions at a level that ensures the LGPS remains attractive to members’.

It said these short-term pressures were ‘additional to, but not central to, the fundamental long-term issue facing the LGPS, that of ever increasing longevity in the midst of a rapidly changing working environment’. The green paper seeks to address this. Its proposals try ‘to provide a level of cost certainty with the aim of ensuring that the scheme remains sustainable and will not require revisiting in the foreseeable future’.

 • Education unions have also announced today that 25,000 teachers and lecturers plan a mass lobby of Parliament on October 26 to protest against pension changes in the education sector.

The is part of a joint campaign by seven education unions to draw attention to ‘myths’ about the changes to public sector pensions.

The unions said: ‘The public has a right to know that cuts could ultimately affect the quality of education for young people, as high-calibre graduates rethink their career choice. We will also be challenging the myths about how public sector pensions impact on taxpayers.’

The unions involved are the Association of School and College Leaders, the Association of Teachers and Lecturers, the National Association of Head Teachers, the National Association of Schoolmasters/Union of Women Teachers, the National Union of Teachers, the University and College Union and Undeb Cenedlaethol Athrawon Cymru.