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Local Government Pensions Update Proposed New Scheme: LGPS 2014

Local Government Pensions Update Proposed New Scheme: LGPS 2014. GMB Presentation. Background. Coalition’s 3 fold attack: Change to pension indexation from RPI to CPI 50% increase in member contributions to the LGPS through the Osborne Pension Tax

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Local Government Pensions Update Proposed New Scheme: LGPS 2014

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  1. Local Government Pensions Update Proposed New Scheme: LGPS 2014 GMB Presentation

  2. Background • Coalition’s 3 fold attack: • Change to pension indexation from RPI to CPI • 50% increase in member contributions to the LGPS through the Osborne Pension Tax • Hutton report advocating increased retirement ages and reduced benefits • Talks started across the public sector with government proposing 1/100th accrual rate for all public sector schemes (except their own which remains 1/40th) • GMB campaign to distinguish LGPS due to real risk of mass opt outs • November 30th Day of Action • ‘December Principles’ for Union-LGALGPS negotiations agreed by government

  3. LGPS Negotiations

  4. Contributions

  5. Benefits I • Defined benefit career average scheme • 1/49th accrual and CPI revaluation • Individual pension age linked to state pension age (minimum age 65) • Contributions and pensions based on actual salary (inc overtime) • Contribution flexibility with 50/50 option • Outsourced members to retain membership of LGPS

  6. Benefits II 50/50 section of the LGPS 2014 is for members who would otherwise opt out of the LGPS • While in the 50/50 section, members: • Contribute half the main scheme rate (on average 3.25%) • Build up pension with a 1/98th accrual rate

  7. Retirement • No scheme retirement age in LGPS 2014 • Members can retire at anytime after 55 • Pension taken before the individual’s state pension age will be reduced; pension taken after will be enhanced • Future changes in state pension age will apply to all service in the LGPS 2014 (excluding protected service built up before April 2014)

  8. Protection • All service before April 2014 is protected - linked to final salary and existing retirement age • Rule of 85 transitional protection will be honoured • ‘Better of’ calculation for members aged 57 – 59 when the new scheme starts

  9. Further Information www.lgps.org.uk • Detailed Guides to New Scheme • Frequently Asked Questions

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