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"Rule of 85" to stay - for now

30 June 2006

The "rule of 85" will continue to apply to council pensions up until the year 2020.

Finance Minister Tom McCabe yesterday unveiled new arrangements for local government pensions which will allow workers to continue to benefit from the rule until 2020. Under the rule, workers can retire at 60 without losing pension rights if their age and years of service add up to at least 85. Those aged between 50 and 60 can also retire if their age and years of service add up to 85, but only with the agreement of their employer.

Mr McCabe had previously said the rule of 85 would have to be scrapped beause it did not comply with European law. It was due to removed from the local government pension scheme in October this year. Some 200,000 council workers took industrial action in April in protest at the move.

The new proposals are expected to cost £400 million. It is to be paid for by recycling all the savings which will eventually be made by the change to the pension arrangements back into the local government scheme. In England and Wales, council workers are only to be covered by the rule of 85 until 2016.

Mr McCabe described the deal as a specific Scottish solution for Scottish circumstances. However, the Conservative Party's pensions spokesman Philip Hammond said Scottish council tax payers deserved as much protection from rising council tax as English council tax payers.