Local government pensions up for consultation

Executive proposes increased annual accrual in place of right to lump sum

News, 31 July 2007

The Scottish Executive has begun consulting on a new Local Government Pension Scheme.

The new scheme would replace the scheme containing the "rule of 85", the abolition of which was announced late last year as incompatible with European equality law. That scheme permitted employees to retire early on full pension if their combined age and length of service totalled 85 years. Savings from the removal of the rule would be reinvested in the new scheme.

Among the key proposals in the new scheme are:

Improved accrual rate for building pension benefits from 1/80th (plus a lump sum of three times the annual pension) to 1/60th (with no automatic lump sum). Under the proposal, members would receive 30/60ths of their final pay on retirement;
Lump sum death-in-service grants for partners increased from two times to three times final pay;
Increased flexibility, to permit members wishing to work beyond 65 to reduce hours while taking part of their pension;
Employee contribution rates to increase from 6% to an average of 6.3%, set at tiered variable levels linked to pensionable pay.

The proposals have been developed by a tripartite group of officials from the Scottish Executive, Convention of Scottish Local Authorities (COSLA) and trades unions. Those wishing to respond to the consultation can access the full proposals on the Scottish Public Pensions Agency (SPPA) website .

Following the consultation, final decisions will be taken on the new scheme outline. These are likely to be announced at the end of 2007.