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Pension Reform - Local Government Pension Scheme

The new Local Government Pension Scheme in Scotland (27/06/08)

Regulations which set out the new Local Government Pensin Scheme (LGPS) in Scotland were laid in the Scottish Parliament on 6th June 2008 and come into force on 1 April 2009.  SPN/LG Circulars Nos. 2 and 3 provide further information and can be accessed on the Local Government Scheme Circulars area of this website.

The Local Government Pension Scheme in Scotland (14/02/2008)

The Scottish Government today issued a Press Release to announce the agreement reached by SLOGPAG.  A copy of the Press Release and Heads of Agreement document, signed by all parties involved in discussions, can be accessed by following the links below.

     Press Release (PDF 51kb)        Heads of Agreement document  (PDF 574kb)

Also available from today is a Report and Summary of responses received during the consultation exercise held between  30 July 2007 and 31 October 2007 on the proposals for the new LGPS.   These can be accessed by following the links below.

      Report (PDF 85kb)                  Annex A - Summary of Responses  (PDF 234kb)

Consultation is now underway on the draft regulations and the consultation documents can be accessed on the LGPS Consultation Page

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Context

Occupational pensions is a reserved matter and therefore the responsibility of the UK Government, although Scottish Ministers have executively devolved powers to make changes to public pension schemes in Scotland (except for the civil service and the MOD).  In practice this generally means ensuring that scheme regulations are consistent with Scottish administrative and legal requirements.  However, Ministers can choose to use executively devolved powers to make more substantial changes (which of course must comply with UK and EU law), such as the development of a Scottish solution to the removal of Rule of 85 from the LGPS.  Notwithstanding the above, changes to public pension schemes in Scotland need to remain in line with UK and European primary legislation.

LGPS Pension Reform

Following the UK Government’s announcement in 2003 that it intended to proceed with its reform of public service pension schemes and in particular to raise the normal pension age for most public servants from 60 to 65, in 2004 the Scottish Public Pensions Agency (SPPA) and the Office of the Deputy Prime Minister (ODPM) (now the Department for Communities and Local Government - DCLG) consulted with stakeholders on proposed changes to the LGPS in Scotland and England and Wales respectively.  In Scotland, the consultation exercise ‘Facing the Future – Propositions and Principles for an Affordable and Sustainable Local Government Pension Scheme in Scotland’ sought views and feedback on broad reform proposals to ensure sustainability of the Scheme over the longer term.

The LGPS already has a normal pension age of 65, but under the Rule of 85 members who decided to leave employment before that age, and who met the requirements of the Rule, could receive an unreduced pension.  However, both England and Wales Ministers and Scottish Ministers received advice to the effect that the rule breached the terms of the EC Directive on equality in the workplace, which deems that provisions in the rules of occupational pension schemes which are discriminatory on age grounds are unlawful unless they fall within limited exceptions.  The Rule of 85 therefore had to be removed from the scheme regulations.  Judicial proceedings brought by UNISON in England and Wales against the Secretary of State for Communities and Local Government confirmed that the Rule of 85 did not comply with the EC Directive.  The Rule was therefore removed from the LGPS on the 1 December 2006.

However, as this gives rise to an apparent anomaly in treatment between LGPS members and their colleagues in the pension schemes covering NHS, Teachers and Civil Servants, transitional protection arrangements were developed for existing members of the LGPS.  Following extensive discussion with COSLA and the Unions, the Scottish Government consulted in June 2006 and subsequently laid regulations, which set out the protection arrangements to be put in place for Local Government scheme members in respect of the requirement to remove the Rule of 85.

The transitional protection provided to existing members has two elements, the first of which provides that all existing active scheme members at 30 November 2006 will continue to accrue service under the 85 year rule until 31 March 2008.  In practice, this means that individuals who retire before the normal pension age of 65 will not have this element of their service actuarially reduced.

The second element of transitional protection provides protection for existing members who both attain age 60 and satisfy the 85 year rule by 31 March 2020.  This provides protection for those scheme members closest to retirement, i.e. those within 13.5 years of retirement, who are likely to have insufficient time from the date of the removal of the rule of 85 to make alternative arrangements for their retirement.

These transitional protection arrangements are legal, affordable and proportionate.

Next steps

Discussions on the new scheme are ongoing within the tripartite Scottish Local Government Pensions Advisory Group (SLOGPAG), which has representatives from COSLA, trade unions and the Scottish Government.  The group is working to develop a potential scheme outline, which is healthy, fair and delivers for all members.  The aim is to finalise proposals by June 2007 with consultation due to take place during the summer of 2007.  This timetable should enable Regulations for new provisions to be laid by the end of March 2008, which would allow implementation of the new scheme by April 2009.

What if I have any comments or concerns?

Any queries and other responses can be sent by e-mail to locgovpensionsreform@scotland.gsi.gov.uk

Alternatively, you can write to us at:
SPPA
Local Government Policy Branch
7 Tweeside Park
Tweedbank
Galashiels
Selkirkshire
TD1 3TE

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