UK - The £83bn Local Government Pension Scheme is considering closing DB provision to new members of the 89 local authority schemes in England and Wales. The Department of Transport, Local Government and the Regions (DTLR) - which sets out local authority pension scheme policy via the LGPS - is undertaking a comprehensive review and considering the DB move as part of a raft of new measures.
The review has sparked fears of a reduction in local authority pension provision in a bid to restrict spiralling costs.
A sustainability review on the DTLR website seen by IPN sister publication, Professional Pensions, said: “There is growing concern in the LGPS and associated circles that pension liabilities and costs are beginning to have an increasingly adverse impact on employers’ budgets. [This comes] at a time when the immediate, short-term future seems to hold the prospect of even more emerging liabilities leading to the prospect in the LGPS of medium/long-term issues of sustainability.”
An LGPS draft document, which is currently being discussed, will also tackle other issues affecting local authority schemes, including deregulation, administration provision and member benefits.
West Midlands Metropolitan Authorities Pension Fund’s chief pensions officer Mike Woodall said: “This exercise appears to be a radical reconsideration of the current scheme with a view to introducing a new scheme for new scheme members. Any move to a DC scheme, I believe, would be strongly opposed by Trade Unions and the staff affected – it is only through knowledge of a DB scheme that an individual can plan adequately for retirement.”
This review comes only three years after new regulation was introduced, involving much work by scheme administrators, and the new review and the possibility of more changes will not be welcomed by schemes.
Greater Manchester Pension Fund head of pensions administration Ged Dale said: “During the 1990s we also co-operated with a comprehensive scrutiny of the LGPS, after which we were presented with new regulations operating from April 1998. It was a colossal job to assimilate these, and I am dismayed that so soon after their arrival we see another major review under way.”
The government has set a tight schedule for completion of this review with a report to ministers due by January 31 next year, and draft reports to be finalised by the end of December this year.
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