The Local Government Association (LGA) and trade unions have announced their new LGPS proposals which will take effect from 1 April 2014.

The next phase is a consultation period during which the proposals will be communicated by the LGA and unions to scheme members, employers, funds and other stakeholders. The Government has confirmed that a favourable outcome of the consultations will lead to a direct implementation.

The seven main proposals are:

1. A Career Average Revalued Earnings (CARE) scheme using CPI as the revaluation factor (the current scheme is a final salary scheme).

2. The accrual rate would be 1/49th (the current scheme is 1/60th).

3. There would be no normal scheme pension age, instead each member's normal pension age (NPA) would be their state pension age (the current scheme has an NPA of 65).

4. Average member contributions to the scheme would be 6.5% (same as the current scheme) with the rate determined on actual pay (the current scheme determines part-time contribution rates on full time equivalent pay).

While there would be no change to average member contributions, the lowest paid would pay the same or less and the highest paid would pay higher contributions on a more progressive scale after tax relief.

5. Members who have already opted out, or are considering opting out, of the scheme could instead elect to pay half contributions for half the pension, while still retaining the full value of other benefits. This is known as the 50/50 option (the current scheme has no such flexible option).

6. For current scheme members, benefits for service prior to 1 April are protected, including the remaining 'Rule of 85' protection. Protected past service continues to be based on final salary and current NPA.

7. Where scheme members are outsourced they will be able to stay in the scheme on first and subsequent transfers (currently this is a choice for the new employer).

All other terms remain as stated in the current scheme.

Sir Merrick Cockell, LGA chairman, said: "The LGA's objective in this process has been to ensure that the LGPS continues to be sustainable into the future by developing a set of proposals that are affordable for employers and council taxpayers while being fair to members.

"Our aim in reaching agreement on these proposals was to give employers the future cost stability they need. In my view employers can be confident that these proposals coupled with forthcoming cost control mechanisms meet that aim. Along with the LGPS unions we shared the goal of encouraging existing members to stay within the scheme and new employees to join, these proposals are an example of us working together to achieve such shared goals."

Heather Wakefield, UNISON national secretary local government, police and justice section, said: "The negotiations over LGPS 2014 have been long and tough and have taken place in a demanding political and economic climate. The process has shown that UNISON, the LGA and the other local government unions can work productively together in the best interests of LGPS members and potential members."

azeevalkink@wilmington.co.uk

First published 01.07.2012