Draft regulations on membership, contributions and benefits
The Department of Communities and Local Government (DCLG) has issued detailed draft Regulations for consultation that set out the scheme that members voted on in August 2012.
The DCLG have confirmed to us that technically it will not be a new scheme, but simply the existing scheme with Regulations setting out who can join, what members pay and what benefits will be earned from 1 April 2014.
In view of the work already done and the informal consultation, including UNISON’s ballot of members on the proposals that ended in August 2012, the consultation period is short to allow Regulations to be laid in the Spring and to give employing authorities enough time to bring the scheme in from 1 April 2014.
UNISON will submit a detailed response to the consultation by the closing date of 8 February 2013. UNISON’s head of pensions is attending regular meetings of the technical group which is going through the draft regulations.
What the draft regulations do not cover
The consultation does not cover a number of issues including Fair Deal, Cost Control and Governance.
UNISON is pressing for discussions to start on Fair Deal as soon as possible so that the agreement to allow members outsourced in future to remain in the Local Government Pension Scheme (LGPS) is implemented as soon as possible.
The consultation document does attach a paper (Annexe F) which sets out the way forward on cost control agreed by both employer and trade union sides. Separate draft Regulations will be put out for consultation in due course.
Governance is an important issue for UNISON, so we are pleased that Ministers are fully committed to establishing the Advisory Board for the LGPS which will give a voice to both employers and trade unions to manage the ongoing costs of the scheme. Discussions on the precise role and membership of the Advisory Board are ongoing and there will be a further consultation on this too as soon as possible. UNISON is also pressing to changes in the Public Service Pensions Bill which would allow member representation on individual pension boards and will continue to push for this in joint discussions with employers.
Further consultation will be issued as soon as possible covering transitional arrangements to protect members who have service before 1 April 2014. This includes setting out how the underpin protection will work for those with existing protection under the Rule of 85. It will also set out circumstances in which the final salary link to pre-April 2014 service will be retained for members who leave and then rejoin the LGPS in the future.
The draft regulations
The draft regulations confirm that those who have less than two years service when they leave in future will be entitled to a refund of contributions, instead of benefits based on a short period of service. They also confirm that members who have a contract of less than 3 months duration, while not being automatically brought into the scheme, will have the right to reply for membership.
The draft regulations on contributions confirm the contribution bands that were agreed and also how part timers will be dealt with after April 2014. They also set out members’ option to reduce their contributions by 50% and the affect this will have on their benefits.
The contribution draft regulations also set out when assumed pensionable pay will be awarded and the rules that will apply. The draft regulations setting out the benefits introduce a new term of “Pensions Accounts”. This means for active members the contributions they pay on their pensionable pay will be paid into a pension account which will then be re-valued in line with the Consumer Prices Index (CPI). Those who leave the money in their pensions account will continue to have it revalued in line with CPI, as will be the case for the pension for those that have retired. The draft regulations set out that members will be able to apply to retire any time after their 55th birthday. If they retire before their State Pension Age (SPA) their pension will be reduced by an early retirement factor and if they retire after SPA it will be increased by a late retirement factor.
Discussions are continuing to ensure that the draft regulations do not make members worse off in respect of ill health retirement or survive a benefit than is the case in the existing scheme.
Click here if you would like to see the draft regulations and the various annexes that are attached to those draft regulations.
If you have any queries or comments on the draft regulations please send them to Glyn Jenkins, Head of Pensions at UNISON email address firstname.lastname@example.org
11 January 2013