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Written question asked by Lord Hutton of Furness (Labour) on Tuesday, 7 January 2020, in the House of Lords. It was due for an answer on Tuesday, 21 January 2020. It was answered by Viscount Younger of Leckie (Conservative) on Tuesday, 21 January 2020 on behalf of the Ministry of Housing, Communities and Local Government.

Local Government Pension Scheme

Question

To ask Her Majesty's Government what assessment they have made of the cost savings resulting from the 2014 reforms to the Local Government Pension Scheme.

Answer

In 2014 and 2015, significant reforms were made to public service pension schemes to address increases in the costs of providing pension benefits to public workers, and to place schemes on a more sustainable and affordable long-term footing. In the Local Government Pension Scheme (LGPS), reforms were implemented from 1st April 2014 and included moving the scheme from a final salary benefit structure to a career average benefit structure.

In May 2012, the Government published documents (attached)on the planned reforms to the LGPS including a costings analysis from the Government Actuary’s Department (http://data.parliament.uk/DepositedPapers/Files/DEP2012-1614/Buildupofcostsandcostreconciliationtables-Final.pdf). This analysis outlined that the existing final salary scheme design was estimated to cost in total 21.73% of pay (p2) and the planned career average scheme was estimated to cost in total 19.51% of pay (p3), suggesting an overall saving of just over 2.2% of pay.

To ensure consistency with other public service pension schemes, the final design of the reformed LGPS was changed so that scheme members received revaluation of their in-year accrued pension immediately. This increased the costs of the career average scheme by an estimated 0.4% (see table 7.1 at (attached) http://lgpslibrary.org/assets/othergov/2013VRep.pdf

The Government is currently considering the changes to public service pension schemes which will be necessary to comply with the findings of the Courts in the McCloud and Sargeant cases (https://www.parliament.uk/business/publications/written-questions-answers-statements/written-statement/Commons/2019-07-15/HCWS1725/) and these will have cost implications for the reformed scheme.

Secondary information

Type
Written question
Reference
HL133
Session
2019-21
Attachment
Local Government Pension; Reform to the LGPS
Related items
Public Service Pensions
Monday, 15 July 2019
Written statements
House of Commons
Subjects
Cost effectiveness Reform Local Government Pension Scheme
Contains statistics
Yes
Link
View this Written question on www.parliament.uk