LGPS

[HarrisRuto]

Morning All
Hoping the group can share a bit of knowledge, my organisation pays into a LGPS, with a multi million pound deficit, they are looking to stop the scheme.
The scheme was closed to new members in 2014
They propose a new pension scheme, with a 1 month consultation period.
What kind of questions would you think should be put towards the HR dept.
New scheme details are 5% contribution with 12% employer contribution, previous scheme was 20% employer contribution with similar benefits to a local authority, such as death in service etc.
Thanks for all the contributions
Harris

[Alaric]

What kind of questions would you think should be put towards the HR dept.

LGPS = Local Government Pension Scheme presumably.
I believe that was a defined benefit scheme. In other words, the scheme sponsors bear investment and longevity risk rather than contributors.

What is the new scheme? Is it defined contribution where the members make the investment decisions and take the profits or losses?

[kempiejon]

Morning All
Hoping the group can share a bit of knowledge, my organisation pays into a LGPS, with a multi million pound deficit, they are looking to stop the scheme.
The scheme was closed to new members in 2014
They propose a new pension scheme, with a 1 month consultation period.
What kind of questions would you think should be put towards the HR dept.
New scheme details are 5% contribution with 12% employer contribution, previous scheme was 20% employer contribution with similar benefits to a local authority, such as death in service etc.
Thanks for all the contributions
Harris

I'm in a defined benefit LGPS, in fact it's one of the main attractions for staying with this employer. Quick web search and I see that the LGPS is working on reducing the deficit. I contribute about 6% for the priveledge but each year I buy a 44th of my annual salary to be paid until my death post normal retirement age. My partner would recieve around a third of my pension should I pre decease them.

If my employer was going to remove those benefits I'd want to know what my uplift in wages would be for the removal of such a valuable reward.

[Sobraon]

"Basing its assessment on 73 of the 86 local fund valuation reports for 2022 that are currently publicly available, the consultancy* found that LGPS funds saw an increase in their overall funding level from 98.5 per cent at 31 March 2019 to 107 per cent at 31 March 2022."(Pensions Age 27/4/23).

I think this looks pretty good, so the company maybe is flying a kite to frighten people over the 2019 deficit.

*Hymans Robertson

[DrFfybes]

Bottom line, employer is currently putting in 20%, this will reduce to 12%.

As you are still in the scheme, I'm assuming you are ex LG and TUPEd to a private contractor that took over a service, or an associated organisation such as Fire Service.

The rest is probably irrelevant - LGPS take on the risk, not your employer, although the contributions to LGPS can fluctuate so there is some some risk to the employer.

LGPS hasn't been Final Salary since IIRC 2012, however the Career Average (CARE) scheme is very generous at 50ths with no lump sum and index linked for earlier contributions, so in a situation like now where inflation outstrips wage rises I believe earlier years can actually count more towards your pension than the current one.

As for what to ask HR...
Why am I getting an 8% pay cut?
Can we do Salary Sacrifice into the new scheme?
Who is the provider, what funds are available, what are their charges?

But basically I'd say the decision has been made, and the 'consultation' is just for you to tell them how unhappy you are.

Paul

[BullDog]

This is one situation where a trade union can be worth it's weight in gold protecting members interests.

[HarrisRuto]

Thanks for all the comments,some more info based on replies.
It’s a DB scheme run alongside a local authority with £15million debt in our own pot after a tri annual valuation

So new scheme will be DC with employeeontribution of 3,4 or 5 or more with employer matching with 8,10&12
Previous had 3 times salary for death benefit now proposed 5 times differed annual pension would be paid
Proposed scheme is standard life master trust

I thought the consultation period was 60 days- from pension regulatory website?
Would you ask for a match of 20%, or an increase in salary, what’s the positives of this as no doubt you can take pension at 55 and stay at work?
Is a compensation payment a thing?
Thanks so much,for any info