Your browser is no longer supported

For the best possible experience using our website we recommend you upgrade to a newer version or another browser.

Your browser appears to have cookies disabled. For the best experience of this website, please enable cookies in your browser

We'll assume we have your consent to use cookies, for example so you won't need to log in each time you visit our site.
Learn more


  • Comment
The government has decided against a major overhaul of the£50 billion local government pension scheme, which threa...
The government has decided against a major overhaul of the £50 billion local government pension scheme, which threatened to end the predictable nature of pension payments enjoyed by council staff.

Environment minister Sir Paul Beresford announced on Tuesday that after a two-year scrutiny of the superannuation scheme the DoE would be sticking with the current statutory framework.

The scrutiny had raised the possibility of a deregulated trust-based system, similar to the private sector, with councils being allowed to set up their own funds.

This could have left new employees joining the scheme dependent on the performance of funds rather than having guaranteed payments.

But Sir Paul said the government would be consulting on introducing greater flexibility in the way the scheme operates, with a view to implementing changes in 1997.

'Local government pension arrangements will still be provided under a statutory framework, though rather broader and less detailed than at present,' he said. 'The pension entitlements of all existing members and pensioners within the present statutory framework of the local government pension scheme will be protected.'

The announcement was welcomed by councils, which had expressed almost complete opposition to radical change.

'We have got the pudding we actually ordered,' said Charles Nolda, secretary to the UK Steering Committee on the superannuation scheme. 'We argued for a continuation of the statutory scheme with more local flexibility.'

But Mr Nolda said the 'nutritional value of the pudding' would depend on the discretion allowed to councils.

He acknowledged the government may make it possible to pay less than is currently required by law. 'That is not the flexibility we have in mind,' he said.

Mr Nolda said councils are likely to look for flexibility on the margins, such as allowing the payments of larger lump sums while reducing annual payments.

The UKSC has already started a major consultation on how the scheme could be improved.

It has emerged from the DoE scrutiny that the scheme costs £122 million a year to administer, with around £500,000 being spent by the DoE on regulation.

Administration costs per pension fund member are highest in inner London at £91.70, which is £50.70 more than metropolitan funds (see table). The costs are linked to the numbers served by the schemes, with smaller numbers meaning higher costs per head.

London boroughs have an average size of 9,000, while metropolitan districts have around 44,000 members.

  • Comment

Have your say

You must sign in to make a comment

Please remember that the submission of any material is governed by our Terms and Conditions and by submitting material you confirm your agreement to these Terms and Conditions.

Links may be included in your comments but HTML is not permitted.