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FINANCE - FOR ADULTS ONLY

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As if there isn't enough red tape, pension administrators are still in bondage to all manner of obsolete clauses. T...
As if there isn't enough red tape, pension administrators are still in bondage to all manner of obsolete clauses. Time to whip the system into shape, says Ged Dale

Second I'll get bondage and the ODPM, but first of all here are a few key facts about the local government pension scheme. It has around 3 million members, its funds are worth around£100bn and,

unlike far too many private-sector pension schemes, its pension promise is rock solid. To use the modern parlance, the LGPS is mega.

Turning now to my subject this month, when I look out of my window - having worked in local government for 28 years, I've become quite adept at this - I can see Eastlands, Manchester City's new home. How cool and edifying is that? When I look out of my other window

(I'm multi-skilled), I see the frontages of the local emporia. A new one is called Simply Adult and, according to its sign, has 'The Largest Selection of Adult Toys in the North West'. These include 'lotions and potions', 'clubwear' and 'novelties'.

I don't know what the latter includes, but I suspect they are not the sort of thing that falls out of a Christmas cracker.

The connection with the LGPS is the aforementioned bondage, and the way that scheme administrators are bound by the red tape relating to surrenders. These aren't, I must point out, anything to do with bedroom games. They actually date back to the 1920s when the scheme did not provide even a widows' pension. Instead, at the point of retirement, members could surrender some of their own pension to provide for a dependent. But widows' pensions were introduced in the 1950s, children's pensions in the 1970s and widowers' pensions in the 1980s. There was also the small matter of the welfare state being created in 1948. Consequently anyone you might want to make a surrender for is going to receive a pension anyway or, if needed, some other sort of benefit.

These developments explain why we have had one - as in single, solitary - surrender in the past 10,000 or more retire ments. But because the ODPM hasn't removed surrenders from the LGPS, they remain a possibility. We are therefore obliged to tell new pensioners about them, despite the call from government pensions adviser Alan Pickering in his eponymous report to cut out this sort of disclosure chaff. And having told them, some people ask for a surrender quote and then, in all but that one case, don't proceed.

The Government Actuary's Department maintains the factors that govern surrenders and both the Employers' Organisation and the Institute of Payroll & Pensions Management include sections about surrenders in their training material.

Can you imagine the cumulative cost of all this? Do the words 'barking' and 'mad' spring to mind? Or are you just wondering if Simply Adult has a website?

If you are, let me to interrupt your musings to make a request. If you ever find yourself responding to a consultation document from the ODPM about the LGPS - or anything else for that matter - please include a mention that it is high time surrenders became extinct. This might lead to a little confusion if the consultation is about, say, regional government, but nothing like the bafflement caused by telling so many people about something that is as relevant to them today as gas mantles.

Now if you'll excuse me, I, er, have to get to the shops. . .

Ged Dale

Head of pensions administration, Greater Manchester Pension Fund

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