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Changes proposed for sector pension scheme

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A government consultation has been launched on changing local fund valuations in the Local Government Pension Scheme (LGPS) from a three-year cycle to four years.

There are also proposals for flexibility on exit payments, changes to employer contributions and to which employers are required to offer LGPS membership

The consultation paper said the government had already moved the LGPS scheme valuation to a four-year cycle and the proposed change was to ensure that scheme and local valuations were aligned.

It proposed that LGPS funds would become able to undertake interim valuations when circumstances change between valuations, and the widening of a power to amend an employer’s contribution rate in between valuations.

The paper said that for some employers, the cost of exiting the scheme can be prohibitive, as when the last active member leaves, the employer must pay a lump sum exit payment calculated on a full buy-out basis. It proposes two possible methods to avoid this ‘cliff edge.

There is also a proposal to remove the obligation on higher and further education institutions to offer LGPS membership and instead leave this for each body to decide.

The consultation runs until 31 July.

 

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