The DoE received more than 200 responses to the scrutiny report. It recommended in the medium term councils should take responsibility for pension provision.
While most local government respondents opposed this, ministers have decided to 'accept it for further investigation', according to a letter from the DoE's Terry Crossley to chief executives this week On the basis of the value for money study's findings the DoE will decide whether or not to pursue deregulation.
Mr Crossley, who heads up the DoE unit which runs the LGSS, told an LGC pensions seminar on Monday the study would look at various options including the status quo. Deregulation options to be studied include: setting up a national scheme run by local government; individual trust schemes for each council; a trust scheme managed by a lead authority; or a regionally based trust scheme.
'The DoE seems generally to have followed the proposals of local government. But we are concerned they are continuing with possible deregulation of the scheme', said Mr Russell.
'We will do everything we can to help with the value for money study but local government was nearly unanimous in saying no to that idea'. Ministers have postponed a decision on the report's second most controversial recommendation: that individual authorities should be allowed to opt out of the LGSS for new employees in advance of deregulation. This will be looked at in the light of legislation resulting from the government's response to recommendations from the pension law review committee.
The DoE will discuss with other departments the recommendation that employers may contribute to personal pension plans. The decision coincides with advice from the UKSC that councils should let people back into the scheme if they left it for personal pension plans. The UKSC estimates between 30 and 40 people per pension authority may seek readmittance.