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PENSION PLAN BACKED

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Employers have welcomed last-minute changes to make the new-look local government pension scheme simpler....
Employers have welcomed last-minute changes to make the new-look local government pension scheme simpler.

Local government minister Phil Woolas announced that greater account will be taken of workers on low wages when the scheme goes live in April 2008.

The draft regulations announced last November proposed increasing staff contributions through a two-tier contribution rate. Staff would pay 5.5% on the first£12,000 of earnings and 7.5% on the rest.

But the final regulations will have more tiers, with different contribution rates for salaries between£12,000 and£25,000, when the higher rate will kick in. The average contribution rate would stay at 6.3%.

A Local Government Employers spokesman said the government had recognised that its original proposals were unworkable but had ignored opposition to a variable contribution rate.

'It has adopted the banded contribution rate approach we put forward as a compromise position,' he said.

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