Further details of reforms to public sector pensions including the local government scheme have been published.
The Treasury lay the Public Service Pensions Bill before Parliament on Thursday afternoon, detailing how the government intends to implement the recommendations made by Lord Hutton’s commission into pension reform.
The bill seeks to implement key aspects of his report including a move from final-salary to career-average pension schemes, a link of schemes’ normal pension ages to the State Pension Age and protection for those closest to retirement age.
The bill also makes it clear that schemes must set a cap on employer costs and, as reported last week by LGC, the Pensions Regulator looks set to have its remit extended from private sector pensions to cover public sector pensions as well.
In a separate provision, the bill requires schemes to appoint a ‘scheme manager’ and create a scheme board - likely to supersede the LGPS ‘policy review group’ currently organised by the Department for Communities & Local Government.
Chief secretary to the Treasury Danny Alexander, left, said the bill would cut the cost of pensions by 40%, saving £65bn over the next 50 years.
“This is a good deal for taxpayers and a good deal for public service workers: a settlement for a generation,” he said.
GMB national secretary for public services Brian Strutton warned the bill could derail reforms of the Local Government Pension Scheme.
“The bill is much wider ranging and more prescriptive than we had been led to believe which is bad news for the LGPS. Whereas the proposals put forward by the LGA and trade unions after consultation with DCLG seek to minimise buraucracy and focus on good governance and future cost management, this bill proposes more levels of regulation, scrutiny, reporting and external interference.
“It seems Treasury has been more concerned with shoehorning the LGPS to fit in with the way they want to manage the unfunded schemes than with ensuring the sustainability of the LGPS itself. It also means that it will now be more difficult to draft the necessary regulations for the LGPS over the next month or so because the bill creates so much new uncertainty. This bill is going to have a very busy time at committee stage”.