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Pensions bill sparks fears for reform deal

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Treasury proposals for the reform of public sector pension schemes have sparked fears the deal brokered by local government employers and unions could be undone.

Union leaders have warned parts of the Public Service Pension Bill published last week could scupper the timetable for implementing the new Local Government Pension Scheme in 2014.

Separately, the Chartered Institute of Public Finance and Accountancy has expressed concern about the future role of the Treasury, while a former senior civil servant closely involved in the pension scheme has described the loose framework of the bill as “good news” for the scheme but warned the hard work will come in negotiating the contents of the secondary legislation.

Brian Strutton, GMB’s national secretary for public services, said: “It looks like we are going to have to go through the ‘LGPS is different’ argument all over again and bottom out all the new issues the bill has thrown up while somehow keeping on track for the promised statutory consultation on the LGPS 2014 in a couple of weeks’ time. That’s a very tall order.”

The bill was “not drafted in a helpful way for the LGPS”, he said, despite “careful briefing [of Treasury officials] by the trade unions and by Department for Communities & Local Government civil servants to ensure it was LGPS-compatible”.

Employers and unions finalised their plans last month for the cost management of the LGPS, which Mr Strutton said were “discussed with Treasury without dissent, yet the bill lays down proposals for all schemes including the LGPS which are quite different and in my view less robust”.

Heather Wakefield, head of local government for Unison, said the government wanted to include scheme liabilities from before the start of the new scheme in 2014 which was “never the intention” and would be resisted by union negotiators.

Mr Strutton said he also had concerns about proposed Treasury powers to set the conditions of valuations, a decision currently made by individual LGPS funds.

CIPFA also expressed concern about the future role of the Treasury. Pensions panel chair Bob Summers said the LGPS was “unique” in the public sector because of the “clear accountability link between local fund administrators and local council tax payers”. He added: “The introduction of a third party … restricts the ability of the local fund administrator to manage the fund flexibly to suit local circumstances.”

However, DCLG’s former head of pensions Terry Crossley sought to allay fears about the wording of the bill, claiming it allowed for scheme-specific elements to be introduced in secondary legislation.

“The real challenge for authorities, senior officers, elected members and ministers is going to be getting the governance and the cost management right and getting the right level of reforms into the bill in secondary legislation for the LGPS,” he said.

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