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Pensions deal could be changed despite union, employer approval

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Key aspects of the negotiated deal to reform local government pensions could be rewritten risking outcry from unions and scheme members, LGC has learnt.

Even though a deal agreed by unions, employers and ministers at the start of the summer has been overwhelmingly endorsed by union and employer members, LGC understands it could yet be amended following a statutory consultation which is due to be launched by Department for Communities & Local Government.

Responses to this legal consultation could affect the final shape of the new Local Government Pension Scheme even though informal consultations by unions and the LGA of their members have backed the current proposals with votes ranging from 84% to 95%.

A government source said: “We cannot go into a statutory consultation fettered by those proposals.”

LGC understands there were just over 500 responses to the LGA’s informal consultation with its members, but government officials are expecting some of those who did not respond to the LGA to do so to DCLG’s statutory consultation, with the potential to impact on the final design of the scheme.

Individual scheme members will also be able to respond to DCLG’s consultation, whether or not they have taken part in an informal consultation run by any union.

In particular the 50/50 ‘low cost’ option, which allows members to reduce their pension contributions and was championed by unions during the long-running negotiations, could be at risk.

The source described these as the “most contentious and interesting” part of the proposals for reform, but warned they may have to be amended. “We are looking seriously at whether the 50/50 option will have to be tweaked to comply with wider government legislation.”

The government is due to publish the Public Service Pension Bill this month – and LGC understands it will include a role for the Pensions Regulator to oversee public sector pensions including the LGPS.

The regulator currently oversees private sector pensions, while oversight of the LGPS has thus far rested with DCLG.

Unions and employers who completed talks on members’ benefits at the start of the summer, are still in negotiation over issues such as scheme governance, transparency and how any cost rises should be managed in the future.

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