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The current
one-sixtieth final salary Local Government Pension Scheme (LGPS)
will not exist by 2012, according to 75 per cent of local government
attendees at a seminar hosted by financial consultant Mercer.
The seminar, one in a series held over the summer, focused on the
future of the LGPS, including the cost-sharing arrangements, which
the Government are committed to implementing from 1 April 2009.
Chris Hull, head of Mercer’s Local Government Consulting Unit
and seminar chairman, commented: “Cost sharing will be a vital
negotiating area for LGPS over the next few years. Implementing
a fair and effective cost-sharing system is a difficult task for
any pension scheme. However, it’s particularly difficult for
a national scheme like LGPS in which thousands of different employers
participate.”
According to responses, just over half of the seventy pension managers
and finance officers who attended the seminar series thought that
cost sharing should apply to benefits and retirement age under the
scheme, but 47 per cent thought that only employee contribution
adjustments should be made through cost sharing. In terms of investment
strategy, 75 per cent thought that investment volatility should
a matter for employers to deal with and should not be reflected
in any cost sharing mechanism.
When questioned about an absolute cap on employer contributions,
delegates were split between yes and no. Of the 50 per cent that
agreed with a cap, four fifths thought that it should be at a higher
level than the 14 per cent of pay proposed by the Government.
More than half of delegates thought that the LGPS would be converted
to a career average revalued earnings scheme by 2012, and only seven
per cent believed that the scheme would move to defined contribution
(DC).
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Pensions Age July 2008
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