An independent Local Government Pensions Commission is necessary to secure the future of the Local Government Pension Scheme (LGPS), says the London Pension Fund Authority (LPFA).

The LPFA has made the proposal in a 'green paper' called , A fair and affordable LGPS, suggests that the Commission has equal representation from employers and taxpayers, and those who receive the benefits from the scheme. It would be under the chairmanship of an independent chair, to be appointed by the Secretary of State for Communities and Local Government.

The politics need to be taken out of the LGPS, according to the paper, and the Independent Commission would replace the day-to-day involvement of the Secretary of State.

The Commission would be responsible for determining an appropriate and affordable scheme structure within an agreed framework, and manage the affordability of the scheme in the future, making recommendations for effective reduction in scheme deficits.

The paper also states that the Commission would be required to take decisions relating to the basis of the scheme (defined benefit/defined contribution/hybrid), the balance of cost between beneficiaries and contributors, solvency parameters, conditional indexation parameters, the normal retirement age and accrual rates.

"An affordable and sustainable pension scheme which meets the requirements of its members within the means of its sponsors should be a vital component of long-term public finance, health and welfare policy," explained LPFA chief executive, Mike Taylor. "The LGPS differs from most other public sector pensions in that it is funded and benefits from a positive cash flow. But it is becoming increasingly evident that even this scheme must adapt in the face of growing pressures around longevity and public concern over long-term costs, if it is to continue to be sustainable for future generations."

Taylor added that the proposals in the Green Paper intend to promote debate, and to ultimately provide politicians with a blueprint for ensuring all stakeholders have a say in the success of the scheme.

The Commission would ensure that the scheme provides an effective provision in retirement that fits within overall government targets for public expenditure, that it operates within overriding regulatory, pensions and fiscal legislation, and that it is within a fair balance of cost between beneficiaries and contributors.

The Commission would report to the Secretary of State annually, with a special report every three years after a statutory triennial valuation. Administering local authorities would continue to have control over areas including investment strategy.

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