24/2/2010
By Sophie Baker
A new minimum threshold requirement, and an independent commission with powers to increase contribution levels, would help secure the long-term sustainability of the Local Government Pension Scheme (LGPS).
That was the message from Anthony Meyer today, the chairman of the London Pensions Fund Authority(LPFA), as he who proposed a three-step plan at a Symposium on the future of the LGPS.
The plan would require new legislation to set a minimum threshold requirements where a scheme's assets should be at least 80 per cent of its discounted long-term liabilities and the establishment of an independent commission with the sole remit of ensuring the long-term sustainability of the LGPS. The third part would see the commission given powers to increase contributions, or adjust the inflation indexation, should a valuation fall short of the 80 per cent funding threshold.
Mayer said: "There is a growing body of opinion that over time the unfunded liabilities of LGPS will have to be picked up by the taxpayer unless the fund is closed. This is a nonsense. The LGPS will always be sustainable - if contributions into the fund and/or pensionable retirement ages are increased sufficiently and/or by reducing benefits, such as adjusting the indexation of pensions increases."
Mayer said now is the time to start a debate on this subject, as doing nothing about the sustainability of the LGPS is "not an option".
Mayer was joined by speakers from the Local Government Association, the GMB union, as well as representatives from the National Association of Pension Funds, Hymans Robertson, Barnett Waddingham, Record Currency Management and Eversheds.
"To illustrate our commitment to informing this much-needed debate, the LPFA is today launching this much-needed debate, the LPFA is today launching a unique website, An affordable Local Government Pension Scheme that contains key information about our campaign to promote constructive and informed debate on the future of the LGPS," said Mayer.
The website is available here.
