Scottish Pension Reforms

Local authority employers and trade unions have reached emphatic agreement on the new design of the Local Government Pension Scheme (LGPS) in Scotland.
The movement to a Career Average Valuation will ensure that those at the lowest end of the pay scale and particularly female employees will benefit from a fairer and sustainable pension.  Scotland’s Councils are one of Scotland’s largest employers, employing over 280,000 people.
The new scheme design will go a significant way to ensure that those employees can make a decent provision for their retirement.  COSLA Leaders approved the new scheme design in September 2013 and now UNISON has confirmed that they had received an overwhelmingly positive response to the new design with a 94% positive response to the ballot.

Councillor Kevin Keenan COSLA’s Finance Spokesman said:

"Whilst we felt we already had a sustainable and fair Local Government Pension Scheme in Scotland, the reform process did over an opportunity for local authorities as Employers to ensure that the Scheme provided important support for employees at the lower end of the pay scale and reflects the unique demographics of our workforce whilst remaining affordable and sustainable.  The positive ballot result from the Trade Union Side is a welcome confirmation that the new scheme design is a positive change and reflects a very constructive approach between all parties."

Dave Watson, Scottish Organiser (Bargaining and Campaigns) at Unison said:

“Whilst the local government trade unions, UNISON, GMB, Unite and UCATT regard the reform of the Scottish LGPS as an unnecessary interference by the UK Government in the operation of a pension scheme that had been updated as recently as April 2009, our approach has been to minimise the impact of the changes imposed by the UK Government and maintain the main elements of the uniquely Scottish approach. The main aim was to protect and improve pension benefits for the majority of members without increasing contributions. Such an increase would simply drive members away from pension provision at a time of pay cuts and other economic pressure. We hope the new scheme will attract new members, particularly women and those at the lower end of the pay scale who are most likely to suffer by not having a secure pension in retirement. In doing so we believe we have a sustainable and affordable scheme for the longer term.”

The key changes to the new scheme are:

• Move from Final Salary to Career Average Pension Scheme
• Increase in accrual rate from 1/60ths to 1/49ths.
• Retaining existing ill health and death in service benefits.
• Introducing a 50/50 option allowing employees to pay 50% of contributions for 50% benefits.
• Introduction of an Employers' cost cap mechanism to ensure the future affordability and sustainability of the scheme.
• Equality in partner pensions for co-habiting and civil partners as with married couples