7 November2003

 

Local Government Pension Scheme

Phase 2 Policy Proposals Discussion Paper

1. With the agreement of Ministers, I enclose for your comments a policy discussion paper. It sets out proposals that will form the basis of future amendments to the Local Government Pension Scheme (LGPS) in England and Wales to take effect from 1 April 2005. The proposals were foreshadowed in the Department’s letter of 23 July which set out an initial two phase Strategy to amend the existing Scheme prior to any further decisions about the longer term.

2. Several of the propositions in the discussion paper need to be introduced to the LGPS to reflect Government policy. A key task of this exercise is to seek views on the best ways to implement the required changes and how to ensure that transitional arrangements are fair and balanced in relation to existing Scheme members’ accrued rights. Consultees will need to have regard to emerging policy and legislative/regulatory proposals from the Department of Work and Pensions and the Inland Revenue during the period of consultation for this document.

Background

3. The Strategy proposals’ announcement included a two phase programme of regulatory amendments. The steps to implement the first phase were announced on 30 September 2003. As a prelude to the second element of that programme, this policy discussion paper is timetabled to provide all LGPS interested parties with a clear picture of the principal changes currently envisaged for the Scheme, to take regulatory effect from April 2005. The necessary statutory consultation exercise to achieve that date is presently earmarked to begin in Spring 2004.

Policy Discussion Paper

4. The policy discussion paper now enclosed is intended to take forward a series of amendments to the existing LGPS regulatory framework which collectively reflect the following:-

recent pension policy changes to apply to all occupational pension schemes as set out in the White Paper, Simplicity, security and choice: Working and Saving for retirement – Action on occupational pensions (cm 5835);

Inland Revenue proposals for change as trailed in that Department’s consultation paper, Simplifying the taxation of pensions: increasing choice and flexibility for all, published in December 2002; and

several propositions which have emerged from responses to previous discussion papers circulated as part of the current Stocktake of the LGPS.

5. This exercise is not a statutory consultation; rather, the views of LGPS stakeholders are being sought on several important proposed changes to the current Scheme’s regulatory framework. Responses to the exercise will be carefully considered in preparing of draft amending regulations which will implement the second phase of the strategy.

6. In taking the Scheme forward the Department is conscious of the need to connect a number of different strands, internal and external, which are not all moving at the same pace. A positive and effective timetabling of changes is integral both to the issues to be taken into account by authorities as part of the 31 March 2004 valuation exercise, and to inform key decisions facing Ministers about the future evolution of the Scheme.

Responses

7. Responses to this letter, and any initial queries, should be directed to Paul Kirk, Local Government Pensions Division, ODPM, Zone 2/F8, Ashdown House, 123 Victoria Street, London, SW1E 6DE (telephone: 020 7944 6014) no later please than 12 January 2004. Electronic responses can be sent to the e-mail address given above.

 

 

 

 

 

 

T B J CROSSLEY

The Chief Executive of:

County Councils (England)

District Councils (England)

County and County Borough Councils in Wales

London Borough Councils

South Yorkshire Pensions Authority

Tameside Metropolitan Borough Council

Wirral Metropolitan Borough Council

Bradford Metropolitan City Council

South Tyneside Metropolitan Borough Council

Wolverhampton City Council

London Pensions Fund Authority

Environment Agency

Town Clerk, City of London Corporation

Clerk, South Yorkshire PTA

Clerk, West Midlands PTA

The Secretaries of:

Local Government Association

LGPC

SOCPO

SOLACE

ALACE

CIPFA

New Towns Pension Fund

Trades Union Congress

UNISON

TGWU

GMB

Audit Commission

ACA

UCEA

 

Other Government Departments:

GAD

DOE (NI)

SPPA