Agenda item

The Committee will be asked to consider a  draft response to the DCLG consultation paper of 7^th October 2011attached as Appendix 2 to the main  report.

The Committee were referred to their terms of reference and asked to note that they were considering this report in both their capacity as an administering authority and as an employing authority.

The Committee were asked to consider a response to the DCLG consultation paper on pension’s reform.  The DCLG had issued this consultation paper in October 2011 on proposals to deliver short term savings in the LGPS (England& Wales). To limit the rise in employee contributions in the short-term, while delivering the required savings. There were two options put forward for consideration.  The first option  involved an phased increase in employee contributions  starting in 2012/13 of 1.5% and  a change in  the accrual rate  of 1/64  for service between April 2013  and March 2014  and to 1/65^th for each year of service  after March 2014. The second option, which was likely to be more acceptable to employees and the Council, was a phased increase in employee contributions equivalent to 1% and change in the accrual rate of a reduction in 1/67^th per year of service after March 2014. The Chair asked whether a response would now be needed as recent national news stories indicated that an agreed position had been reached between the Government and unions about contribution levels. The Head of Human Resources   advised that, as yet, there was no official confirmation had been received from the Government that an agreement had been reached and therefore a response to the consultation should be taken forward.

Understanding was sought on how many staff could opt out of the Local Pension Scheme and the financial impact of this.  The Committee learnt that there was no statistical information available on the number of calls made to the Council’s Pensions office but only first hand experience that a number of concerns were being raised. Employee side representative Sean Fox informed the Committee that a recent survey carried out by UNISON   and the PCS where 50%, of those responding to the survey said they would opt out of the scheme.  Whilst the Employee side agreed with the Council’s response to the consultation they highlighted that the Hutton proposals included the abolition of the ‘Fair Deal for Pensions’ this mechanism helped protect a local government employee’s pensions in the event of outsourcing. The Pensions Committee had previously considered an earlier version of the Hutton report and further to representation by UNISON had supported the continuation of this mechanism.  The Employee side had also previously responded on some key clauses in the Hutton report concerning career average scheme and retirement age which would also need to be reaffirmed in the response sent to the government.  The Committee agreed that the preliminary response to the Hutton review containing the information on the Council’s stance on fair deal for Pensions and the above mentioned clauses be appended to the consultation response.

 To understand the financial impact on the Local Government Pension Scheme   Members noted that the pension fund in the last financial year had   operated at a surplus of 1m a month. More recently following staff reductions the Pension fund was operating at a break even point.

It was accepted that there should have been prior consultation with the Pensions working group about this consultation and response.  Although the group did not have set meetings it was felt that the group should continue to meet on an ad hoc basis.  The Assistant Director for Finance informed the Committee that he would be reviewing the working arrangements of this group.

The Committee agreed the CFO’s proposed amendment to the letter to Mr Crossley, Deputy Director Workforce and Pay and Pensions in appendix 2, paragraph 4, This was the deletion of the phrase “no saving are likely to emerge” and replacement with “no reduction in the employer contribution rate will be possible”.

RESOLVED

That the draft response to the DCLG consultation paper of the 7^th October 2011 as appendix 2 be approved subject to the above amendment from the CFO. Also that the preliminary response to the Hutton review also be attached as an appendix.