Following increased pressure to limit the cost of local authority schemes to taxpayers, the Department for Communities and Local Government (CLG) launched a consultation in March to look at cost sharing as part of wider reforms to the LGPS.
Speaking at the National Association of Pension Funds’ (NAPF) local authority conference, Chris Hull, head of Mercer’s local government consulting team, said the proposal was being driven in part by politics and the demise of private sector final salary schemes.
He argued that the implications of a national model for cost sharing would have a
fundamental impact on the structure of the LGPS.
“It’s a tough one to predict but I don't think it’s going to be easy. We have the framework to deliver this, but the outcomes are still shrouded in mystery,” he added.
Trevor Jones, chairman of the Local Government Pensions Committee, said that introducing a cost-sharing approach to the LGPS was likely to raise debate with the unions.
“There will be a row of monumental proportions and there will be more strike threats,” said Jones.
“I do not see any appetite for taking on the unions. In the private sector, management can announce the closure of a final salary scheme and tell members they are moving to a money purchase arrangement, but this is something you cannot do within the public sector.”
The deadline for submissions to the CLG consultation is May 30, 2008.
DR
