New LGPS proposed

Details of a new proposed local government pension scheme (LGPS) have recently been announced, following negotiation between the Local Government Association and trade unions.

Briefly, this new scheme would be a career average revalued earnings (CARE) scheme with an accrual rate of 1/49th of salary for each year of service. A CARE scheme is a defined benefit scheme where a member`s pension at retirement is calculated using their average salary of the whole period of their service, rather than on the salary at retirement. Average contributions by members into the scheme would be set at 6.5% of actual pay - for lower paid members this would be the same or less than current contributions; higher contributions would be payable by higher earning members.

For those members who have, or are considering, opting out of the scheme, there would be an alternative of paying half of the appropriate member contribution and receiving half of the pension (whilst still retaining all other benefits in full). Instead of a scheme normal retirement age, each member`s normal pension age would be their state pension age. Finally, benefits that have accrued up to 1 April 2014, which is the proposed start date for this new scheme, will be protected.

Significantly for educational institutions that deal with outsourcing contracts, any outsourced members will be able to stay in the scheme not only on a first transfer, but on all subsequent transfers. This would extend the rights of members on subsequent transfers more comprehensively than is currently the case.

These proposals will now be the subject of consultation by members and employers, with the hopes of a formal government consultation to follow in the Autumn. 

If you have any queries or would like to discuss any issues around LGPS and its implications for employers, please contact Craig Engleman on 01904 688509 / 01482 323239 or email

Posted on: 09/07/2012

This article is for general guidance only. It provides useful information in a concise form. Action should not be taken without obtaining specific legal advice.

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