Asked by: Lord Hutton of Furness (Labour - Life peer)
Question to the Department for Levelling Up, Housing & Communities:
To ask Her Majesty's Government what assessment they have made of the cost savings resulting from the 2014 reforms to the Local Government Pension Scheme.
Answered by Viscount Younger of Leckie - Parliamentary Under-Secretary (Department for Work and Pensions)
In 2014 and 2015, significant reforms were made to public service pension schemes to address increases in the costs of providing pension benefits to public workers, and to place schemes on a more sustainable and affordable long-term footing. In the Local Government Pension Scheme (LGPS), reforms were implemented from 1st April 2014 and included moving the scheme from a final salary benefit structure to a career average benefit structure.
In May 2012, the Government published documents (attached)on the planned reforms to the LGPS including a costings analysis from the Government Actuary’s Department (http://data.parliament.uk/DepositedPapers/Files/DEP2012-1614/Buildupofcostsandcostreconciliationtables-Final.pdf). This analysis outlined that the existing final salary scheme design was estimated to cost in total 21.73% of pay (p2) and the planned career average scheme was estimated to cost in total 19.51% of pay (p3), suggesting an overall saving of just over 2.2% of pay.
To ensure consistency with other public service pension schemes, the final design of the reformed LGPS was changed so that scheme members received revaluation of their in-year accrued pension immediately. This increased the costs of the career average scheme by an estimated 0.4% (see table 7.1 at (attached) http://lgpslibrary.org/assets/othergov/2013VRep.pdf
The Government is currently considering the changes to public service pension schemes which will be necessary to comply with the findings of the Courts in the McCloud and Sargeant cases (https://www.parliament.uk/business/publications/written-questions-answers-statements/written-statement/Commons/2019-07-15/HCWS1725/) and these will have cost implications for the reformed scheme.
Asked by: Lord Hutton of Furness (Labour - Life peer)
Question to the Department for Levelling Up, Housing & Communities:
To ask Her Majesty's Government what assessment they have made of the cost savings resulting from the use of pooled investment funds in the Local Government Pension Scheme.
Answered by Viscount Younger of Leckie - Parliamentary Under-Secretary (Department for Work and Pensions)
In November 2015, the Government published criteria and guidance for the creation of pooled investment funds in the Local Government Pension Scheme (LGPS) in England and Wales, to be operational by April 2018. Eight LGPS asset pools have been established to manage the investments of the scheme.
Estimates provided by the LGPS pools indicate that across the scheme, total savings of around £155 million have been achieved over the period from 2015 up to March 2019. The pools have estimated total savings by 2033 at between £1 billion and £2 billion, with annual savings of up to £200 million.
Asked by: Lord Hutton of Furness (Labour - Life peer)
Question to the Department for Levelling Up, Housing & Communities:
To ask Her Majesty’s Government what guidance they have given, or plan to give, to the Local Government Pension Scheme and similar public sector pension schemes, concerning the scope of the WHO Framework Convention on Tobacco Control.
Answered by Lord Bourne of Aberystwyth
The Local Government Pension Scheme is the only major public sector pension scheme which maintains independent investment funds out of which member benefits are paid. Investment decisions are the responsibility of scheme administering authorities.