9 September 2002

1. Following Ministers’ response to the first phase of the stocktake exercise, announced in the department’s letter of 16 May, I now enclose a discussion paper which outlines several ways in which the current benefit package of the LGPS could be modernised, extended or developed, particularly for new members. Your comments and observations are now invited on the terms of the paper and should be sent, no later than 14 February 2003, as indicated below. It is hoped to issue further papers on other topics shortly.

2 The prime purpose of this second stage of the stocktake exercise is to use a series of discussion papers as a basis to generate discussion and comment from among LGPS interests in England and Wales on the concepts and suggestions raised by the papers. No specific regulatory changes are envisaged or proposed to the current Scheme’s provisions; no entitlements are affected.

3. The discussion paper acknowledges that while the LGPS provides a reasonable pension package for full time career local government employees, it is increasingly unsuited to the modernisation trends of local government in terms of new workforce and employment characteristics. The current arrangements for existing Scheme members are not affected in any way by this exercise but it is right to debate how best to forge some new, flexible and attractive proposals which could form the basis of a new benefit package, primarily for the future staff of local authorities and one which local authority employers will support.

4. Interested parties are invited to consider the several propositions and suggestions set out in the paper, against the background of the stocktake exercise and the prevailing pension framework. The costs and benefits of any possible changes will need careful assessment. The responses will, it is hoped, provide a comprehensive and objective basis for informing any future decisions Ministers may wish to take about the Scheme’s benefit package and particularly for new staff. The exercise will however, also provide a working context for LGPS interests to consider the scope for possible future extensions to the current LGPS benefit package including, for example, pension provision for unmarried partners.

5. Responses to this exercise, and to further consultation phases will be carefully considered and reported to Ministers. Subsequent decisions they may wish to take about the need for any future amendments to the Scheme’s regulatory framework would be announced later next year. Where any are agreed, there would then follow the usual preparation stage of drafting amendments which would in turn be subject to a full national, formal consultation stage with all interested parties, as required by the Superannuation Act 1972, prior to any final coming into force of the regulatory changes.

 

6. As stated above, it is not the intention of this exploratory exercise, within the ambit of the stocktake review, to suggest any specific changes to the current pension benefit framework which applies to existing Scheme members. Their rights are, of course, protected by statute. Where it may be determined, following this exercise, that improvements should be made to the existing benefits of current Scheme members, then national, formal consultation with all LGPS interests will take place in the usual way before statutory effect could be given to the changes.

7. Details of the Department’s intentions to ensure an effective consultation in this stage of the exercise will be posted shortly on LGP’s web-site (http://www.xoq83.dial.pipex.com). Useful preliminary meetings have already taken place with several members of UNISON, the GMB, and the T&G, as well as elected representatives from Derbyshire County Council and councillors representing several of its District Councils. The Department is very happy to accept further invitations to attend and to contribute to meetings or seminars about this and any of the forthcoming series of stocktake discussion papers within the relevant consultative periods. It may be that the Department will organise specific arrangements for seminars on particular papers; these and other details will be finalised shortly.

8. Any enquiries and your eventual responses to the discussion paper should be sent to Michael Groves, Local Government Pensions Division, ODPM, at Zone 2/E8, Ashdown House, 123 Victoria Street, London SW1E 6DE, or by email to michael.groves@odpm.gsi.gov.uk by close on 14 February 2003.

Yours sincerely,

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 Metropolitan Borough 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

EO

SOCPO

SOLACE

ALACE

CIPFA

New Towns Pension Fund

Trades Union Congress

UNISON

TGWU

GMB

Audit Commission

UCEA

Other Government Departments

GAD

DoE (NI)

SPPA