This item was published during the term of a previous administration that ended in April 2007
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Local government pension scheme
26/10/2006
Regulations have been laid in the Scottish Parliament to implement transitional protection for existing members of the Local Government Pension Scheme as the Rule of 85 is removed.
This legislation gives full transitional protection to 2020 for existing members who would have reached age 60 and satisfied the Rule - that their combined age and length of service is 85 or more - by that date, and who decide to leave before 65.
The Rule has to be removed from the Local Government Pension Scheme (LGPS) to comply with EC law. It will be removed from December 1, 2006.
Minister for Finance and Public Service Reform Tom McCabe said:
"We have undertaken a full consultation on these proposals to secure a fair form of protection which will address the concerns of members. Crucially, any proposals must also be legal and affordable.
"I believe this legislation meets that aim - this is a specific Scottish solution tailored to Scottish circumstances, over and above what has been agreed in England and Wales.
"We have worked closely with the trades unions and COSLA to develop the details of the protection for existing members. Through this consultation, I am satisfied we have reached the fairest decision for all parties involved.
"Removing the Rule of 85 will also release financial savings from the local government pension scheme. We are determined to ensure that every saving made from its removal will be put back into the LGPS. This will help ensure that the new scheme is fair, healthy and delivers for all its members - not just those who can afford to retire early."
A consultation exercise, on removing the Rule, implementing transitional protections for existing scheme members and tax changes resulting from the Finance Act 2004, ran from June 29 to July 31, 2006. This followed an earlier 12-week consultation on proposed changes to the LGPS in Scotland, that commenced in September 2004, as well as detailed ongoing discussions between the key stakeholders in Scotland and on a UK basis.
The Rule of 85 has to be removed from the Local Government Pension Scheme by December 2, 2006 in order to comply with EC Directive 2000/78/EC. This was confirmed by the judgement on the UNISON judicial review on the decision to remove the Rule of 85 from the Local Government Pension Scheme in England and Wales.
The regulations go beyond those agreed in England and Wales in July 2006, which offer full transitional protection to 2016 and tapered protection for those who will be 60 and satisfy the 85 year rule between April 1, 2016 and March 31, 2020 respectively. The total cost of implementing transitional protection in Scotland is estimated at £360 million.
Discussions with trades unions and COSLA will continue and a wider consultation is planned in 2007 on costed, realistic options for a new LGPS for Scotland.