The Scottish Public Pensions Agency (SPPA) has launched a consultation on a new Local Government Pension Scheme for Scotland, which is designed to be affordable and sustainable as well as fairer for employers, scheme members and tax payers.

The scheme plans for savings from the removal of the 'Rule of 85' from the current scheme - so as to comply with the EC Directive on Equal Treatment in Employment and Occupation - to be reinvested in the new plan.

The rule had seen workers over 60 in local government, whose age and service added up to 85, be able to retire early and receive an unreduced pension.

However, the new scheme proposes improved accrual rate for building pension benefits, up from 1/80th, plus a lump sum of three times the annual pension, to 1/60th, but with no automatic lump sum.

For example, members who currently pay into the scheme for 30 years would receive 30/80ths of their final pay on retirement plus lump sum, whereas under the proposal members would receive 30/60ths of their final pay on retirement.

Also included in the scheme for consultation are plans for lump sum ‘death in service’ grants for partners to increase from two times final pay to three times final pay, and it also plans for increased flexibility, as members wishing to work beyond 65 could reduce hours while taking part of their pension.

Employee contribution rates to the scheme will increase from 6 per cent to an average of 6.3 per cent, which will be set at tiered variable levels linked to pensionable pay.

The proposals have been developed by a tripartite group of officials from the Scottish Executive, Convention of Scottish Local Authorities and trade unions, and those wishing to respond to the consultation can access the full proposals on the SPPA website .

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