employer seminars pensions policy overview november 2011 presentation by: sharon liptrott scottish...
TRANSCRIPT
Employer seminars
Pensions policy overview
November 2011
Presentation By: Sharon Liptrott Scottish NHS Pension Scheme Policy Manager
www.sppa.gov.uk
Aim of today’s presentationProvide:
• role of Policy
• a narrative around various pension reforms
• what the reforms intend to cover
• the current position and;
• the impact on and position of the Scottish Government
Policy role at SPPA
– prepare in accordance with Government policy the regulations governing the schemes for which the Scottish Ministers have regulatory responsibility (i.e. Teachers, NHS, LG, Police and Fire in Scotland)
– determine questions under the regulations on which there is a right of appeal to the Scottish Ministers, and
– advise the Scottish Ministers on public sector and occupational pensions policy generally
Background informationBackground informationOccupational pensions policy reserved to UK Govt.
• Scottish Ministers have limited powers for Scottish NHS scheme– design secondary legislation, but -• HM Treasury has a legal veto
and a financial one
In past tended to follow what is agreed in E&W scheme.
Membership in Scotland aprox 1/10th of E&W
Additional changes made to pensionsNew UK Government formed 20 June 2010
Introduced wider policy changes that impacted or will impact on the public sector pensions
Annual Indexation (RPI to CPI) (reserved)
Tax Relief (reserved) - to be covered later in today’s seminar
Continued previous UK Government’s policy on
auto-enrolment (reserved) - to be covered later in today’s seminar.
Background to Public sector reforms
• UK Government pursuing an agenda of reform
• Independent Public Sector Pensions Commission chaired by Lord Hutton
• Interim report issued October 2010 recommending increases in employee contributions – short term proposals
• Final report published on 10th March 2011 set out a case for reform and made 27 recommendations –long term proposals
Immediate changes – increasing employee contributions• Average 3.2% of pay increases
40% from April 2012; next 40% from April 2013; final 20% from April 2014
• Expected to apply in Scotland (across UK):
Absolute confirmation via Chief Secretary Treasury’s letter 5 September 2011
If not, £8.4m deducted from Scottish Budget for each month (£4.6m from NHS)
£100m in 2012-13 (£56m from NHS), rising to cumulative over £500m by April 2015
Short term proposals – increasing employee contributions
Scottish Government:
– recognise sensitive and difficult issue– First Minister letters (4 Oct) and SPPA website– opposed in principle (wrong time, wrong approach)– lobbied UK Govt (unsuccessfully)– tried to explore options with employers/unions
Concluded no real alternative: – introduce for 2012/13 - consultations 7 Oct to 17 Nov– review feedback: – probable consultation on regulations December 2011 into January 2012– targeting introduction from April 2012
Long term proposals
The UK Government is proposing new set of arrangements from 2015 based on scheme design recommendations made by Hutton
Has designed a “reference scheme” to set cost ceilings for Teachers, NHS, Local Govt. and Civil Service schemes
Other schemes to follow
No cost ceilings set yet for Scotland
Long term proposals – SPPA understanding of the current offer in England and Wales
The reference scheme is based on:
• 60ths accrual rate• Normal Pension Age linked to State Pension Age• CARE accrual• Transitional protection for those within 10 years of retirement at 1/4/2012
Scheme specific discussions will allow tailoring of reference scheme but must remain within set cost ceiling. Current discussions in England and Wales aim to have outlined agreement of reformed schemes by end of year.
Long term proposals - the position in Scotland
• Scottish Government yet to decide
• still further details required on the UK Government proposals
• any Scottish specific differences would have to be met from the Scottish budget whilst recognising the HMT restraints on the scheme
• expect Scottish process & timetable soon:–timetable to suit Scotland, not UK Govt–continued commitment to engage stakeholders
How to find out more?
• SPPA website;• Scottish NHS Pensions Group (SPG) representative;• UK Government’s latest offer can be viewed on HM Treasury Website
Thank you for listeningany questions?
Scottish Public Pensions Agency
7 Tweedside Park
Galashiels
TD1 3TE
www.sppa.gov.uk
Contact Details: [email protected]