The Local Government Pension Scheme was revised in 2015 and a Career Average Earning Scheme (CARE) was introduced which replaced the final salary scheme. The accompanying regulations also introduced a number of important new elements. One of which was aligning the Local Government Pension to the normal State Pension Age.
Whilst members can still choose to retire and access their pension before State Pension Age, it is at a reduced rate (Actuarial Reduction). The level of reduction varies between 52% for men and 50% for women retiring 13 years earlier than State Pension Age and 6% for both men and women retiring one year earlier. For those with a State Pension Age of 67 wishing to retire at aged 62 the reductions are 25% for men and 24% for women.
The level of the reductions applied are based on guidance issued by Scottish Ministers. Since the new scheme was introduced, statistics published by the National Records of Scotland show that life expectancy since 2014-17 has decreased in Scotland for the first time in 35 years. They also highlight that Scotland has the lowest life expectancy of all UK countries and in certain parts of the country including parts of Scotland’s major cities, life expectancy is significantly lower than the Scottish average. Furthermore, there is growing evidence that following retirement the period of healthy retirement in parts of Scotland is also reducing.
Figures produced in 2017 record that in Glasgow 67.2% of Glasgow City Council’s workforce were female. Women predominately absorb caring and family responsibilities and as such many face the necessity of giving up paid employment earlier than their State Pension Age.
Many local government workers, like myself joined the Local Government Pension scheme at a time when joining it was mandatory. At that time, you were able to retire on half your final salary after forty years’ service. For me that would be when I reach 62. Under the new scheme however, if I retire at 62 my pension could be reduced by 24% and even at the age of 66 a 6% reduction would be applied. These reductions are calculated on guidance issued by the Scottish Ministers.
I believe that the guidance issued by Scottish Ministers on the level of reductions is punitively high and as a result it prejudices low paid workers and disproportionately affects female workers. I would like Scottish Ministers to review and issue renewed guidance which significantly reduces the level of reductions to avoid these low paid workers becoming even poorer pensioners.