Government secures agreement on new pension boards' membership

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Pension boards will have equal numbers of employers and pension scheme members, under new arrangements proposed by the government.

The measure was introduced by Treasury spokesman Lord Newby during report-stage debate of the Public Service Pension Bill on 12 February 2013.

Labour, together with some Lib Dems, had previously argued that one third of pension board appointees ought to be member representatives.

Lord Newby said: "We accept the principle that employees should be properly represented, so, for the public schemes, we propose that there should be equal representation.

"That would mean that there will always be equal representation of employer and employee interests, regardless of the number of participating employers in a scheme."

He added: "We believe that our approach offers a fairer and better way to ensure that members' interests are represented in the public schemes."

The move was welcomed by several peers.

Opposition Treasury spokesman Lord Davidson of Glen Clova replied: "We applaud what the minister said about equal representation on pension boards. To have employees on such pension boards is a very welcome development."

Lib Dem Lord Sharkey, one of the peers who had advocated the requirement for one third of board appointees to be member representatives, said the government had taken a "realistic and fair view of member representation".

"The equality of employer and employee representatives on pension boards is an entirely satisfactory resolution to the problems that we outlined earlier. In fact, I think that the amendments provide a better solution than those proposed previously here and in the Commons," Lord Sharkey said.

Four key tests

Later the bill was agreed at report stage. It will now pass to third reading, which gives peers a final chance to review the bill's contents.

The bill moves public sector pensions over to a career average scheme and increases the age at which members can draw their pensions.

The government's plans are based on a report by Labour peer Lord Hutton, who designed four key tests for public service pension reform: affordability, fairness to public service workers, fairness to taxpayers, and transparency.

Lord Hutton's recommendations were the basis for consultation between the government and public servants, trades unions and other member representatives, and the bill implements the agreements reached on:

  • moving to career average pension schemes, instead of final salary schemes
  • public servants working longer to receive a full pension, except for the armed forces, police officers and firefighters
  • making no changes to the pensions of those who are 10 years from normal pension age on 1 April 2012
  • changing the governance arrangements of public service pension schemes.

The bill applies to the whole of the United Kingdom.

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