Consultation launched on future of Assembly Members’ Pensions
27 September 2012
The National Assembly for Wales’s independent Remuneration Board has launched a wide-ranging review into the future provision of Assembly Members’ Pensions.
A copy of the consultation document is attached. The main features of the current scheme are listed in Chapter 2.
“Demographic and economic changes in recent years have significantly changed the pensions environment in both the public and private sectors,” said Board Chair, Sir George Reid. “The current National Assembly for Wales Members’ Pension Scheme has not reflected these trends.”
The most recent valuation of the Scheme, in April 2011, indicates that it is fully funded and in £1.6m profit. However, actuarial advice provided to the Board indicates that this has been achieved largely by the switch from RPI to CPI. “A continuation of the Scheme in its present form would likely result in rising costs both for Members and for the Assembly Commission”, the Board comments.
Assembly Members currently pay a 10% or 6% contribution, with a 2 3.8% contribution being made by the Assembly Commission.
Earlier research by the Board indicates that AMs are in the highest 1.7% bracket of Welsh earners. When pensions are included in their ‘total reward’, says Mr Reid, “it is clear that this is at the top end of what is available in Wales.”
He adds, however, that the Board will wish to consider such factors as job insecurity and the absence of traditional career and pay progression for AMs in reaching a settlement which is “fair, sustainable and affordable.”
The Board has arrived at no pre-determined outcome to this review process but it has identified three possible options as a starting point for the discussions over the future of Members’ pensions provision, and has agreed to protect benefits accrued up to the date of any change.
Adjustment of the current final salary scheme, considering such factors as the accrual rate, the contribution rate and modifying some benefits
A Career Average Revalued Earnings Scheme, dependent upon the balance of accrual rate, level of indexation and pension age
A Cash Balance Scheme, guaranteeing a lump sum benefit but not an annual pension
The consultation process will start with a colloquium at the National Assembly on 11 October and will run until 17 January 2013. The Board intends to make a decision on AMs pensions by March 2014.
The Remuneration Board of the National Assembly for Wales is the independent body responsible for setting the pay, pensions and allowances of Assembly Members and their staff. The Board was established by the National Assembly for Wales (Remuneration) Measure 2010, which received Royal Approval on 22 July 2010.
In previous Determinations the Board has frozen AMs’ salaries for four years from 2011, agreed payments for additional office holders, reviewed their allowances and decided staff payments.
Review of Assembly Members’ Pensions: Issues and Options