Lambeth Council is taking steps to address the gender pension gap and encourage more employees to remain in the Local Government Pension Scheme (LGPS), according to discussions at the recent Pensions Committee meeting.

The committee reviewed the government's consultation on LGPS Access and Fairness, which includes proposals to address issues such as survivor pensions and death grants, the gender pension gap, and pensions opt-outs. The committee is providing input into the final response to the consultation.

One area of focus is the gender pension gap. The committee reviewed proposals to address this issue, including making unpaid leave under 31 days pensionable and aligning the cost of buying back unpaid leave with standard member contribution rates. The committee generally agreed with these proposals, noting that they would be simpler for both individuals and the employer to calculate. However, concerns were raised about potential appeals from members who previously repurchased leave at a higher cost.

Another area of concern is the number of employees who opt out of the LGPS. Officers reported that the opt-out rate for Lambeth Council employees is fairly average compared to national figures. Most of those who opt out are casual workers, particularly in leisure services. The council has held campaigns and Q&A sessions to promote the benefits of the scheme, but many casual workers still choose not to join. The committee discussed ways to improve uptake, including providing more information about the benefits of the scheme and addressing any barriers to participation.

Linda D'Souza, Assistant Director of Payroll and Pensions, noted that the number of active members using the pensions online portal continues to rise, falling just below the 50% mark. An article was issued to promote the Engage platform, and emails will be sent to active members encouraging them to access the portal to view their annual benefit statements.

Projected annual CPI inflation rates from 2025 to 2045
Projected annual CPI inflation rates from 2025 to 2045

The committee also discussed the actuarial assumptions for the 2025 valuation, which are used to calculate funding positions and employer contribution rates. The key assumptions include the discount rate, Consumer Prices Index (CPI) inflation, and longevity. Officers are recommending maintaining prudence margins at 85% for the 2025 valuation, resulting in a discount rate of 5.5% per annum and an estimated funding level of approximately 120%. They are also recommending that the Fund continues to adopt the median projection for CPI inflation using the Economic Scenario Service (ESS) model, resulting in a CPI inflation assumption of 2.3% per annum.

However, maintaining prudence margins at 85% still carries risks. According to Stephen Law, the model is based on human assumptions and therefore carries inherent uncertainty. Specific risks include:

The committee will continue to monitor these issues and work to ensure that all employees have access to a fair and adequate pension.