MD2215 GLA Members’ Pension Scheme

Section 26 of the Greater London Authority (GLA) Act 1999 provides for the Mayor and the Assembly jointly to make determinations in provision for the payment of pensions to the Mayor and Assembly members (collectively “GLA Members”) as the Authority may determine from time to time.

Under this provision, GLA Members were, from 2000 to 2016, within the Local Government Pension Scheme (LGPS), along with local councillors and local authority staff.

Following the GLA elections in May 2016, and as a result of legislative amendments approved by Parliament, the Mayor and Assembly Members are no longer eligible to be members of the LGPS.

The Government has confirmed that the Authority is free to establish an alternative arrangement, under the relevant powers granted in the GLA Act. While not employees of the Authority, it is recognised that being an elected member of the Authority is a full-time role and therefore it is appropriate for suitable pension provision to be made.

Informal discussions resulted in Barnett Waddingham (the Authority’s actuary) being engaged to provide professional advice on options for a pension scheme for GLA Members. The scheme would operate on the basis of there being exactly the same level of contributions by GLA Members individually and the Authority corporately as there had been previously under the LGPS scheme. Investment risk would be borne by GLA Members, ensuring that there would be no additional cost to the taxpayer.

Based on a specification provided by the Authority, Barnett Waddingham reviewed the relevant providers in the market and have recommended that the Authority contracts with Aviva for the provision of a master trust pension scheme for GLA Members. This scheme is typically used to meet organisations’ “auto enrolment” requirements and so is representative of typical current private sector practise.

To provide GLA Members with a Defined Contribution pension scheme within existing budgetary resources.

The provision of a pension scheme for GLA Members helps recognise the full-time nature of their work. Not providing an appropriate scheme may deter Londoners from some backgrounds from putting themselves forward in future elections to the Assembly.

Although the proposed scheme is in principle open to the Mayor as well as all Assembly Members, the Mayor has indicated that he does not intend to join the new scheme. In order not to bind the hands of his successors, whoever is Mayor at any point in future will have the option to reverse this decision.

The costs of the scheme for Assembly Members will be met by Members’ individual employee contributions and from the existing budget and reserves held for employer contributions within the Assembly’s budget and balance sheet, which is fixed at 12 per cent of pensionable pay.

Section 26 of the GLA Act 1999 provides for the Mayor and Assembly jointly to make determinations in regard to the Mayor’s and Members’ pension arrangements. The GLA can under s 26 make payments towards the provision of superannuation benefits, establish and administer such schemes and make payments to schemes, both GLA schemes and those administered by third party providers.

It is proposed that the Defined Contribution Scheme will be set up before the end of February 2018 to allow Assembly Members to make contributions into the scheme before the end of the 2017 18 tax year.