At a time when many organisations are looking at budgets and considering reducing staff numbers great care needs to be taken when those considered participate in the local government pension scheme, says David Davison.

Improved benefits apply to individuals who lose their job as a result of the pursuit of ‘operational efficiencies’ and these enhancements need to be paid for by the employer as a one-off ‘strain on fund’ cost.

These payments are often missed as part of the planning for redundancy costs which can result in organisations getting a nasty surprise, as often they can be for tens of thousands of pounds, frequently dwarfing other costs.

Local Giving Pension Scheme (LGPS) has well publicised practices and employers should speak to their local contact to ascertain the likely costs in advance of making any restructuring decisions.

David Davison is a director of Spence & Partners Actuaries and Dalriada Trustees