Pensions - Articles - Is the LGPS to be saddled with a new valuation cycle


As you are more than likely to be aware, Ministry of Housing, Communities & Local Government (MHCLG) has recently issued a consultation on a number of proposed changes to the Local Government Pension Scheme (LGPS) in England and Wales.

 By Graeme Muir FFA, Partner and Head of Public Sector, Barnett Waddingham

 This covers a number of areas, including:

 Moving from triennial to quadrennial local Fund valuation cycles from 2024 and how we get there
 Allowing revisions to employer contribution rates between valuations via interim valuations and in what circumstances
 Allowing “exiting employers” to remain in the Scheme as “deferred employers” with no exit payment due and continuing to be responsible to meet their liabilities that remain in the Scheme
 Where exit payments are still due, a greater degree of flexibility in recovering them from employers
 Some potential changes to paying exit credits and addressing issues with pass-through arrangements
 Removing the requirement for higher and further education bodies to have to put non-teaching staff into the LGPS
 Responses are sought to 19 questions by 31 July 2019. We are preparing a briefing note to assist Funds in preparing their response over the next 2-3 weeks and will of course be submitting our own response.

 We are largely supportive of most of what is being proposed but will still have a lot to say; the devil is in the detail and, as ever, we also need to think through any unintended consequences.

 A lot can happen in four years so is extending the funding valuation cycle appropriate? Will a four year roll forward to estimate an employer’s assets and accounting liabilities be accepted by auditors reviewing the FRS102 and IAS19 disclosures?

 When is it “appropriate” to adjust contributions based on an interim valuation? What could be deemed appropriate by one Fund might be different to another Fund.

 Allowing further education bodies to be given the option of no longer offering staff LGPS membership could increase pension costs for them in the short term. What criteria do you use in deciding to treat employers as deferred employers? What is the risk of being challenged?

 If there is a payment plan, does this mean you should revisit the debt position at subsequent valuations?

 Where risks are shared between letting authorities and contractors how do you decide if the employer is entitled to exit credit or not? If so, how much?

 All these questions (and more) need to be answered so watch this space for our briefing note.

 The consultation can be found here.

Back to Index


Similar News to this Story

Pensioners urged to check availability for benefits
Annual research by HUB Financial Solutions reveals that losing the £154.50 licence fee from next June could be the tip of the iceberg for many thousan
Aegon highlight demand for DB advice remains strong
According to adviser research from Aegon the demand for Defined Benefit (DB) advice remains strong with 9 out of 10 (89%) advisers, who are or have be
The rise of a gradual transition to retirement
The rise of a gradual transition to retirement prompts ONS to consider new ways of measuring the ‘dependency ratio’

Site Search

Exact   Any  

Latest Actuarial Jobs

Actuarial Login

Email
Password
 Jobseeker    Client
Reminder Logon

APA Sponsors

Actuarial Jobs & News Feeds

Jobs RSS News RSS

WikiActuary

Be the first to contribute to our definitive actuarial reference forum. Built by actuaries for actuaries.