LOCAL
GOVERNMENT PENSION SCHEME
SUSTAINING
THE LGPS IN
Consultation
commenced:
Consultation
closed:
SUMMARY
TABLE 2 OF 2
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CONSULTATION
QUESTIONS 8-14 |
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Respondee
Name |
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Q14. (a) Consultees’ views on the most appropriate
and beneficial timetable position are invited, given the objectives set out
in paragraph 18. (b) Consultees may
also wish to comment on the timetable and process needed to establish the
cost share arrangements, given the 31 March 2009 regulatory timetable and the
earliest date from which the results of the first cost share (should one be
needed) is implemented. |
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County
Councils |
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To adopt the
amortisation period most commonly used in the 2007 valuation. |
Inter-valuations
can be taken into account to extend that they affect the future service costs.
However there may be a case for not having a notional fund and past service
element as this would penalise LGPS members relative to teachers and NHS
staff (assuming their cost sharing is understood correctly). |
Ill-health can
be taken into account so far as they affect future service rate calculations
(including retrospective adjustments). |
The only way to
achieve inter-generational balance is to alter the assumptions in the model
at every valuation, on the basis of a framework set out in a statutory
instrument. This will ensure the assumptions reflect the demographic and
financial experience of LGPS. |
50:50 share of
cost is arbitrary and how would any other split be justified given that the
Teachers Pension Scheme and NHS Pension Scheme have a 50:50 split for cost
sharing. |
The principle of
a notional cap within the cost sharing mechanism is non-negotiable (rightly
or wrongly) as it is included in other public sector schemes. |
The required
datasets should be based on the data submitted for the 2010 valuation and
then applied from April 2012. |
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Bedfordshire |
No comment. |
No comment. |
No comment. |
No comment. |
The adjustment
to employee rate is based on 50:50 share of the increase or decrease in the contribution
rates for the model fund seems an acceptable method for providing cost
sharing; and it is noted that similar approaches have, or will be implemented
for other public sector schemes. |
There is
insufficient information on the consultation paper to comment with confidence
on the proposed level of a notional cap. It would be helpful to fully
disclose the assumptions and rationale for a proposed cap in particular (i)
whether the cap will be set for a particular date or will set at a level to
allow headroom before the employer cap bites; (ii) whether the cap be
adjusted as a result of savings due to gradual increase in retirement age, if
not yet included in the assumptions. |
The timetable to
establish the model fund by 2009 and implementation of cost sharing in 2011
is acceptable as it is in the same timescale as the valuation process.
However, based on recent experience, the Council is concerned about the
ability to deliver a robust cost sharing arrangement in line with this
anticipated timetable. |
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The LGPS is a
long-term business and amortisation periods are a valuable tool in smoothing
out short-term fluctuations in experience and thereby providing contribution
stability, by adopting a long period over which any surplus or deficit is
spread. The Authority agrees that the current 2007 actuarial valuation
average amortisation period could at the outset be adopted in the notional
fund. This is likely to be around 20 years. |
It would be
appropriate for the actuarial assumptions underlying the calculation of the
notional fund to be reviewed triennially and be informed by local valuation
bases, taking into account the experience over the inter-valuation period. The best estimate assumptions could then be
smoothed so that demographic experience between valuations would not
necessarily be introduced into the assumptions in one fell swoop; this
approach should serve to reduce the volatility of members’
contributions/benefit and dampen inter-generational cross subsidies. |
Ill-health and
related experience should be based as
smoothed best estimates in the subsequent calculations as this has the
benefit of reducing the ‘double cost impact’ of changes to the assumptions. |
As mentioned in
the consultation document that if actuarial assumptions are fixed at the
outset and waited to be changed with actual experience would cause a greater
risk to inter-generational cross subsidy, hence the smoothed best estimate
approach should be adopted to reduce risk. |
The Authority
considers the cost risks that are agreed should be shared as 50:50 split. |
The Authority
agrees that there should be a notional employer cap on costs and 14% seems
reasonable. |
The timetable to establish the notional fund in 2009 and implement
in 2011 should be adhered. The fact that it would necessitate some double
running of calculations for local fund actuaries, first to establish a
validated dataset and second to determine an actuarial basis is not an issue. The Authority may even be able to negotiate
a reduction in valuation costs – two for the price of one. |
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No comment. |
No comment. |
No comment. |
To achieve some
inter-generational balance the cost sharing should be linked to movements in observed
mortality rates over short timescales perhaps one/three years. This would
remove the requirement for making assumptions about future rates of
improvements. The assumptions should be smoothed in order to remove 3 yearly
fluctuations in employee contribution rates and benefits. |
A 50:50 split on
cost sharing is agreeable by the Council. |
The notional
employer cap of 14% is agreeable as an indicative rate, although it should be
accepted that actual rate cannot be set until the notional fund has been established
and the future service cost calculated. If the cap is set at 14% and employer
cost is determined at 14% then there is effectively no cost sharing as all
sharable cost increases will be borne entirely by the employees. |
The most
appropriate timetable should e cost effective to employers and individual
funds. Accordingly whatever the implementation date the membership data
supplied to fund actuaries for March 2010 valuation should form the basis for
the notional fund. The required datasets could be supplied by 30 September. |
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Devon |
The current 2007
actuarial valuation average amortisation period to be adopted in the notional
fund. |
For the
inter-valuation experience the smoothed best estimate approach should be used
to reduce volatility. |
Although it’s
difficult to determine the future impact of tiered ill-health scheme, however
the smoothed best estimate approach should be adopted. |
The smoothed
best estimate approach will reduce the double cost impact and will help to
achieve inter-generational balance. |
The cost share
ratio should be 50:50 split. |
Employers’
notional cap of 14% seems reasonable rate to contain costs. |
The time-table
for the cost sharing mechanism as suggested in the consultation paper seems
appropriate as it ties with the next actuarial valuation. The Council is of
opinion that the notional fund should be established in 2009 and scheme be
implemented in 2011. |
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Some compromise needs to be reached on the proposed amortisation period.
A shorter period will result in a more immediate impact of the cost-sharing
mechanism and (presumably) higher contributions from scheme members thereby
controlling employer costs. However the shorter the recovery period will
increase volatility of the scheme so suggest some sort of modelling of the
recovery period. |
If
inter-valuation is included within the cost sharing mechanism it will
increase volatility but will be able to react to changes. Inter-valuation
experience and up to date industry ‘best practice’ assumptions should inform
the actuarial assumptions underlying the calculation of the notional fund. |
Ill-health
retirements only are considered if significant enough to form part of the
cost-share mechanism however a less volatile mechanism should be chosen to
reflect the impact instead of an arbitrary ‘smoothing’ mechanism. |
Inter-generational
cross subsidy could be mitigated in one of the following ways: (i)The
employers could bear the cost of increased costs arising from non-actives or even
from all service prior to the cost-share implementation date. (ii)The
cost-share ratio could be adjusted at the outset to take into account the
proportion of LGPS liabilities that relate to non-actives. (iii)The
cost-share mechanism could allow non-actives future increases to be
restricted (see answer to 6). However none of
the above options is ideal, first two will dilute the impact on cost sharing
and the third one may be unacceptable. |
Risks should be
shared as 50:50 unless the ratio is adjusted to reflect the fact that a
significant proportion of the LGPS liabilities relate to non-actives (see
11). |
In principle a cap on employer contributions is attractive as it
demonstrates to taxpayers that there is a limit to the amount that will be
paid into the LGPS. In practice more work is needed on the impact of an
employer cap in situations which currently seem extreme but may not in future
(for example average UK life expectancy exceeding 90). |
The least disruptive option would be to collect the required data along
with the data supplied for the triennial valuation. This leads to an
implementation date of April 2012. However, given the importance of
introducing a cost-sharing mechanism, on balance it is probably preferable to
undertake an extra data collection (i.e. collect data in 2009 a non-valuation
year) for the notional fund and implement the mechanism from 2012 onwards. |
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It is totally
unacceptable to use a 20 year spread period.
Changes need to be made quickly and spread over a 3 year phasing
period. |
The
inter-valuation experience needs to be reviewed at each triennial actuarial
valuation. |
Ill-health and
related experience be excluded from scheme and costs be borne by the employers. |
No comment. |
The fundament of
the new scheme should be that individual scheme members have to meet a
substantial proportion of the higher costs of paying their benefits. A 50:50 split seems appropriate. |
There is no
explanation of how the notional cap of 14% is arrived at and presumably this
will be derived from the model fund. |
The Council
totally opposes any slippage on the timescales; cost sharing has to be in
place to deal with the outcomes of the 2010 valuation. |
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Hampshire |
It is reasonable
to use an average amortisation period, as well as for future periods based on
subsequent valuations. |
Changes at
trienniel valuations should impact on cost sharing calculations but shouldn’t
be inter-valuation reassessments. |
The mechanism as
set out in the consultation paper required that a smoothed best estimate is
used for ill-health experience. There is no alternative to this approach
although it will add another area of subjectivity. |
Any cost share
mechanism is likely to introduce some inter-generational cross subsidy. The Council don’t think this is perfect but
accept it as a necessary part of cost sharing. |
A 50:50 split is
acceptable but will become irrelevant if the employer cap is reached too
quickly following implementation of the cost sharing scheme. |
The need for an
employer contribution cap for long term sustainability is agreeable but do
not accept that the indicative figure of 14% is realistic. The paper predicts
the notional fund will have an average employer rate of 13.7% whereas the
Council’s service rate following the 2007 valuation is 14.5%, ie any changes
in cost will fall 100% on the employees and could lead to members leaving the
scheme. |
The aim should be
to implement the scheme by 2011 but the timetable is out of sync with the
budget setting process and would like to see results fed by Sept 2010 rather
than November 2010. Also the dataset will be required in 2009 and 2010 for an
implementation in 2011. The timescale
would be insufficient to change the payroll system and to communicate changes
to employees. |
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No comment. |
No comment. |
No comment. |
No comment. |
No comment. |
No comment. |
No comment. |
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Oxfordshire |
To the extent
that the surplus/deficits at the start of the model fund are excluded, the
relevance of the amortisation period is unclear. As surpluses or deficits build up on the
model fund going forward, extending the amortisation period in line with average
figures within local funds would be supported, minimising the volatility on
the results between valuations. |
Inter-valuation
experience should be considered in agreeing the assumptions for each new
valuation. However do not support
re-valuation in between the normal tri-valuation exercises. |
Taking that
funds / employers would want to anticipate the effect of ill-health
experiences as soon as possible then smoothed approach has to be the way
forward. |
There is no best
way for achieving inter-generational balance as this would require valuation
results to fully reflect future performance.
The issue of inter-generational cross-subsidy therefore needs to be
accepted. |
The 50:50 split
of cost is acceptable at initial stages but should be subject to future
review. |
The principle of
a notional cap is welcomed as a means of managing the future costs of the
scheme. The scheme sustainability also
relies on the continued take up of membership; a cap which shifts all cost
increases onto the employee’s rate thus unlikely to meet the objectives of
the cost sharing proposal. The
implementation of a cap on total costs should therefore be considered
alongside a list of further proposals to amend the scheme benefits in the
event that the cap is likely to be breached on an on-going basis (care
average scheme, extension of normal retirement age – perhaps linked to
improvements in longevity, reduction in accrual rates etc). |
An appropriate
timetable should be April 2012 to implement the cost sharing mechanism to
avoid the need to provide a full set of valuation data in both 2009 and
2010. Also the 31 July date for the
submission of valuation membership data to fund actuaries should be no
earlier than 31 August for the relevant year. |
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Shropshire |
Amortisation
period be adopted in the notional fund but also be averaged at each
subsequent valuation. |
Unclear about
this question but suggest that by applying inter-valuation experience into cost
sharing calculations would increase the scheme’s volatility, hence any
changes should be considered at every trienniel valuations. |
Smoothed
approach must be applied for ill-health and related experiences. |
Inter-generational
balance will not be obtained as there will always be an inequity. A smoothed
long term approach must be implemented for employees as short term changes
will be unacceptable to both employees and employers. |
The elements in
the cost basket will affect the share cost ratio. If the costs of benefits
rise but investment returns are good then employees’ contribution would rise
but the employers’ would have reduction in contribution rate. The level of
any employer cap will also have an influence in the sharing ratio. |
A notional
employer cap of 14% would be acceptable but may be on the low side. It should
not be set at a level that would mean changing employee contribution rates or
benefit levels every 3 years. A longer term view has to be taken for
employees as it has been for employers at each valuation in the past. |
The timetable
must be sensible and achievable and be acceptable to all councils. Decisions
in the future must be sound, transparent and robust. |
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Staffordshire |
Can’t comment on
amortisation period as there is no clear understanding on how the notional
model will work and how the deficit might arise. |
Not sure how the
inter-valuation experience will impact on cost sharing calculations. |
Initial thought
is to ignore ill-health as not being material. Experience should be averaged
across all funds if the new regulation shows a marked increase on ill-health
retirement and if material then it should become part of cost sharing. |
No comment to
make. |
The cost sharing
range might vary from 50:50 over time, however it seems reasonable on the
basis that employers cap remains at 14%. |
The principle of
a notional cap is most fundamental and important point in the whole
consultation as it gives chance for the scheme to sustain over a long period.
A 14% cap is consistent with other public schemes and is wholeheartedly
supported. Employees will have choice of paying more or accept reduction in
benefits. |
a.
2010 will coincide with actuarial valuation but too tight so bring forward to
2009 using 2007 valuation with updated assumptions on longevity etc. b.
There is concern about reducing benefit option, it would be better if the
implementation process put through only if employees (Unions) accept it to be
taken into account at subsequent actuarial valuation. |
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West Sussex |
Amortisation
over 20 years is acceptable however long amortisation period defers
employees’ cost whereas employers’ pay an unfair costs years after the
implementation of notional fund. Alternatively shorter periods might offer a
reasonable compromise for cost sharing purposes. |
The actuarial
assumptions underlying the calculation of the notional fund to be reviewed
triennially and be informed on the basis of local valuation taking account of
experience over the inter-valuation period. |
Future changes
to ill-health within the 2008 scheme should fall within the cost sharing
mechanism by inclusion within the scope of benefit changes. Other demography
should fall to employer for simplicity as variation between actual rates and
valuations are unlikely to be material to the model scheme. |
The impact on
member contribution of a change in the past service costs could be many times
more than that of accruing benefits because of the gearing effect of non-active
liabilities; eg improving longevity would increase all accrued liabilities
including those of deferred and pensioners but the cost will be met by the
actives. This type of inequity is inherent in any mechanism which doesn’t
allow any changes to be recouped from non-actives. The impact on member
contribution will depend on how the additional cost is recognised and spread. |
The cost risks
that are agreed should be shared as 50:50 split between the employers and
employees. |
The rationale for
14% cap is not fully explained, the underlying assumptions are not stated and
neither is the date at which it has been struck. Although the cap is meant to
be consistent with other public service schemes but there should be scope for
variations in level across the schemes. There is insufficient information in
the consultation paper to comment with confidence. Wessex CC requests CLG to
fully disclose the assumptions underlying the cap and the rationale for
setting it at 14%; (i) they would specifically like to know whether the
employer cap is set from a specific date or there would be a headroom before
it bites in; (ii) will the cap be adjusted with savings due to gradual
increase in retirement age. (For information on Hyman’s calculations see
response document). |
There shouldn’t
be delay in implementing the cost sharing mechanism; hence establishing the
notional fund in 2009 and implementation date of 2011 should be adhered.
However to meet this target it may require data collection for 2009 ie a
non-valuation year which will duplicate work at the local level. |
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Wiltshire |
The amortisation period be
adopted at the outset of the process seems a logical and consistent approach. |
Inter-valuation
experience should be adopted as part of the cost-sharing calculations at
trienniel valuation but shouldn’t be inter-valuation reassessments. |
Smoothed best estimate should
be adopted for Ill-health and related experience. |
It
is difficult to see how inter-generational balance be achieved without
introducing additional complications into what could already prove to be a
complex process at the outset. |
The costs should be shared
equally between members and employers. This will be perceived as fair and
reasonable. What need to be avoided are frequent changes to members’
contribution rates as it should be smoothed over a longer period rather than
at each valuation. (Also see response to question 13). |
The proposed cap of 14% on
the employer’s rate in the notional fund is a challenging one. Moreover, it
goes against the notion of a 50:50 share suggested in answer 12. Once the cap
is reached, all further costs will fall on employees. |
The cost-sharing mechanism
should be implemented from April 2011 to coincide with that of the 2010
valuation results. |
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Worcestershire |
To adopt
amortisation period in the notional funds seems a reasonable approach with
future amortisation periods being set to reflect average period at subsequent
valuations. |
Changes at triennial
valuation should be applied for cost sharing calculations but there shouldn’t
be inter-valuation reassessments. |
Smoothed best estimate should
be adopted for ill-health and related experience. |
There will be
intergenerational inequality e.g. current contributors will have to meet the
cost of not only their own increasing longevity but also that of members who
have left with a deferred pension or pension in payment, and who are no
longer able to pick up their share of the increasing cost as they no longer
make contributions to the scheme. Whilst this is far from perfect but
believes that this has to be accepted. |
A 50:50 split
subject to the cap on employer contributions is acceptable. A potential issue is that scheme member’s
may find it difficult to understand why, for example, their contribution rate
has to increase (because of increases in the cost of those elements included
in the cost sharing basket) if at the same time funds are in surplus due to
good investment returns (which are not proposed to be included in the cost
sharing basket). |
There should be
an employer cap and accept the 14% cap as an indicative rate. However, need
to avoid three yearly fluctuations in the employee contribution rates, or
benefits structure and normal retirement date. Changes should only occur once
a longer term trend is established and short term fluctuations within set
parameters should be smoothed. |
The aim should
be to implement cost sharing from April 2011. However the timetable for data
requirements is tight and should recognise that this may pose some practical
difficulties in meeting the targets. |
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LB Bexley |
By adopting an
amortisation period in the notional fund would ensure that contribution rates
are as stable as possible. |
Given the need
for long term phasing of contribution changes there is little to be gained
from inter-valuation adjustments. |
Ill-health and
other experience issues should like other factors are treated over the long
term. The “double impact” of actual experience and changes to future
assumptions will have to be accommodated whether the factors involved
increases or decreases. |
It’s accepted
that there will always be some form of inter-generational imbalance merely
because actual experience takes a long time to feed through to justify future
assumptions. Nominally hoping to achieve balance might just as likely create
further imbalance if the assumptions made are wrong. |
Anything other
than 50:5 split on cost sharing is likely to overcomplicate the system. |
The idea of a
notional cap is very welcome. However given the views expressed in the
consultation paper may lead to unacceptably high level of employees’
contribution unless the scheme is changed further. It is a little early to
say whether 14% might be a suitable starting level. |
It’s important
that changes to contribution rate are made in consistent with the triennial
actuarial valuation period. . This is desirable for administration,
comprehensibility and financial planning. If for first time this allows only
two years of experience than so be it. Alternatively to delay implementation
to April 2014 to coincide with the following actuarial valuation to allow the
new scheme to fully bed down. |
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LB Brent |
To adopt an amortisation period at the out set in the notional funds
seems a reasonable approach with future
amortisation periods being set to reflect average periods at subsequent valuations
(which in turn will be a reflection of whether funds are in deficit or
surplus, with shorter amortisation periods expected at times when funds are
in surplus). |
Not
clear exactly what the question is asking but believes that changes since the
last triennial valuation should be taken into account but there shouldn’t be
inter-valuation reassessments. |
Smoothed best estimate should
be adopted for ill-health and related experience. |
No
system will be perfect and there will be intergenerational inequity e.g.
current contributors will have to meet the cost of not only their own
increasing longevity, but also that of members who have left (with a
preserved pension or pension in payment) and who are no longer able to pick
up their share of the increasing cost (as they no longer make contributions
to the Scheme). Whilst this is far from perfect but needs to be accepted. |
A 50:50 split subject to the
cap on employer contributions is acceptable. One
potential issue is that scheme member’s may find it difficult to understand
why, for example, their contribution rate has to increase (because of
increases in the cost of those elements included in the cost sharing basket)
if at the same time funds are in surplus due to good investment returns
(which are not proposed to be included in the cost sharing basket). |
There
should be an employer cap and accept the 14% cap as an indicative rate.
However, ideally we need to avoid 3 yearly fluctuations in the employee
contribution rates, or benefit structure, or Normal Retirement Date. Changes
to one, some or all of these should only occur once a longer term trend is
established; short term fluctuations within set parameters should be
smoothed. |
The aim should be to implement cost sharing
from April 2011. Any decision on the implementation of a cost share must be
clearly based on robust and transparent data and professional advice.
Ultimately it must be for the Minister to decide following a statutory
consultation on how (e.g. via an increase in employees’ contribution, reduction
in benefits package or change to the normal retirement date), and when, to
implement the outcomes resulting from each triennial assessment. The
time table in the GAD report is not workable given the need to have a process
completed in time for budget setting purposes in the Autumn of 2010 (or the
Autumn of 2011 if cost sharing is not implemented until April 2012). If the
GAD model is to be taken forward then some changes to the timetable is
required (see response document for details). |
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LB Camden |
No comment. |
No comment. |
No comment. |
No comment. |
No comment. |
No comment. |
The Pension Committee is
concerned that the timetable of |
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LB Enfield –
(also see any other points table) |
No comment. |
No comment. |
No comment. |
No comment. |
No comment. |
No comment. |
No comment. |
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LB Hackney |
It would seem
sensible to have regard to the longer term given the profile of LGPS funds
and therefore using the average amortisation period at the 2007 valuation
would seem appropriate at this stage. |
Changes on cost
sharing factors should be included in the triennial valuation but wouldn’t be
beneficial to undertake interim valuations and adjust factors accordingly. |
Smoothing of
such factors as ill health would seem sensible approach rather than making
adjustments for what could be very volatile factors. It is more important to
try to reflect longer term trends. |
Smoothing would
be the best way forward rather than waiting for actual experience to achieve
inter-generational balance. If the scheme is to be sustainable then these
factors have to be reflected in cost sharing otherwise future members may be
adversely affected and the inter-generational imbalance may become more
inequitable. |
A 50:50 split
seems to be best way forward to share cost and is more easily justified than
any other ratio. This would still be subject to an employers’ cap. However
the Borough has serious concerns about communication issues when the
employers’ cap has been reached and contribution increases are being
experienced by employees. |
The pressures to
contain costs within the LGPS at a notional cap of 14% would seem reasonable
as it’s in line with Teachers Pension Scheme and NHS Pension Scheme, although
it is noted that caps for other public sector schemes may be higher. It would
be helpful to know the employer rates
for future service were at 31st March 2007 before finalising the
notional cap, given that there may be a number of funds where the future
service rates is in excess of the 14% being suggested. The issue will be now
to communicate this to scheme members if they see contributions rise or
benefits fall once the employer cap has been reached. |
It would seem
appropriate that cost sharing should be implemented such that it falls in
line with the new employer contributions rates to be applied following the
March 2010 triennial valuation exercise. However the Borough would be worried
about the potential for slippage and having to implement and communicate any
changes within the expected timescales. |
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LB Havering |
No comment. |
No comment. |
No comment. |
No comment. |
No comment. |
No comment. |
No comment. |
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LB Lewisham |
No comment. |
No comment. |
No comment. |
No comment. |
No comment. |
No comment. |
No comment. |
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Borough
Councils |
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Amortisation
should be adopted in the notional fund as it’s based on the past experiences. |
Inter-valuations
should be monitored and affected in same way as done now ie changing employer
contribution rates. It’s important to stabilise employees’ contribution rates
so hasty changes due to inter-valuation should be avoided. |
Ill-health
should be based closely on observed experiences. Local actuaries are best
placed to develop local assumptions that reflects local variation.
Assumptions on notional scheme should be based on same actuarial principles
as real schemes. There should be consensus between GADs and independent
actuaries. |
Inter-generational
factor should be excluded from the cost sharing mechanism and efforts should
be made to prevent current members paying for negative contribution. Local
actuaries are best placed to propose local measures, as these reflect local
variations; notional scheme should be based on same actual principles as
‘real’ schemes. |
Cost share
should be discrete for each cost sharing element on level of influence to
employees’: employers’. The overall share ratio would be a pro rata-ing of
these shares. Correct balance need to be struck to avoid cost above employers’
cap being borne by employees’. Traditionally cost ratios are 2:1 for
employers: employees - regard should be given so that proposals are
acceptable to employees. |
A notional cap
could effectively negate the effort to develop cost sharing framework; if cap
applied then employee contribution will distort with every valuation. A
notional cap plays no part in setting local employers’ rates beyond
influencing revenue inflows into local funds from employee rates. It’s unfair
to set level of cap below the average employers’ cap (over 89 funds).
Employees’ rate should be determined without applying the national cap. |
a.
Although the mechanism is intended to be in place by 31st March
2009 the final decision will be taken from the outcome of 2010 valuation;
rates may need to change in 2011 hence 2012 would be achievable. b.
Deadlines shouldn’t be paramount if it compromises the achievement of a
robust and fully consulted/agreed outcome that meets shared objectives. It’s
prudent to defer implementation date until April 2012. It’s regrettable to
contemplate to this short timescales without a period of stability to assess
the effects of the New Look scheme introduced in April 2008. |
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Mets |
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A future working
life period as calculated at each valuation would appear to be the most
appropriate amortisation period. The average future working life of members
in the LPFA Fund at both the 2004 and 2007 fund valuations were significantly
less than 10 years. A 20 year average amortisation period would therefore be
likely to result in future members paying for or benefiting from previous
members. |
The
inter-valuation experience should impact on the assumptions used for cost
sharing calculations at the next valuation with any trends assessed over a
number of valuations, taken into account to smooth changes where appropriate. |
It seems
sensible to use the smoothed approach for ill-health retirements as this will
help to reduce volatility. |
Smoothed best
estimate assumptions and a shorter amortisation period will help to reduce
inter-generational cross subsidy. Some allowance say for future increases to life
expectancy rather than actual life expectancy should be used to reduce cross
subsidy. |
It would be hard
to argue that 50:50 is not a fair split to share cost increases. The
difficulty will come when the cap is breeched and members are picking up more
than 50% - it will be hard to justify that as “sharing”. |
In
order to provide employers with greater certainty on costs a cap is
important, although other non shared events may also cause changes in the
employers’ future service rate. Whether 14% is a realistic initial cap if
cost sharing is not mainly to result in increased member contributions
without prospect of a 50:50 share requires actuarial calculation and indeed
the consultation notes that the 14% may require recalculation following the
2007 valuation. However the Fund accepts the views set out in the minutes of
the Policy Review Group. |
A one year cycle
linked to the 2010 valuation cycle would be ideal and result in a closely
correlated system. However the existing valuation And budget
setting processes are already very tight. Therefore a two
year cycle appears initially attractive but as mentioned in the consultation
paper that the proposed two year timetables brings their own issues, and LPFA
believes it would also increase the work,
resources required and expense.
Each two year timetable as suggested in the consultation paper would
still result in late information to inform employer budgets and in any event
would require tightening to deliver information back to the actuaries by 30th
September at the latest. |
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Greater |
No comment. |
No comment. |
Ill-health
retirements have fallen significantly in recent years. Assuming the new
arrangements do not materially impact on the number of retirees, there is not
a strong case for including such retirements in the cost sharing. |
No comment. |
No comment. |
The current
estimated future service rate for GMPF employers averages 13.9% and the
national rate is likely to be similar. Thus in practical terms there is
limited scope for movement in employer rates if the cap is set at 14%. |
No comment. |
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There should be
a maximum recovery period based on the periods used for 2007 valuation, but
administrative authorities should be given some flexibility to use a shorter
period if they wish. |
Due to
additional pressures that would be placed on administrative authorities and
the volatility of stock markets over the short-term, it is felt that impact
from inter-valuation experience should not be taken into consideration. |
The smoothed
approach is the current method used by the Fund’s actuary for ill health and
related issues and no reason for this to be changed. |
The
inter-generational balance cannot and will never be achieved. |
A 50:50 cost
share is accepted in general terms however consideration should be given
whether all cost-shared elements should be shared equally. It would be
difficult to decide on which elements are non 50:50 split and what
justification is applied for an appropriate split. |
WYPF is not
convinced that there should be a notional cap on employers’ contribution
rates as it would lead to possibly high and unacceptable changes to
employees’ contribution rates at each actuarial valuation, however if the
notional cap is imposed then the Fund’s future contribution of 14% would be
reasonable. Also there should be a limit on increase in employee’s
contribution rates, therefore any additional cost should be met through
changes to benefits. |
a.
The scheme implementation should be delayed until 2012/13 in b.
Also there will be a huge communication exercise required to inform members
of potential changes to their contribution rates, hence they should be given
ample time to decide whether they wish to stay with LGPS or opt out. The
likelihood is with triennial valuation members may opt in and out which will
create an administrative nightmare. |
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Wirral Council
(Merseyside Pension Fund) |
The use of
average current actuarial valuation amortisation period at the outset is
agreeable but concerned about the communication and perception problems in
trying to explain to stakeholders the lack of reconciliation between these
notional figures and possibly significantly different actual figures adopted
by individual funds. Consideration to be given to explain and justify the
difference of approach between national and local funds and to facilitate
meaningful comparison between the two. |
Cost sharing is
a long term issue and inter-valuation reviews would be problematic in view of
time constraints however at a local level a number of individual funds
including Wirral does carry out an annual fund level actuarial review. |
Lack of
information on likely future ill-health costs and lack of progress in
agreement of future monitoring of such costs in the ill health working party
will cause difficulty. |
The actuaries
may be able to answer the question on inter-generational issues. |
Employee
representatives will point to the historic 1/3 and 2/3 split of cost sharing
between employees and employers and are likely to oppose a 50:50 split
especially if an employer cap is set close to current contribution levels. |
Same as 12. Short term
fluctuations should be smoothed. |
The
implementation timetable set out in the consultation paper is acceptable but
must be clearly based on transparent, comprehensive, representative and
accurate data. |
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City
Councils |
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To adopt an
initial amortisation period in the notional fund seems a reasonable approach. |
Changes since
the last triennial valuation should be used for cost sharing calculations but
don’t believe there should be inter-valuation re-adjustments. |
Smoothed best estimate should
be adopted for ill-health and related experience. |
No system will
be perfect and there will be inter-generational inequity ie current
contributors will pay for increasing longevity of their own and pensioners.
The smoothed best estimate approach therefore appears to be most appropriate. |
A 50:50 split on
cost sharing subject to cap on employers’ contribution is acceptable as this
will be consistent with Teachers Pension Scheme and NHS Pension Scheme. |
There should be
an employer cap and accept the 14% cap as an indicative rate. Again it is
important that the principles adopted are in line with Teachers Pension
Scheme and NHS Pension Scheme. |
The aim should
be to implement cost sharing from April 2011, by allowing the timetable to
continually slip fails to address employers’ concerns regarding the long term
viability of the scheme. |
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Same as 7. |
No comment. |
No comment. |
The Council supports
the actual experience approach in every case.
Whilst the approach of using actual experience would introduce a lag
and a greater risk of intergenerational cross subsidy because of the effects
of experience (such as improving longevity) being different to that expected
might take some time to emerge, it would nevertheless be based on actual
experience rather than actuarial assumption.
It is the Council’s experience that actuarial assumptions can vary
widely resulting in less stability. In
summary it is thought that the actual experience approach will give greater
accuracy and certainty to the model. |
A 50:50split on
cost sharing approach is acceptable however the position is to be reserved
and reviewed when the contribution rates of employers and employees are
known. |
The Council
gives initial support for the proposed employers’ contribution cap however
the proposed rate of 14% in the national/notional scheme may be required to
be increased in light of the latest average employer contribution. The last
average notified was 13.7% which is very close to the cap and leaves very
little latitude for variation. If other factors vary through no fault of
employees, the inference is that the vast majority of the costs arising from
the variation of those factors would be borne by the employees. Whilst from a funding perspective this
would limit additional costs flowing through as a result of future actuarial
reviews; it is unlikely to be either fair or acceptable to employees and
their representatives. |
No comment. |
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District
Councils |
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Town
& Parish Councils |
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Welsh
Councils |
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Powys |
Covered in LGE
response. |
Covered in LGE response. |
Covered in LGE
response. |
Covered in LGE
response. |
Covered in LGE
response. |
Covered in LGE
response. |
Covered in LGE
response. |
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Trade
Unions |
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Aspect |
Longer amortisation
period with future surplus/deficit embedded into the cost sharing envelope |
Inter-valuation
experience should be fed through cost sharing calculations to set best
estimate assumptions. |
Ill-health
should be retained within the broader cost sharing mechanism rather than kept
separate. The |
Cost sharing
mechanism should focus on current scheme members hence past liabilities
should be excluded from the cost sharing envelop to avoid inter-generational
cross subsidy. |
There is no
magical quality to 50:50 split perhaps it should be 2:1 employer:employee
split. Any changes or development of a tiered approach should only be
considered on evidence based. |
Application of a
mechanistic employers’ notional cap will not assist in maintaining the scheme
or public confidence in the cost sharing mechanism. |
To agree an
implementation timetable, a governing body should be established as soon as
possible. Narrow focus on cost only for cost sharing mechanism is
unhelpful. Objectives set out in
paragraph 18 of consultation document should be agreed as ‘terms of
reference’ by the governing body. |
|
GMB |
There is no
reason to adopt a restricted amortisation period for the scheme. Although as
average is referred to in paragraph 32 of consultation paper, no figure is
mentioned so there seems no reason to deviate from the traditional amortisation
period of 20 years or more. Private sector adopts 10 year period as a
requirement under Pension Protection Fund. LGPS is a statutory scheme and not
covered by Private Pension Fund. |
Only in the most
extreme cases should trigger an inter-valuation review, in most cases this
will simply be fed through to the next valuation and then the impact of
inter-valuation experience will be properly assessed. The scheme should be
sustainable so serious consideration be given before attempts to short cut the
review process. Self-evidently inter-valuation experience will be reflected
in valuations so any inference that there is an option not to involve is
mistaken. |
Ill-health
should be included in the cost sharing mechanism along with other risk
factors. No accurate predictions being made on the take up of ill-health
pensions overall or for specific tiers. It is likely therefore that the
arbitrary costing associated with this provision is inaccurate and savings to
scheme may well be greater than predicted. As a result this item should be
considered in isolation to ensure that provisions are fit for purpose and as
part of cost sharing mechanism. |
A whole cost
approach is likely to involve reflecting existing actuarial practice although
some reform of this would be beneficial in order to bring about some
consistency as well as greater transparency. A balance between a harmonised
reflection of existing actuarial practice and the appropriate amortisation
period should reflect the need to mitigate against short term fluctuations
and provide a workable long term focus for the management of the scheme. |
The cost sharing
split should move towards a 2:1 ratio for employer and employee. This means
in the long term 12.2% employer rate and 6.3% member rate is slightly out of
sync and needs some rebalancing. GMB does not see any justification for a
50:50 split for cost sharing and GLC does not offer any such justification.
GMB suggest this sort of formulaic approach is rejected and attention is
focused on a sustainable strategy such as the model set out by GMB (for
details refer to consultation response paper). |
The notional cap
is a flawed approach to achieving long term sustainability and instead
proposes the whole scheme model as outlined in previous answers. A notional
arrangement would be undermined by the passage of time that would distance it
from the actual experience of the scheme. A cap is overly formulaic, and an
approach GMB finds inappropriate. |
The objectives
outlined in paragraph 18 of consultation paper should make clear that any
arrangement applies to the LGPS 2008, as indicated by Regulation 40 of the
Benefit Regulation not the LGPS as a concept. The management of changing
liabilities and other variables are subject to employers’ management decision
which needs to be discussed and monitored. GMB is not clear on what is meant
by ‘rigorous framework; GMB don’t believe these should be restricted to a
concrete framework that it inhibits discussions or approaches. GMB challenge
the assumption in the fifth core objective that implies members don’t know
the value of their pension provision. In the fifth objectives there is no
clear reference in what is meant by ‘scheme providers’. |
|
Unison – Head
Branch |
The statutory nature
of LGPS allows the employers to spread the cost of the scheme over a far
longer period than that for the private sector to escape the requirement to
pay any levy on the Pension Protection Fund. |
No comment. |
Ill-health
should be dealt with separately. Continuing trend on fewer ill-health
retirements and likelihood that most future ill-health retirement will be a
lower benefit means the savings will be greater than expected, priority
should be to improve ill-health benefit especially 3rd tier one.
Any savings above that is considered to offset against the other costs. |
Assumptions on
inter-generational balance have to be transparent. Urgent work needs to be
done to ensure that assumptions take account of high proportion of low paid
members and number of female employees. Any suggestion of members sharing
risk should be considered whether the past assumptions have been too low,
resulting in artificially low employer contribution. |
Unison would
oppose any attempt to fix a proportion of savings and costs between employers
and members. The suggestion that all future increases in costs should be
automatically shared 50:50 seems inherently unfair. It would lead to
cross-subsidy and will quickly become unaffordable to low paid members.
Historically employers over the long term have paid two thirds of overall
costs and see no justification in changing this ratio. Also for long term
scheme cost is set to reduce as the benchmark cost for new members is 2%
lower than existing members. |
A maximum
employer contribution cap would not reflect the real cost. Members will have
little confidence whether the cap would operate fairly or whether would it be
affordable to low paid members. Without any similar cap to employees’
contributions could lead to members either leaving en masse and the variation
between funds could lead to the break up of the national scheme. |
Regulation 40
says “administering and employing authorities shall have regard to guidance
to be issued by Secretary of State before 31 March 2009, as to the manner in
which costs of the scheme will be met after 31 March 2010”. Unison does not
believe that his implies a strict formulaic approach. |
|
Unite |
An amortisation
period of 20 years is common to LGPS and other public sector schemes hence no
reason to depart from it. LGPS has the backing of statute in making secure. |
Pensions are
long term and most dramatic events would make it necessary for
inter-valuation. Certain factors ie investment returns could be fed through
following valuation. Any short circuiting should be avoided as interim
changes would be fed into the following valuation. |
Ill-health is
cost to the scheme so it should be included in the sustainable review.
Accurate dataset and greater detail of actual costs is required to predict any
savings to the scheme. |
Actuarial
assumptions and appropriate amortisation period should ensure that short term
effects are not carried forward, if a whole cost approach is adopted then a
proper inter-generational balance should be achieved. |
The cost share
should move back to 2:1 with present 12.2%:6.3% employer and employee ratio.
No rationale is given on moving away from that kind of split and Unite can’t
see any justification for this. |
Unite opposes
the suggestion of a notional cap in the cost sharing framework as it’s
inappropriate and distorts actual experience. As the gap between the notional
cap and actual experience widens it become even more inappropriate. Any
changes in contribution rates must be borne on the basis of rationale agreement
and discussion on actual experiences of a ‘whole cost’. |
The cost sharing
mechanism must only be used as of need and just because circumstances have
given rise to a review at any one time, doesn’t mean to say that there should
be an implementation of cost sharing. |
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Unison –
Charnwood Branch |
No comment. |
No comment. |
Ill-health
should be dealt separately. A priority use of any savings should be used to
improve ill-health benefits to an acceptable level. |
To achieve inter-generational
balance assumptions on improving life expectancy should be questioned by use
of specific data and its gender composition which is predominantly female. |
There should be
no fixed proportion of savings/costs between employers and employees.
Employer shouldn’t be allowed to go below 2:1 employer and employee ratio
over the long term. |
There shouldn’t
be a notional employer cap. The regulation should have a mechanism in place
for sharing future cost pressures which doesn’t require a formulaic approach.
If the overall cost of notional fund changed significantly at future
valuation, the governance group would determine appropriate future benefits
and contribution rates which are equitable |
No comment. |
|
Unison – |
Maximum
amortisation period reduces employers’ contribution rate hence it should be
introduced at maximum period in notional fund. |
Inter-valuation
experience be applied to cost sharing calculations only if improves benefits;
longevity triennial trends to be scrutinised. |
Ill-health
should be out of cost sharing as it would be beneficial to employer and will
defer them from improving working conditions for staff. |
Existing
member’s shouldn’t be paying for longevity liabilities; however it’s not
achievable as there is no link between pension payments and funding level. |
A 50:50 cost
share is arbitrary; employee contribution should be based on salary so it
would also make it affordable to non-scheme members. |
The Union is
against the principle of a notional cap as it leaves two options once it
reaches the cap limit; either reduce benefit or increase employee
contributions. In the |
1 April 2012 is
favourable implementation timetable as it will allow stakeholders
particularly Unions to consider datasets and assumptions in the interest of
scheme members. |
|
Unison –
Denbighshire |
No comment. |
No comment. |
No comment. |
Actuarial assumptions
on longevity should be adequate so that any past liabilities due to
under-provision shouldn’t be borne by
scheme members. |
The cost share
ratio should be 2:1 for employers and employees; the employers’ shouldn’t
have 14% cap. |
A notional cap for
one party isn’t compatible, we either share or not share cost and referring
to the Minister’s statement of ‘no additional costs to taxpayers’. Also
employer’s contribution should be a guide over a period of time and not cap. |
A model scheme
should be constructed after 2010 valuations with statutory guide for GADs to
adopt realistic longevity assumptions. |
|
Unison – Kent
Branch |
There is no
reason why the proposed notional model should not use the same assumptions about
amortisation as actual funds. |
Prudent
provision is already made for risk in actuarial valuations. Any
inter-valuation experience should feed into modelling of long term trends.
Clearly the transition to a higher or lower rate of contribution should be as
smooth as possible. The refinement of this seems a matter for the actuaries. |
Ill-health
experience should be kept outside the cost sharing process. Any savings from
the new package should be applied first to improving ill-health benefits
especially at 3rd tier. The three tier process as set out in the
LGPS (Amendment) Regulations 2008 is still an issue for this |
Same as 9. |
Historically 2:1
was a common ratio of employer to employee contributions and a similar ratio
is reasonable for sharing cost pressures. |
The |
The timetable
for implementation is demanding given the complexity of the issues. |
|
Unison – |
See response from Unison - Head Branch |
See response from Unison - Head Branch |
See response from Unison - Head Branch |
See response
from Unison - Head Branch |
See response from Unison - Head Branch |
The suggestion that there should be employers’ cap above which costs are borne entirely by employees the actuaries noted that under such an arrangement the term cost sharing becomes a misnomer, since all additional costs fall to one party. Given that pensions actuaries are not voted for being overly sympathetic towards a trade union perspective on these matters, their comment provides objective support to the argument that the concept of the cap is intrinsically unjust. |
See response from Unison - Head Branch |
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Unison –
National Assembly for |
No comment. |
No comment. |
No comment. |
No comment. |
No comment. |
No comment. |
No comment. |
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Societies |
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PPMA |
See response to
Q5. |
Inter-valuation
experience should only be considered where significant events will affect the
viability of the LGPS in its current form. |
Ill-health may
need to be an area where inter-valuation experience needs to be explored and
variation to the scheme made more rapidly. If ill-health cases increases
significantly, a review of costs will need to be taken before cost sharing
comes into effect. PPMA believes a
quick and accurate mechanism will need to be agreed and implemented to monitor
ill-health retirements to provide the Policy Review Group the intelligence to
make decisions. |
Fixing actuarial
assumptions will result in greater inter-generational cross-subsidy and could
ignore major changes in factors like ill-health retirements that need to be
addressed. However, there
could be some merit in fixing some factors like longevity. |
See response to
Q6. |
PPMA suggests a
higher than proposed 14% employers notional cap as a large proportion of LG
employers already pay > 14%. Could go for 15% but check the outcome of
valuation exercises. |
Strongly
recommends that the cost sharing exercise commences in April 2010 with the
implementation from April 2012. Notes that if a
3-year pay deal be negotiated with the Trade Union; cost sharing will be easier
to sell to their members in 2010 rather than in 2009. |
|
Society of |
Lengthy spread
periods defer the effect of cost sharing, meaning that when model fund costs increase
and if employee contributions are deferred then employers pay an unfair share
of cost for many years after implementation.
They also mean cost adjustments bear little relation to any
significant recent changes in experience. The accumulating effect of deferred
employee contribution increases over a period of time could undermine the
whole mechanism unless the full implications are understood at the
outset. Immediate recognition on the
other hand creates volatility in employee contribution rates. Members of the SCT appreciate that spreading
of experience effects involves inter-generational judgements but on the other
hand having no spreading is an unrealistic ideal. The right balance needs to be struck. |
It would be
appropriate for the actuarial assumptions underlying the calculation of the
notional fund to be reviewed triennially and be informed by local valuation
bases, feeding into the experience over the inter-valuation period. |
The cost of
‘other demographics’ should fall to the employer only for simplicity as
variations in actual rates between valuations are unlikely to be material to
the model scheme. Future changes to ill health benefits (or policy) within
the 2008 scheme should be dealt with within the cost sharing mechanism by
inclusion within the scope of benefit changes. |
As proposed the
cost sharing mechanism will take account of changes to the cost of providing
both accrued (past service) and accruing benefits by adjusting member
contributions (or reducing accruing benefits). The impact on member contributions of a
change in past service costs could be many times more than that of accruing
benefits because of the gearing effect of non-active liabilities. For example, improving longevity would
increase all accrued liabilities including those of deferred and pensioners
but the cost will only be met by actives.
This type of inequity is inherent in any mechanism which does not
allow any change in costs to be recouped from non-actives. The impact on members’ contribution will
depend on how the additional cost is recognised and spread. (Also refer to
answer 8). |
The cost risks
that are agreed should be shared as 50:50 split. |
The rationale
for the 14% level of cap is not fully explained and the underlying assumptions
are not stated neither is the date at which it has been struck. The proposed level of 14% may have been
designed to achieve consistency with the other public schemes however with
different benefit structure and implementation dates there should be scope
for variation across the schemes. The Society would specifically like to know
(i) whether a cap is intended for a specific date; (ii) whether savings from
removal of Ro85 is accounted within the cap. According to Hyman’s calculation
from 2007 valuation employer contribution for model scheme is 11.8% however
it accounts for only three main risks sharing factors (refer to response
document for more details). |
The timetable
for implementing cost sharing in 2011 and establishing a notional fund in 2009
should be adhered to, although this is challenging and may pose some
practical difficulty. To meet this
target may require data collection in 2009, ie a non-valuation year with
consequent duplication of effort at our end.
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Other
Government Departments |
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HM Treasury |
20 years
amortisation period is too long, whereas other public services have explicit
15 year rules and private sector is fixed at 10 years. |
LGPS should be consistent
with rest of public service pension schemes. |
No comment. |
No comment. |
No comment. |
No comment. |
No comment. |
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Other
employers |
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LGPC/LGE |
To adopt an amortisation at the outset of the notional
fund seems reasonable, with future amortisation periods being set to reflect
average periods at subsequent valuation (with shorter amortisation period
where funds are in surplus). |
Not clear about
the question. Inter-valuations reassessments should be fed through the
triennial valuations. |
Smoothed best
estimates for ill-health and other experience in subsequent calculations will
reduce ‘double cost impact’. |
No system will
be perfect and there will be inter-generational inequity ie current contributors
will have to meet the rising longevity cost for themselves and pensioners, so
we need to accept it. |
A 50:50 split
for cost sharing is acceptable subject to employers cap. One potential issue
is that it will be difficult to increase employees’ contribution where funds
are in surplus due to good investment returns. |
The notional
employer cap at 14% is acceptable however 3-yearly fluctuations in the
employee contribution rates should be avoided; changes should only occur once
long term trend is established whereas short term fluctuations should be
smoothed. |
a.
The timescale suggested in the consultation paper is not workable as budget
setting takes place in 2010 (or 2011 if cost sharing is not implemented in
20112). If GADs model to be taken forward then LGE suggests a timetable (for
details refer to response paper). b.
Any decisions on cost sharing must be transparent, robust and clearly based
on appropriate datasets and professional advice. However the Minister should
decide following a statutory consultation on how (changes to employee
contribution rates; reduction on benefits; change to normal retirement date)
and when to implement the outcomes of triennial valuations. |
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Education |
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The current 2007
actuarial valuation average amortisation period to be adopted in the notional
fund for long term stability however do not feel there is sufficient
information to comment further. |
Unsure of the question
or its potential impact. |
A smoothed
approach for ill-health and related experience should be adopted but
concerned whether “step changes” should have a more immediate impact. |
A matter of best
practice would suggest that we should not fix the actuarial assumptions and
wait for actuarial experience – seemingly impacting on those still
contributing to the scheme ie feeding the inter-generational cross subsidy. |
The 50:50 split
for cost share appears reasonable, as does the employer cap. |
The notional
employer cap is acceptable however employees’ understanding of the scheme is
fundamental which will require a clear communication programme with wider
consultation and should seek to avoid short term fluctuations. |
The whole point
is long term sustainability and smooth introduction of the scheme allowing
sufficient time for consultation. The cost sharing mechanism should not be
rushed and a realistic timetable is used to achieve an informed and balanced
legislation and regulation. |
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Individuals |
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Kevin Gregson |
No comment. |
No comment. |
Volatility in
trends should be avoided where possible by using smoothed best estimate eg
for ill-health retirements. |
No comment. |
Same as 6. |
An important aspect
of the scheme is that it applies nationally, therefore all assessments made
with regard to cost sharing should be assessed by means of a notional
national fund and agreed cost increases should be applied nationally. |
No comment. |
|
Annwyl Gyfaill
(Gwynedd) |
No comment. |
No comment. |
No comment. |
No comment. |
No comment. |
No comment. |
No comment. |
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Actuaries |
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Hymans Robertson |
Hymans’ disagrees
with the consultation paper suggesting to spreading gains or losses over
lengthy periods may be an appropriate mechanism to deal with
inter-generational inequity. Lengthy amortisation periods will simply defer
full adjustments to member contribution and so the actual adjustment to
contribution has little correlation to cost pressures in any recent periods
and will instead relate in large part to past 10 to 20 years experience. |
No comment. |
No comment. |
The GADs appears
to align longevity assumptions based on longevity improvements to national
population projections. Hymans’ view of a better alternative would be to
align future improvements to the observed past improvements over an
appropriate period as this is evidence based. Further analysis indicates a
rolling period of at least 10 year period (to 2006) and compare this with
rates over the 10 year period ending 3 years previously (2003), so the
allowance of future improvements would be taken from the comparison between
these two rates. This approach is objective and far more readily explained to
members who are affected by the impact. |
No comment. |
No comment. |
No comment. |
|
Campaign
Letters from Unison = 60 |
No comment. |
No comment. |
No comment. |
No comment. |
There should be no
fixed proportion of savings/costs between employers and members. Employers
should not be allowed go below the 2:1 cost sharing ratio over the long term. |
There should be
no employer cap. |
No comment. |