What do the new regulations say?
Although there is still provision for an exit credit to be paid, it is no longer the case that the exiting employer will automatically be entitled to a payment equal to the amount of any surplus revealed in an exit valuation.
The administering authority, instead, now has the discretion to determine the amount of an exit credit, and there is express recognition in the amended LGPS Regulations that the amount may be zero.
In exercising their discretion, the administering authority is required to have regard to the following:
- the extent to which there is an excess of assets in the Fund relating to the exiting employer over the liabilities in relating to that employer’s current and former employees,
- the proportion of this excess of assets which has arisen because of the value of the employer’s contributions,
- any representations which are made to the administering authority made by the exiting employer and where that employer is an admission body, certain other bodies such as (for example) the LGPS scheme employer for whom the admission body is providing services,
- any other relevant factors.
What changes have been made to the Funding Strategy Statement?
Changes have been made to Section 3.3 Note (j) of the statement, starting on page 18. This section now provides an outline for how the administering authority will assess the value of any exit credit and the factors that will be taken into account when doing so. This includes factors such as:
- representations made by both the admitted body and the letting authority,
- any risk sharing agreements in place between the letting authority and admitted body,
- the reason and timing of any exit from the Fund. e.g. natural end of the contract or early termination,
- whether any contributions due or monies owed to the Fund remain unpaid
How do I respond to the consultation?
Please send any responses to firstname.lastname@example.org by 12 noon on Monday 7 September.