FAQs
Does the FSS have any impact on individual LGPS members?
The FSS does not have any impact on the individual LGPS members themselves whose benefits are in accordance with the LGPS regulations.
For “Other 2’’ category employers, why is the Fund considering these employers potential cessation position when setting their employer contribution rates?
Where an employer falls within the “Other 2” category, the Fund is at risk of an employer being unable to meet their cessation obligations. The employers in this category have not provided the Fund with any form of security or guarantee to mitigate this risk. Therefore, where an employer is in a deficit position on a cessation basis, the Fund will maintain their current contribution rate. The intention is that this provides some small mitigation for the additional risk the Fund is subject to. The Fund has adopted this approach rather than to explicitly ask employers in this category to fund towards a fully funded position on a cessation basis. This is an approach taken in other funds, but the Fund appreciates this could lead to unaffordable contributions for employers and seeks to achieve a balance of risks. If an employer does not wish the cessation position to be a consideration, then the Fund would welcome a form of security or guarantee to mitigate its risks. Where the “Other 2’’ category applies and the employer is in surplus on a cessation basis, this will also be considered when setting their employer contributions.
Would the Fund consider reducing or increasing contributions by more than 1.0%?
The Fund will take this into consideration and will respond further at the end of the consultation.
Would the Fund consider increasing its proposed maximum 8-year deficit recovery period?
The Fund intends to retain the proposed maximum 8-year deficit recovery period which was 11 years at the 31 March 2022 triennial valuation.
Would the Fund consider when determining the value of an employer’s contributions for exit credit purposes, making an allowance for investment returns achieved by those contributions?
The Fund will take this into consideration and will respond further at the end of the consultation.
Would the Fund consider offering a discount for the prepayment of employer contributions?
In accordance with the Fund’s existing FSS, the Fund intends to retain the proposal not to offer any discount for the prepayment of employer contributions.
Would the Fund consider mirroring any limitation to annual reductions in contributions, by a corresponding limit to annual increases in contributions?
Yes, this has always been the Fund’s intention. We will review and, if necessary, revise the FSS wording after the consultation to ensure this is clearly reflected.