The Head of Pensions Administration, Yvonne Murphy, introduced a report that updated Members covered updates to the Funding Strategy Statement’s termination policy and the new contributions flexibilities policy in light of the new Regulations that came into force on 23 September 2020.  The Regulations required these policies to be included in the Funding Strategy Statement. Appendix 1 to the report contained the Draft Termination Policy updates regarding exit debt payments and deferred debt agreement flexibilities and Appendix 2 to the report contained the Draft Policy regarding flexible contributions.

The report informed that the default position for exit payments was that they were paid in full at the point of exit. The termination policy had therefore been updated to allow for the new Regulations which allowed exiting employers (subject to a suitable review of the unaffordability of an immediate exit debt payment) to spread their exit debt over a set period or to enter into a Deferred Debt Arrangement allowing them to remain in the Fund with no active members. The policy set out the process that must be followed by the Fund when an employer exits the Fund (usually triggered when the last active contributing member leaves pensionable service).

The new Regulations also permitted contribution rates to be adjusted between valuations. Currently the contribution rates set out in the valuation report stayed in place until the next valuation (except in limited circumstances or where an employer exits the Fund). These Regulations allowed changes to contributions to be made before the next valuation if an employer’s circumstances meet the specified criteria. The policy set out the situations where contributions may be reviewed between actuarial valuations and the conditions that must be met.

The Head of Pensions Administration responded to Members questions and being moved by the Chair and formally seconded by Councillor Cherry Povall, it was;

Resolved – That;

1.  the draft policy for ‘Deferred Debt Agreements’ based on HMRC’s draft statutory guidance and the Scheme Advisory Board (SAB) guide be approved.

2.  the draft policy for ‘Flexibility in Contribution Rates’ based on HMRC’s draft statutory guidance and the SAB guide be approved.

3.  any final changes to the draft policies – following consultation with employers on the updated Funding Strategy Statement, and after having taken advice from the Scheme Actuary along with consideration of the publication of the final statutory guidance and SAB guide be delegated to the Director of Pensions.