The Head of Pension Administration presented a report that provided Members with a copy of the report updating the Fund’s termination policy and a new contributions flexibilities policy that had been taken to Pensions Committee in February 2021. 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 met 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 Chair requested that when the Fund consults with employers on the revised FSS that it is made clear that the new flexibilities are at the discretion of the administering authorities following appropriate engagement and due diligence with relevant parties.

The Head of Pensions Administration responded to Members questions and it was;

Resolved – That the report be noted.