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Employers in surplus

Publication date: 01/06/2023 16:44:16

The amount your employer contributes to your pension will have changed recently as a result of the Valuation, which takes place once every three years. 

The valuation is required under Regulation 62 of the Local Government Pension Scheme Regulations 2013 (as amended) (“the Regulations”). The Valuation Report describes the factors considered by the Administering Authority when carrying out the actuarial valuation as at 31 March 2022 and the decisions reached as a result.  

The purpose of the Valuation is for the Administering Authority to determine: 

  1. The expected cost of providing the benefits built up by members at the Valuation date (the “liabilities”) and compare this against the funds held by the Fund (the “assets”).
  2. The contributions needed to cover the cost of the benefits that active members will build up in the future and other costs incurred in running the Fund (the ‘Primary Contribution Rate’).
  3. An appropriate plan for achieving a 100% solvency funding level if the Fund has more/less assets than liabilities. This plan will cover the amounts which will need to be paid in addition to the Primary Contribution rate (the ‘Secondary Contribution Rate’) and the timeframe over which they will be paid (‘the Recovery Period’).

The report is available to view on our website.  

Appendix H in this report shows the employer contribution rates that will apply from for the years 2023/24, 2024/25 and 2025/26. 

Employer contributions do not form part of a pension pot as they would with a Defined Contributions (DC) pension but are instead based on a member’s pensionable pay and membership (a Defined Benefit scheme). In a Defined Benefit scheme, the Employer contributions must ensure there are enough “funds” to meet the liability of the pensions to be paid.  

At this latest Valuation, some employers have more assets in their pot than liabilities. This has meant they can use some of this surplus to reduce their Primary contribution rate. You can view a full breakdown of how your pension has built up so far using our ‘My Pension Online’ service. Please note that employee contribution rates have also changed as a result of the valuation and these new rates can be found on our website.  

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