One of the Board’s statutory duties, under the regulations, is to introduce and maintain a process to manage costs in the scheme alongside the process introduced by HM Treasury for all public service schemes. The first application will be in 2016 with further processes following at three year intervals. These processes are delivered in line with the document “Public service pensions: actuarial valuations and the employer cost cap mechanism” (pdf 347kb). In particular, attention is drawn to section 5 which sets out how the two processes integrate and includes the following statement:
5.10 As with the statutory cost cap, certain drivers of scheme costs will not affect the cost control mechanism run the by the Scheme Advisory Board. In addition to existing past service effects and changes in financial assumptions, risk associated with investment performance will also be excluded from both the statutory cost cap and the Board’s cost control mechanism. Investment risk will instead be dealt with via improved governance.
This section of the site will contain information on, as well as the outcome of, those processes.
The Shadow Scheme Advisory Board (SSAB) has today published two briefing notes in respect of the cost control processes which will be used to assess the costs of the reformed LGPS in England & Wales.
A briefing note for members and employers has been published in order to:
- give a broad overview of the background to the cost control processes,
- outline the differences between the cost control processes and local funding valuations, and
- detail the possible impacts on the benefits structure and/ or employee contribution rates which could arise from the results of the cost control processes.
The SSAB ask that administering authorities make this briefing note accessible to fund employers and members so that they can familiarise themselves with the processes and the possible impacts that the cost control mechanisms could have on the Scheme benefits structure and/ or employee contribution rates.
A second briefing note has been prepared for administering authorities in order to outline the role that LGPS pension funds will play in the cost control process and in particular focusses on the practicalities of delivering accurate and timely cost control figures.
In addition, the SSAB has published a process map (located here) and a timetable (located here) setting out its plans for the interactions between the HM Treasury Employer Cost Cap (ECC) process and the Scheme Advisory Board Future Service Cost (FSC) process.
Any questions or queries arising from the publication of these documents should be referred to the Board secretariat in the first instance.