The government has been seeking views on proposals for pooling academies in the Local Government Pension Scheme (LGPS).
The Department for Communities and Local Government (DCLG) launched the consultation, which closed on 15 November, on 7 October.
Some academies have seen contributions for staff covered by the LGPS soar after conversion while other schools have decided not to proceed with conversion because of higher charges.
The increased costs are due to academies’ perceived higher risk after leaving local authority control. Pooling is designed to create larger populations within pension funds, reducing risk factors such as early retirement.
The consultation followed an announcement by Education Secretary Michael Gove in July guaranteeing that the government would meet the LGPS liabilities if they had to close. The guarantee is designed to ensure that LGPS contributions do not substantially increase after academies convert.
The DCLG asked for comments on practical arrangements for pooling such as which bodies should form the pool – academies only, academies and local schools, or academies and local authority employees – and the nature of actuarial assumptions.
The consultation document said: “A more structured regulatory arrangement for creating pooling mechanisms, whereby risks and costs are shared between academies and the local authority should reduce the volatility of academies’ employer contribution rates but there may be a number of ways to achieve this aim.”
At Nicklin, we can provide expert advice to schools about converting to academy status and the financial implications involved. We can also offer guidance on budgeting for, any new contribution rate associated with the LGPS and other potential costs, such as early and ill health retirements.
We can also advise on compliance with the Financial Reporting Standard 17 (FRS17), under which the LGPS relating to an academy must also be valued annually and on the preparation and auditing of the annual end of year certificate for submission to the Teachers’ Pension Scheme. For more information, please contact us.