Contact: Chief Pensions Officer [email protected] telephone 01962 - 847506

1. Summary

1.1 The Panel is asked to agree special, "bulk" pension transfer payment terms for staff who moved from the Hampshire and Isle of Wight Magistrates' Courts' Committee (HMCC) to Her Majesty's Courts Service (HMCS) on 1 April 2005.

2. Staff transfers

2.1 These employees are automatically entitled to have their benefits preserved in the Hampshire Pension Fund, index-linked and paid at retirement. They also have the option to elect for a transfer payment to the Civil Service scheme instead, along with magistrates' courts' staff in 40 other local government funds.

2.2 Over the past year negotiations have taken place over the terms on which bulk transfer payments could be made from these funds to the Civil Service scheme. The Civil Service did not want to accept less money that was needed to fund the transferred benefits fully, but the local government funds are all in deficit.

2.3 A scheme has now been recommended to local authorities by the Association of Consulting Actuaries (ACA), in consultation with local and central government interests. It would protect the interests of the transferred staff and local government funds as neither would suffer financially. HMCS also accepts this.

3. Valuations

3.1 Each individual will be given a quotation of their accrued benefits and the "cash equivalent" transfer value which would normally be offered to any other pension scheme. The Civil Service scheme will then offer each individual a service credit for that transfer value, as they usually would for anyone joining from another public service pension scheme. The individuals will each get year-for-year service credits if they elect to transfer. Special "bulk" payment arrangements will apply.

3.2 Each fund's actuary will calculate the value of its assets attributable to all former employees of the Magistrates' Courts' Committee, as at 31 March 2005, including those who retired or resigned beforehand. This will be less than the fund's liabilities for such former employees because each fund was in deficit at that date. Depending on which staff elect to transfer, each fund will then pay that proportion of the value of the assets attributable to all former employees, less the value of assets needed to pay benefits to those who left before 1 April 2005. It will fall upon HMCS to make good any deficits in the Civil Service scheme later.

3.3 If the value of a fund's retained liabilities exceed the value of the transferable assets then HMCS will make good that deficit to that fund over a ten year period.

3.4 The intention is to achieve a "clean break" settlement between local and central government. Consequently it is important that the actuary is supplied with reliable data, virtually equivalent to another full pension fund valuation exercise. The Government Actuary's Department (GAD) will verify the actuaries' reports.

3.5 Administering authorities are now asked to accept the proposals by 30 June 2005.

4. Unfunded pensions

4.1 HMCS will continue to reimburse local authorities for the full costs of unfunded benefits and their administration. These discretionary or statutory awards were made to staff who were retired early or made redundant before 1 April 2005 and were never a pension fund liability. Otherwise the proposal gives a "clean break".

Recommendation

That the Panel approves the ACA's proposals to protect both staff and fund.

Section 100 D - Local Government Act 1972 - background papers

Documents which disclose facts or matters on which this report, or an important part of it, is based and has been relied upon to a material extent in the preparation of this report, excluding published works and documents which disclose exempt or confidential information as defined in the Act.

Draft letter dated 29 April 2005 from the Government Actuary and ACA entitled "Transfer of MCC staff from LGPS to Civil Service Pensions" in HMCC File.