Anthony Collins Solicitors is pleased to have been ranked as a Band 1 firm once again.
New regulations came into force on 23 September 2020 providing LGPS (Local Government Pension Scheme) employers with flexibility on meeting exit payments and LGPS funds with the flexibility to review employer contributions between valuations. These changes have the potential to help employers who feel trapped between rising liabilities on the one hand and a large exit payment on the other hand.
Review of contributions
The government has given administering authorities of LGPS pension funds the ability to review employer contributions in between three-yearly valuations in three circumstances:
- where there has been a significant change to an employer’s liabilities;
- where there has been a significant change in the employer’s covenant; and
- where the employer requests a review.
The government has made clear that market volatility or changes in asset values would not be a proper basis for the use of this new flexibility.
This would enable LGPS funds to respond to circumstances where the employer's liabilities substantially reduce or increase because of a TUPE transfer or local government re-organisation or where an employer's financial strength weakens materially. It also allows employers to request a review. The government has suggested that the potential impacts of Covid-19 might be a circumstance leading an employer to ask for a review.
Flexibility on exit payments
The government has recognised that employers may feel trapped into accruing further liabilities in the LGPS that they cannot really afford because they are also unable to afford the exit payment that would fall due if all employees stop accruing benefits. Whilst some LGPS funds already allow this sort of arrangement, the government wanted to put this on a formal footing.
The government has therefore introduced deferred debt arrangements (DDAs) which allow employers to defer an exit payment and to pay this off over time by way of continuing contributions. This has the potential to allow employers who want to reduce their liabilities to do so without risking insolvency or a substantial impact on their operations caused by a large exit payment.
There are a number of points to note about the new DDAs:
- it is at the LGPS pension fund's discretion whether to offer the DDA but they are required to set out a consistent approach to the exercise of their discretion in their funding strategy statement;
- the DDA must be for a fixed period, although this can be changed by agreement between the fund and the employer;
- the agreement will terminate if the employer becomes insolvent, is taken over or amalgamates - unless the fund is satisfied that there is no significant weakening in the employer's ability to continue to pay contributions; and
- the fund may terminate the agreement if it forms the view that the employer's ability to pay contributions has weakened materially or is likely to weaken materially in the next 12 months.
This new arrangement substantially mirrors arrangements introduced for private-sector pension schemes in April 2018 so we already have experience of negotiating these sorts of agreements in relation to private sector schemes.
For more information
For advice in relation to deferred debt arrangements (DDAs) or options for managing liabilities in the LGPS, contact Doug Mullen.
Since March 2020, commercial property owners and occupiers across many sectors, whether housing associations, charities, care providers or local authorities, have been impacted by the rules regulating how they deal with their tenants and their landlords. It seems each week there is a change in policy, regulation or legislation, governing how they must respond.
A key element of the Bill is the establishment of a duty holder regime and requirement to maintain the ‘golden thread of information’ throughout the life cycle of high-risk residential buildings
We have been working with care homes to update their contracts and advise on the risks of charging the resident a regular “top-up” or additional fee where a resident is funded through NHS CHC
The parliamentary processes are complete and the Restriction of Public Exit Payments Regulations 2020 (“the Regulations”) which cap exit payments in the public sector at £95,000 will be in force from 4 November.
As the UK’s social housing sector recovers from the initial Covid-19 outbreak and lockdown, now is the time to focus on the challenges that may emerge next.
There is no universal approach to regenerating town centres. However, housing must be considered a key part of any regeneration project – providing well-needed new homes and economic growth.
Friday 16 October marks the 6th annual Wear Red Day in England, Wales and Scotland. Wear Red Day is the brainchild of the charity; Show Racism the Red Card (SRTRC). SRTRC aims to educate young people so they are equipped to recognise and challenge stereotypes, misconceptions and negative attitudes towards race.
Alongside the Building Safety Bill published in July 2020, the Fire Safety Bill is a key step in the Government’s strategy to improve building and fire safety in the wake of the Grenfell Tower tragedy
Government regulations came into force on 23 September 2020 providing LGPS (local government pension scheme) employers with flexibility on meeting exit payments and LGPS funds with flexibility too
To receive invitations to our events, as well as information and articles on legal issues and sector developments that are of interest to you, please sign up to Newsroom.