Steve Simkins letting off steam

Steve Simkins is closer to the discussion on how the “stable primary contribution rate” that will enable actuaries to work out what employers should pay in their particular circumstances.

He reports on a worrying tendency in the discussions among LGPS actuaries, a wish to revert to the cautious approach adopted in the first quarter of the century “back-solving” as he calls it.

Instead of looking at the future and asking what LGPS best endeavours could deliver, back-dating seeks to ensure that promises made so far are valued by the cost of guarantees ( a gilts discount rate) rather than a courageous view of the future.

A courageous view of the future would lead to lower contribution rates for employers and a few less black bin bags on the streets.

Steve wants better information for local authorities to take decisions on and he refers them to the 2013 legislation

The Local Government Pension Scheme Regulations 2013

This is important not just to Local Authorities but to council tax payers who are paying wildly different council tax demands because of different approaches to funding of LGPS.

There is no sense in adopting a strategy of growth for investment but “gilt + a fraction
discount rates” as if there were no future for LGPS but an “endgame”.

The great thing about this scheme is that it is providing pensions for people in their twenties who may still be receiving pensions in 80 years time – in the 22nd century. What is more, there will be 20 year olds at the end of this century who will only be getting started on the same cycle.

If LGPS has to follow the short-term ambition of private pensions, then those paying tax now will be over-paying for pensions. We need better information and a better conversation between authorities and their actuaries, better thinking from those who carry out the 2025 valuation and a consistency at the Treasury about funding. The Government Actuary Department advise on the future and they are a part of the Treasury.