New funding guidelines for UK local govt scheme
UK – New guidelines on funding strategy statements have been published for authorities involved in the Local Government Pension Scheme.
The Chartered Institute of Public Finance and Accountancy, which sets accounting rules for local authorities, said that administering authorities involved in the scheme have just over a year to get their Funding Strategy Statements, or FSS, in place.
The purpose of the strategy is "to establish a clear and transparent fund- specific strategy which will identify how employers' pension liabilities are best met going forward”.
“The FSS will pave the way to higher standards of transparency, better levels of accountability and more effective oversight and scrutiny arrangements in the LGPS,” Cipfa said.
The first statements must be published by March 31 2005 – and the new regulations come into effect on April 1 this year.
Cipfa’s pensions panel has now published guidance to help LGPS administrators to establish their own local procedures. “The administering authority must have regard to this guidance,” it said. The statements are to be prepared under specific requirements “while allowing flexibility at local level”.
The guidelines cover the purpose of the statement, the aims of the pension fund, responsibility as well as solvency and target funding levels.
“We think that this guidance will highlight the areas that FSSs should address, while giving administering authorities the flexibility to reflect local circumstances,” said John Stanford, Cipfa’s assistant director of policy.
“FSSs will be important in strengthening employers’ knowledge and will also allow them to influence the funding policies of administering authorities.”
“The publication of these statements is integral to the effective management of LGPS pension funds going forward,” said local government minister Phil Hope.