31 March 2020 Pension Fund Financial Position

Pension Fund Financial Position at 31 March 2020

Report of the Scheme Manager

Agenda Item No: 9
Date:

Purpose of Report:

To inform the Board of the financial position of the Nottinghamshire Firefighters Pension Fund as at 31st March 2020

Recommendations:

That Board members note the content of this report.

Contact Officer 

Name: Beck Smeathers , Scheme Manager
Tel: 0115 967 0880
Email: becky.smeathers@notts-fire.gov.uk


  1. Background
    1. The four Firefighter pension schemes (1992, 2006, 2015 and Modified) are all unfunded schemes, which means that they have no funding invested in assets. Effectively, the schemes operate on a “pay as you go” basis, with contributions into the schemes in each year used to pay the pensions and lump sum retirement benefits in that same year.

    2. Since April 2006, the Fire Authority has been required by accounting regulations to operate a pension fund separately from the Authority’s revenue budget. This has had the effect of “ring-fencing” pension transactions so that they can be accounted for and reported as an entity.

  2. Report
    1. The Nottinghamshire Pension Fund for the Firefighter Schemes is included within the Authority’s accounts but shown as a separate fund. It is subject to audit by external auditors and its financial position is reported as at 31st March each year.

    2. The Pension Fund for the year ended 31st March 2020 is attached as Appendix A.

    3. The deficit on the Pension Fund (the amount by which pension benefits paid exceeds contributions into the schemes) is funded by the Home Office. For the year ended 31st March 2020 this deficit was £9.73m. The deficit in recent years has been as follows:
      Pension Fund Deficiencies
      Financial YearPension Fund Deficit £m
      2016/1710.23
      2017/188.84
      2018/1911.23
      2019/209.73

    4. It can be seen from Appendix A that the total amount of money coming into the pension scheme has increased compared to the previous year largely due to the increase in employer contribution rates.

    5. The total amount of benefits payable has been relatively static after taking account of the inflationary increase. This element can fluctuate between years as it is dependent on the number of retirements and whether these staff hold senior positions.

    6. The overall deficit of the scheme is expected to decrease over time as staff transition into the 2015 scheme and fewer staff retire from the more generous 1992 scheme.

  3. Financial Implications
  4. The financial implications are set out in full in the body of this report.

  5. Human Resources and Learning and Development Implications
  6. There are no human resources or learning and development implications arising directly from this report.

  7. Equality Impact assessment
  8. An equality impact assessment has not been carried out as this is not a new policy.

  9. Crime and Disorder Implications
  10. There are no crime and disorder implications arising from this report.

  11. Legal Implications
  12. The Public Service Pensions Act 2013 introduced a framework for the governance and administration of public service pension schemes. The Pension Regulator’s code of practice requires that Pension Board members are sufficiently knowledgeable about the subject to enable them to carry out their responsibilities and this report serves to increase knowledge and awareness of pension funding with a local context.

  13. Risk Management Implications
  14. There are no risk management implications arising directly from this report.

  15. Recommendations
  16. That Board members note the content of this report.

  17. Background papers for inspection (Other than published documents)
  18. None.


Becky Smeathers
Scheme Manager

Appendix A

Pension Fund Account
Year 2018/19DetailsYear 2019/20
£000£000
Contributions Receivable
Fire Authority:
(2,774)Contributions in relation to pensionable pay(5,181)
(115)Other (Ill Health Retirements)(73)
(2,330)Firefighters' contributions(2,312)
(5,219)Total Contributions Receivable(7,566)
Transfers in from other authorities
(13)Transfers in from other schemes(27)
Benefits Payable
12,891Pensions13,659
3,410Commutations and lump sum retirement benefits3,619
79Lump sum death benefits26
75Other21
16,455Total Benefits Payable17,325
Payments to and on account of Leavers
0Transfers out of other schemes0
Refunds of Contributions
4Contribution holiday refund payments0
11,227Net Amount payable for the year before top-up grant from Central Government9,732
(8,689)Top-up grant received from Central Government(7,219)
(2,538)Balance of top-up grant for the year (receivable from) payable to Central Government(2,513)
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