Early pensions contributions update
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Following Graham’s recent post on the treatment of early pensions contributions, we’ve seen a number of responses and queries from local government. Graham has provided the following update to his original piece.
Following my comments and guidance issued by the Audit Commission, I have now seen a range of proposals from local authorities making early pension payments. In some cases, local authorities have supported their proposal with strong arguments as to why, in their particular circumstances, they should defer the charge to the general fund.
Your authority must be satisfied that the amounts charged to the general fund in a financial year are the amounts payable for that year. This is a matter of interpretation of regulations as they apply to your circumstances. I would reiterate, therefore, that if you are proposing to make early payments to the pension fund that you set out your rationale in writing and take legal advice (if not external, then internal).
I would expect this to consider:
• the actuary’s opinion on the amounts that are payable by the local authority into the pension fund
• the agreement between the actuary and the local authority as to when these payments are to be made
• the wording in the rates and schedules certificate setting out when amounts are payable for each financial year.
For example, if your local authority proposes making a payment to the pension fund in a single year and to charge this to the general fund over a three-year period, I would expect the rates and adjustments certificate to show, unambiguously, that the amount payable is spread over the three years.
Of course, others may not agree with your view. In particular, auditors will have to consider each case on its merits.
Graham Liddell is Grant Thornton UK LLP’s national technical lead for the public sector.
No responsibility or liability is accepted by Grant Thornton UK LLP towards any person or organisation in respect of the use of, or reliance on, information contained in this column.
