No changes to benefits or contributions required following LGPS cost cap valuation

The cost cap cost for the Local Government Pension Scheme (England and Wales) was 1.2 per cent below the employer cost cap as at 31 March 2016, according to new analysis from the Government Actuary's Department (GAD).

This is within the 2 per cent corridor specified in HM Treasury regulations, with the LGPS having an employer cost cap of 14.6 per cent, meaning that no changes to benefits or member contributions are required.

According to the valuation report, the cost cap cost was 13.4 per cent as at 31 March 2016, based on employer contribution correction costs of 11.8 per cent and transitional protection remedy costs of 1.6 per cent.

Changes in financial and demographic assumptions set by HM Treasury reduced the cost cap cost of the scheme, although this was offset by an increase in the cost cap cost of the scheme driven by the transitional protection remedy costs.

The GAD also published a pre-McCloud valuation report to reflect the fact that the cost cap valuation was paused following the McCloud judgment, setting out an intermediate value required to calculate the cost cap cost of the scheme.

This concluded that the employer contribution correction cost should be 11.8 per cent of pensionable pay, as used in the cost cap valuation calculations.

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