This is a timing difference as any difference will be brought forward in future Surpluses or Deficits on the Collection Fund
Note 31 Defined Benefit Pension Scheme
As part of the terms and conditions of employment of its officers and other employees, the Fire Authority makes contributions towards the cost of post employment benefits. Although these benefits will not actually be payable until employees retire, the Fire Authority has a commitment to make the payments that need to be disclosed at the time that employees earn their future entitlement.
The Fire Authority participates in five post employment schemes:
The Local Government Pension Scheme for non-uniformed and control room employees, administered by Cambridgeshire County Council.
This is a funded defined benefit final salary scheme, meaning that the Fire Authority and employees pay contributions into a fund, calculated at a level intended to balance the pensions liabilities with investment assets.
There are four Firefighters’ Pension schemes for uniformed employees. These are unfunded defined benefit schemes. The Firefighters’
pension schemes have no assets. The total contributions, by both current members and the Fire Authority, are used to fund payments to the current pensioners regardless of which scheme they are in. A separate account detailing the 2018/19 transactions and liabilities is shown within the Firefighters’ Pension Fund Account note.
The Local Government pension scheme is operated under the regulatory framework for the Local Government Pension Scheme and the governance of the scheme is the responsibility of the pensions committee of Cambridgeshire County Council. Policy is determined in accordance with the Pensions Fund Regulations.
The principal risks to the Authority of the scheme are the longevity assumptions, statutory changes to the scheme, structural changes to the scheme (i.e. large-scale withdrawals from the scheme), changes to inflation, bond yields and the performance of the equity
investments held by the scheme. These are mitigated to a certain extent by the statutory requirements to charge to the General Fund the amounts required by statute as described in the accounting policies note.
The operation of the Firefighters’ Pension Schemes is controlled by the Firefighters Pension Scheme (Amendment)(England) Order 2006 (SI 2006/1810) and The Firefighters' Pension Scheme (England) Regulations 2014. Employees’ and employers’ contributions into the Firefighter Pension Fund are determined by the Secretary of State on the advice of the Government Actuary. Payments of pensions and other retirement benefits are made from the Pension Fund. Government grant is payable to cover any shortfall on the Pension Fund account.
The principal risks to the Fire Authority are statutory change to the scheme and the number of ill health retirements and injury awards.
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The Fund’s Actuary determined the Authority's contribution to the Fund for 2018/19. The contribution rate equates to approximately 37%
of pay to address the Pension Fund deficit over 15 years.
The actuarial value of the fund’s liabilities as at 31 March 2019, in accordance with International Accounting Standard (IAS) 19, was completed by the Government's Actuary Department on 31 March 2019, and subject to triennial valuation.
Transactions relating to retirement benefits
We recognise the cost of retirement benefits in the reported cost of services when they are earned by employees, rather than when the benefits are eventually paid as pensions. However, the charge we are required to make against council tax is based on the cash payable in the year, so the real cost of post employment/retirement benefits is reversed out of the General Fund via the Movement in Reserves Statement.
The Employer contributions figure includes the relief from DCLG (Top-up Grant). The total contributions expected to be made to the Local Government Pension Scheme by the Authority in the year to 31 March 2020 will be £1,351k. Expected contributions to the Firefighters' Pension Scheme in the year to 31 March 2020 are £3,026k.
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General Fund Transactions
2017/18 2018/19
LGPS Firefighters Main Scheme
Firefighters Injury
Pensions Total LGPS Firefighters
Main Scheme
Firefighters Injury
Pensions Total
£000 £000 £000 £000 £000 £000 £000 £000
Comprehensive Income and Expenditure Statement
Cost of Services
Service cost comprising:
1,877 4,900 600 7,377 Current service cost 2,000 5,200 700 7,900
Financing and Investment Income and Expenditure
321 7,100 700 8,121 Net interest expense 348 7,600 700 8,648
2,198 12,000 1,300 15,498 Total charged to Surplus and Deficit on Provision of Services
2,348 12,800 1,400 16,548
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Other post-employment benefits charged to the Comprehensive Income and Expenditure Statement
£000 £000 £000 £000 £000 £000 £000 £000
Re-measurement of the net defined benefit liability comprising:
571 0 0 571 Return on plan assets (excluding
the amount included in the net interest expense)
(1,987) 0 0 (1,987)
8 31,000 (22,000) 9,008 Actuarial gains and losses -
experience 6 (6,300) (800) (7,094)
0 (11,000) 7,800 (3,200) Actuarial gains and losses arising on changes in demographic assumptions
0 (19,500) (2,400) (21,900)
(1,016) (16,900) 12,000 (5,916) Actuarial gains and losses arising on changes in financial assumptions
4,557 19,300 2,400 26,257
(437) 3,100 (2,200) 463 Total charged to Other Comprehensive Income and Expenditure Statement
2,576 (6,500) (800) (4,724)
1,761 15,100 (900) 15,961 Total charged to the
Comprehensive Income and Expenditure Statement
4,924 6,300 600 11,824
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(2,198) (12,000) (1,300) (15,498) Reversal of net charges made to the Surplus or Deficit on the Provision of Services
(2,348) (12,800) (1,400) (16,548)
Actual amount charged against the general fund balance for pensions in the year:
1,267 5,800 600 7,667 Employers' contributions
payable to scheme 1,364 6,200 600 8,164
2017/18 Pensions Assets and
Liabilities Recognised in the Balance Sheet
Pensions Total LGPS Firefighters
Main Scheme
Firefighters Injury
Pensions Total
£000 £000 £000 £000 £000 £000 £000 £000
(46,442) (283,100) (26,300) (355,842) Present value of the defined
obligation (53,680) (283,200) (26,300) (363,180)
33,873 0 0 33,873 Fair value of plan assets 37,551 0 0 37,551
(12,569) (283,100) (26,300) (321,969) Value of Assets / (Liabilities) (16,129) (283,200) (26,300) (325,629)
0 0 0 0 Other movements in the
(liability) / asset 0 0 0 0
(12,569) (283,100) (26,300) (321,969) Net (liability) / asset arising from the defined benefit obligation
(16,129) (283,200) (26,300) (325,629)
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2017/18 Movement in the Value of
Scheme Assets 2018/19
LGPS Firefighters Main Scheme
Firefighters Injury
Pensions Total LGPS Firefighters
Main Scheme
Firefighters Injury
Pensions Total
£000 £000 £000 £000 £000 £000 £000 £000
32,767 0 0 32,767 Opening fair value of scheme
assets 33,873 0 0 33,873
862 0 0 862 Interest income 924 0 0 924
Re-measurement gain / (loss):
(571) 0 0 (571) - The return on plan assets,
excluding the amount included in the net interest expense
1,987 0 0 1,987
1,267 5,800 600 7,667 Contributions from employer 1,364 6,200 600 8,164
324 1,200 0 1,524 Contributions from employees
into the scheme 351 1,400 0 1,751
(776) (7,000) (600) (8,376) Benefits / transfers paid (948) (7,600) (600) (9,148)
33,873 0 0 33,873 Closing value of scheme
assets 37,551 0 0 37,551
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2017/18 Movements in the Fair Value
of Scheme Liabilities 2018/19
LGPS Firefighters Main Scheme
Firefighters Injury
Pensions Total LGPS Firefighters
Main Scheme
Firefighters Injury
Pensions Total
£000 £000 £000 £000 £000 £000 £000 £000
(44,842) (273,800) (27,800) (346,442) Opening balance at 1 April (46,442) (283,100) (26,300) (355,842)
(1,877) (4,900) (600) (7,377) Current service cost (2,000) (5,200) (700) (7,900)
(1,183) (7,100) (700) (8,983) Interest cost (1,272) (7,600) (700) (9,572)
(324) (1,200) 0 (1,524) Contributions from scheme
participants (351) (1,400) 0 (1,751)
Re-measurement gains and losses:
(8) (31,000) 22,000 (9,008) - Actuarial gains / (losses) -
experience (6) 6,300 800 7,094
0 11,000 (7,800) 3,200 - Actuarial gains / (losses) from changes in demographic assumptions
0 19,500 2,400 21,900
1,016 16,900 (12,000) 5,916 - Actuarial gains / (losses) from
changes in financial assumptions (4,557) (19,300) (2,400) (26,257)
776 7,000 600 8,376 Benefits / transfers paid 948 7,600 600 9,148
(46,442) (283,100) (26,300) (355,842) Balance as at 31 March (53,680) (283,200) (26,300) (363,180)
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LGPS - Pension Scheme - Assets comprised of:
Fair value of scheme assets
2017/18 2018/19
Quoted Unquoted Total Quoted Unquoted Total
£000 £000 £000 £000 £000 £000
927 11 938 Cash and cash
equivalents 572 0 572
Equity Instruments
By Industry Type
925 0 925 Consumer 1,110 0 1,110
625 0 625 Manufacturing 709 0 709
710 0 710 Energy and Utilities 869 0 869
1,545 0 1,545 Financial Institutions 1,439 0 1,439
349 0 349 Health and Care 226 0 226
180 0 180 Information Technology 225 0 225
0 2,981 2,981 Private Equity 0 3,064 3,064
0 19,203 19,203 Investment Funds & Unit
Trusts 0 20,446 20,446
4,334 22,184 26,518 Subtotal Equity
Instruments 4,578 23,510 28,088
Bonds
By Sector
0 3,304 3,304 Investment Funds & Unit
Trusts 0 3,600 3,600
0 838 838 UK Government 0 933 933
0 2,275 2,275 Other 0 2,951 2,951
0 6,417 6,417 Subtotal Bonds 0 7,484 7,484
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5,261 28,612 33,873 Total Assets 5,150 30,994 36,144
The significant assumptions used by the actuary have been:
2017/18 LGPS 2018/19
Long term expected rate of return on assets
2.7% Equity Instruments 2.4%
2.7% Bonds 2.4%
Mortality assumptions
Longevity at retirement for current pensioners
22.4 Men 22.4
24.4 Women 24.4
Longevity at retirement for future pensioners
24.0 Men 24.0
26.3 Women 26.3
Other assumptions
2.4% Rate of inflation 2.5%
2.7% Rate of increase in salaries 2.8%
2.4% Rate of increase in pensions 2.5%
2.7% Rate for discounting scheme liabilities 2.7%
Impact of assumptions on the obligation:
Increase by 1%
LGPS
Decrease by 1%
£000 Assumption £000
0 Longevity 0
0 Rate of inflation 0
1,608 Rate of increase in salaries (1,608)
10,900 Rate of increase in pensions (10,900)
12,700 Rate for discounting scheme
liabilities (12,700)
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The significant assumptions used by the actuary have been:
2017/18 Firefighters Main Scheme 2018/19
Mortality assumptions
Longevity at retirement for current pensioners
29.5 Men 27.3
31.5 Women 29.4
Longevity at retirement for future pensioners
30.8 Men 28.4
32.8 Women 30.6
Other assumptions
2.4% Rate of inflation 2.5%
3.4% Rate of increase in salaries 3.5%
2.4% Rate of increase in pensions 2.5%
2.7% Rate for discounting scheme liabilities 2.4%
Increase by 1%
Firefighters Main Scheme
Decrease by 1%
£000 Assumption £000
9,284 Longevity (9,284)
0 Rate of inflation 0
3,251 Rate of increase in salaries (3,251)
23,265 Rate of increase in pensions (23,265)
29,285 Rate for discounting scheme
liabilities (29,285)
The table above shows the amount included in the Balance Sheet arising from the Authority’s obligation in respect of its defined benefit plans.
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