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0145 2022/23
31/03/2023
Finance and Governance
All wards
Pension Prepayment Saving
Pension Prepayment Saving - Alternative Action
The decision seeks approval to not implement the saving proposal from the prepayment of employer pension contributions to Merseyside Pension Fund that was included within the public budget consultation and the Medium Term Financial Strategy (MTFS) 2023-2026.
The Merseyside Pension Fund has provided member bodies with the opportunity to prepay 80% of employer contributions to the fund for a period of either 1 or 3 years. The prepayment of the pension contributions results in a discount in the contributions that the Council is required to make and would deliver a saving against revenue budgets. The net saving from the prepayment of circa 4.4% has been considered and included as a potential budget saving for consideration within the public budget consultation and by Members in approving the Budget for 2023/24 and the MTFS. The prepayment would require paying 80% of the estimated contributions for the 3 year period to the pension fund (circa £20m for future year contributions and £10m in relation to 2023/24). Due to the current underlying economic conditions, the investment of these funds with high quality counterparties, in accordance with the Treasury Management Strategy Statement, can achieve greater returns. As an example, the most recent investment that the Council has made has achieved a rate of return of 4.9%. The decision to not progress with the saving and take alternative action, if approved, will be reported to Members in a future Financial Monitoring Report.
By not progressing with the prepayment to the pension fund of employer contributions and investing in accordance with the Treasury Management Strategy Statement, the Council will achieve better value for money.
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Please contact Jon Ridgeon on 01744 676701
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