Key Messages

• The Government has launched a consultation on proposals to reform the national cost control mechanism (alongside a consultation on its discount rate methodology). These proposals will not affect the results of the 2016 cost control valuations, which are due for publication after being adjusted to allow for the McCloud remedy. 
• The reforms are designed to bring greater stability to the cost control process and avoid ‘perverse’ outcomes that fly in the face of common sense. The Government has chosen three Government Actuary recommendations – ‘reformed scheme only’, ‘widened corridor’ and an ‘economic check’ - to achieve this. 
• The LGPS is unusual amongst the largely unfunded public sector schemes; it holds assets, and employer contribution rates are heavily reliant on past and future investment returns. In addition, the Scheme Advisory Board in England and Wales runs its own cost control mechanism alongside the Government’s mechanism. These differences can cause the outcomes of cost control valuations on the LGPS to be significantly different to those in other public sector schemes. 

Download our full briefing note which covers: 

• Why is Cost Control out of control? 
• What does the review say?
• What has the Government decided to do? 
• How does this affect the LGPS? 

We will be preparing our own response to the consultation and will share it publicly when available (end of July).

In the meantime, if you wish to discuss any of the topics covered in this briefing further, please contact your usual Hymans Robertson consultant.