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The London Borough of Merton Pension Fund

The London Borough of Merton Pension Fund. Actuarial update AGM September 2012. Alison Hamilton FFA. Agenda. Lord Hutton’s Recommendations. LGPS 2014 – the headlines. Public Service Scheme Proposals. Trade accrual and revaluation for same cost (ish) Not quite there yet. Why CARE?.

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The London Borough of Merton Pension Fund

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  1. The London Borough of Merton Pension Fund Actuarial update AGM September 2012 Alison Hamilton FFA

  2. Agenda

  3. Lord Hutton’s Recommendations

  4. LGPS 2014 – the headlines

  5. Public Service Scheme Proposals Trade accrual and revaluation for same cost (ish) Not quite there yet

  6. Why CARE?

  7. Scheme Design Principles

  8. Replacement Ratios

  9. Income Replacement Ratios

  10. Replacement ratios

  11. CARE Schemes

  12. How it works Accrual 2% (1/50th) Pay Increases 3% Revaluation 3%

  13. How it works Accrual 2% (1/50th) Pay Increases 3% Revaluation 3%

  14. How it works Accrual 2% (1/50th) Pay Increases 3% Revaluation 3%

  15. How it works Accrual 2% (1/50th) Pay Increases 3% Revaluation 3% A final salary scheme is a CARE Scheme with actual salary increase revaluation

  16. Why Career Average?High Fliers -v- Low Fliers

  17. Is the new LGPS better for me?

  18. Is the new LGPS better for me?

  19. Is the new LGPS better for me?

  20. Conclusions

  21. Impact on Merton Pension Fund • We can do the calculations • 1-2% of payroll • The benefits cost roughly the same • The link to SPA reduces the over all cost • Depends on membership profile and funding assumptions • Above excludes any benefit of “50/50” lite option • Employer cost roughly halves for those who opt for 50/50 • If 10% of payroll opt for “50/50” • Further saving of c. 0.5% for the Fund • Variation between employers within Funds

  22. What about the past?

  23. Summary • The 2013 valuation is just around the corner • Benefits built up to date are the same • New contribution rates may reduce slightly • For future benefits • For employers • Not employees • Still a deficit to fund • Still some decisions to be agreed for 2014 scheme

  24. Questions?

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