Some protection benefits, such as ill health retirement, can have an immediate strain on a Local Government Pension Scheme (LGPS) Fund, unless steps have already been taken to meet an estimate of these costs.
Most LGPS Funds will have made some provision for these costs. Assumptions will be used to forecast the incidence of ill health retirements and this will be reflected in the contribution costs. However, the amount set aside may not always equal the actual cost, which means any excess would need additional funding.
Although relatively rare, ill-health retirements can still be costly, especially for small or medium sized employees.
"It is important, therefore, that Funds have a policy to deal with this risk and to avoid employer challenge or default. The 2019 valuation is a good opportunity to put a policy in place."
In this briefing note we explore ways to manage ill-health retirement risk, all of which are used to various extents in the LGPS.
To continue reading, please download the briefing note below.