Our final meeting of 2018 took place on 27 November 2018. This update shares details on the key items discussed, which included an important change in defined benefit (DB) policy and a rule change on defined contribution (DC) life cover. Both of these may impact your future benefit planning.
The EC meeting schedule for next year has been agreed, with meetings planned for early March, June and mid-September. The EC Chair will meet with the Chair of the Trustee Board in January. During 2019, we will carry out a review of the benefits offered by SHPS and assess how the Scheme aligns with the requirements of employers and their employees. The DB investment strategy is due for review as part of the valuation cycle and we will be involved in this on a consultation basis. We have received some preliminary information from TPT about administration costs as well as some responses to our concerns about SHPS DC. We will keep you updated on progress across all of these areas and seek your views, where necessary, in the coming months.
We were asked at one of the recent employer forums whether the EC would publish the minutes of its meetings. We discussed this and feel that providing a summary of the main items will provide you with a clearer picture of our activities. On this basis we will issue an EC Update after each meeting.
We welcome any questions or comments on any aspects of SHPS that you would like the EC to take forward. This can be done via your normal contact at TPT or preferably via email to SHPSEmployerCommittee@tpt.org.uk.
Policy change – Defined benefit structures
The 2017 valuation results indicate a significant increase in future service contribution rates for all the DB structures. The EC is aware that this is a major issue for those employers wishing to maintain DB for their employees. To help employers, the EC has agreed with TPT to remove the restrictions on the number of DB structures an employer can have open from 1 July 2019.
As a reminder, under the existing policy an employer can offer only the CARE 120ths structure plus ONE other DB structure to new members.
From 1 July 2019, each employer will be able to offer as many DB structures as they wish to new members. The normal process and timescales apply for an employer introducing any changes and the Employer Form of Authority will be updated accordingly and made available online in the New Year.
Rule change - DC life cover
It was announced at the November forums that from 1 July 2019, TPT will be changing how the cost of DC life cover is calculated and collected. To be clear, this change is in respect of DC members only and does not affect any active defined benefit members.
SHPS DC currently provides mandatory life cover of three times pensionable pay at a cost of 0.45% of pensionable pay. The cost is deducted from the employer’s contribution, meaning that the full contribution is not invested in the member’s DC pot. The change in approach means that the cost of providing DC life cover will be paid by the employer on top of the full employer contribution.
Considering the feedback received and the EC’s desire to maximise employer flexibility, the EC has agreed a change to the SHPS DC Rules with the Trustee. From 1 October 2019, each employer can select the level of life cover (if any) they wish to provide within SHPS DC.
Your organisation will have received a communication from TPT in December which provided more details on the rationale and any actions you need to take.
It was great to see so many of you attending the recent employer forums. We will continue to provide one of the forums via webinar and will work on enhancing this service for the next forums. There was an excellent level of interaction and debate, and the overall feedback received was positive, scoring the overall events as 8.25 out of 10. TPT will publicise the forums’ Q&As prior to the Christmas break.
We want your views
The EC is very keen to receive the views of all employers on any aspect of the Scheme and to understand any concerns you may have. We encourage you to get in touch via our email address, SHPSEmployerCommittee@tpt.org.uk.