For all employers in the Fund, a situation may occur when an employer no longer has any remaining employees who are active members in the Fund. This will normally happen because either all active members have left their employment (and not replaced with employees enrolled into the LGPS) or because an admission agreement has come to an end (only relevant for admitted bodies).
If this happens, we will normally determine that the employer has ceased and take appropriate action in line with our cessation policy. In particular, we will assess whether there is a cessation deficit or surplus; if so, this will normally result in the Fund receiving an Exit Payment or paying an Exit Credit, either of which could be material in size.
An employer in the Wiltshire Pension Fund is defined as ceased if:
- They have no active members left and the Fund determines that they shall no longer be able to admit any new members to the Fund or
- As the result of the termination of the employer's Admission Agreement. The conditions for this are set out in the employer's Admission Agreement (Admitted Bodies only).
Note: Under the first scenario, the Fund will discuss the situation with the employer to see whether it is likely that they will have active members again in the future before we take the decision to make them officially ceased.
What happens next?
In the interests of consistency and transparency, Wiltshire Pension Fund has created a Cessation Policy which dictates the approach we will normally take regarding the cessation of admitted bodies.
The current cessation policy came into place in early 2021. The previous cessation policies may apply in certain instances whereby the cessation occurred before this date.
Employer cessation policy (PDF, 314 KB)(opens new window)
1. Repayment of any deficit ('Exit Payments')
The cessation valuation, as produced by the Actuary, will calculate a final deficit figure due to Fund. The valuation will be based on a number of factors, determined by the guidelines in our cessation policy, and will vary hugely from employer to employer. Hence, it is difficult to give any general estimates or figures in this respect, although the cessation valuation will typically be significantly higher than the total monetary deficit currently due by most employers unless the admitted body concerned has a guarantor in place with another scheme employer. Once the cessation has been identified, the remaining deficit must be paid within 30 days (unless agreed otherwise with the Fund).
2). Surpluses ('Exit Credit')
If upon cessation there is a surplus, the amount could be repaid to the employer concerned unless the Fund is aware of some type of risk-sharing, pass-through or pooling arrangement which means the surplus should be inherited by another employer. However, the Fund has discretion over whether or not to make a cessation surplus payment. Full details on the Fund's approach to using this discretion can be found in section 8 of the Fund's Cessation Policy.
3). Costs
The actuarial costs involved will be paid by the ceasing employer unless otherwise agreed. Typically this will be several thousand pounds but will vary depending on the number of people employed historically and complexities involved.
We will not normally charge an administration fee for compiling and sending the data to our Actuary or for the officer's time spent on this. However, we reserve the right to charge where we believe we have spent an excessive amount of time in completing the points covered in the cessation policy.
Our Cessation and Charging Policies can be found on our website:
Employer cessation policy (PDF, 314 KB)(opens new window)
Employer charging policy (PDF, 226 KB)(opens new window)
For further information regarding any of the above please contact Employer.Relations@wiltshire.gov.uk
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