Page 2 - Watford Community Housing
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                 First Actuarial proposes an innovative solution
First Actuarial looked at WCH’s c.£2 million LGPS surplus, and realised that passing it back to the Council would benefit both parties.
“We approached Watford Borough Council and Hertfordshire County Council, the funding administrator,” says Paul. “And we suggested moving the surplus back to Watford Borough Council, where it would remain on an ongoing basis within the LGPS, so it would never face a cessation debt.”
A series of negotiation meetings
followed. “First Actuarial consultants were instrumental in reviewing and shaping the structure of the deal,” says Paul. “They were able to advise us while at the same time considering how the scheme would
work for all parties. They cut through the technical complexity to communicate the impact clearly.”
First Actuarial provided advice and guidance to WCH’s Board on a regular basis throughout the negotiations. “They clarified the opportunities and risks, and made recommendations,” says Paul. “Then finally, we had a final agreement to take to the Board for signing.”
With a signed agreement in place, WCH no longer faced the cessation debt risk. Watford Borough Council took on the surplus, to the benefit of its overall funding plans for future pension liabilities. It was
a clear win-win for all parties.
  The A win-win arrangement for WCH, outcome the Council, local community and staff
An innovative way to eliminate the cessation debt risk
First Actuarial are very approachable. They’re good at helping managers and Board members digest a very complex and difficult area, and they’ve also been proactive in helping us shape an innovative solution.
Paul Richmond, Group Director of Finance and Resources, Watford Community Housing
First Actuarial came up with an innovative LGPS arrangement that eliminates the cessation debt risk from WCH’s governance arrangements and risk register. We’re
no longer facing a sudden cliff-edge
payment when the last member leaves the organisation,” says Paul. “And we’ve also helped Watford Borough Council improve its overall pension funding position.”
Freeing up funding for social housing
Removing the threat of the cessation debt frees up WCH to focus on its core activities. “Closing the scheme would have incurred a cost of around £3m,” says Paul. “That would have taken a lot of money out of our business.
We are a not-for-profit organisation. We need that funding to develop new homes, improve the quality of our existing stock and invest in community ventures.”
A great people outcome – Keeping the LGPS open for employees
The solution First Actuarial delivered
was great news for employees. “We seriously considered closing the scheme at one stage,” says Paul. “Instead, those employees who originally transferred from
the Council can continue to participate in the Scheme for as long as they wish. We worked hard to get a solution that would benefit staff – it’s a really positive HR message.”
  Regulated in the UK by the Institute and Faculty of Actuaries in respect of a range of investment business activities. First Actuarial LLP is a limited liability partnership registered in England & Wales. Number OC348086.
Registered address: First Actuarial LLP, Mayesbrook House, Lawnswood Business Park, Leeds, LS16 6QY.

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