Pension Regulator notified of admission breaches

Newham Council has notified the Pensions Regulator of breaches in its admission policy, as revealed in the Pensions Committee meeting on 9 July 2025. The breaches relate to outstanding admissions to the fund, with a breach of law report submitted to the Pensions Regulator on 3 June 2025 regarding 26 outstanding admissions.

According to the Employer Update Report July 2025, these outstanding admissions stem from difficulties experienced by employers in securing the required bonds or guarantees.

To address this, the council is proposing changes to its admission policy. A key change involves implementing a default pass-through arrangement for Transferee Admission Bodies (TABs) under contract to a school or academy within Newham. This approach aims to streamline the admission process and reduce the burden on smaller employers. The proposed changes are detailed in the London Borough of Newham Admission Policy Draft August 2025.

Under a pass-through arrangement, the inherent funding risks in participating in the Local Government Pension Scheme (LGPS) are shared between the new employer and letting authority, with pension liabilities generally remaining with the letting authority, so there is no exit payment due to or from the admission body. The benefit of a pass-through agreement should enable a reduction in the administrative burden and time to conclude an admission as the employer rate and risk will be known at the time of tender.

The changes outlined in the Admission policy are as follows:

• Any TAB under contract to a school or academy within Newham will be admitted on the basis of a Default pass-through arrangement the terms of the Default pass-through arrangement are as follows:
  • The contribution rate will be set equal to the rate payable by the letting authority when the admission commences. It also means that there will be no separate tracking of liabilities or notional assets for the admission body.
  • The contribution rate will be reviewed whenever they are reviewed for the letting authority, as part of each triennial actuarial valuation or more frequently as permitted by our Funding Strategy Statement/policy on employer contribution reviews
  • Funding risks will be shared between the letting authority and the admission body, other than costs relating to decisions such as early retirements which are deemed to be under the control of the admission body
  • An exit valuation will be carried out when the admission ceases as required by the LGPS Regulations, however under the arrangement no exit payment or exit credit will be due from or to the admission body on exit.

The updated policy maintains the option for alternative admission arrangements, such as securing a bond or guarantor, subject to approval by the Section 151 officer. The policy maintains the option for alternative admission arrangements such as the previous standard route of the TAB securing a bond or guarantor or a pass-through arrangement on alternative terms, however these would be for the approval of the Section 151 officer.

The update to the Admission Policy will reduce the future risk of employers delaying gaining admission into the fund. The risk sharing arrangement of the pass-through will place the financial risk to the letting authority rather than the fund.

The council is currently consulting with employers on the proposed changes, with the updated policy expected to take effect from 1 August 2025, pending approval. These documents were recently sent out to our employers for their comments. The deadline for responses was 30 June and no comments or concerns have been received.