Secretary of State for Education (): In 2013, we introduced a
guarantee to Local Government Pensions Scheme (LGPS)
administering authorities that in the event of the closure of an
academy trust any outstanding LGPS liabilities will not revert to
the fund.
Although there is no end date to the Guarantee, we committed to
undertake assessments at regular intervals to determine whether
the guarantee remains affordable and is being fully recognised by
LGPS Administering Authorities in their risk assessments of
academy schools and the subsequent setting of employer
contribution rates.
I can today confirm that we will continue to provide a guarantee
to LGPS administering authorities with a new increased annual
ceiling of £20m, and a Parliamentary Minute, which sets out the
detail of the Guarantee, has been laid in both Houses.
When we first introduced the Guarantee, we agreed annual limits
for each financial year based on estimates. We have reviewed all
payments the Department has made under the Guarantee policy since
2013 and have set a new annual limit of £20m per annum.
In the three most recent financial years the amounts requested
and paid under the Guarantee policy were as follows: 2021/22:
£3m, 2020/21: £4m, 2019/20: £11m. Since the Guarantee was
introduced, the Department has never reached the set annual
limit.
We expect administering authorities to recognise the direct
Government backing provided by the Guarantee and continue to
treat academies equitably with Local Authority maintained schools
when setting employer contribution rates and deficit recovery
periods.
The Guarantee provides academy trusts with direct Government
backing for certain pension costs which will enable LGPS
administering authorities, and I ask you to ensure that this is
reflected in this year’s scheme valuation, both in the setting of
the employer contribution rates and the length of the deficit
recovery period.
