Local Government Pension Scheme – tier 3 employer review

KPMG offers some initial insight into the Local Government Pension Scheme Advisory Board’s review of tier 3 employers.

28 September 2018

The initial report on the Local Government Pension Scheme (LGPS) Advisory Board’s review of tier 3 employers is now available (PDF). Tier 3 employers are admitted bodies without a full local authority guarantee, which includes nearly all housing associations participating in the scheme.


This initial report sets out the main findings from the research and analysis and identifies some possible solutions. The review is suitably broad, covering all stakeholders, and identifying the main issues (transparency, consistency, trapped employers, lack of flexibility). However, the solutions are somewhat generic and it is not clear which of these will be adopted and, if so, when.


KPMG supported the Federation with its participation in the review to ensure the views of housing associations were well represented.


In KPMG's view, this tier 3 employer project is important and necessary. However, unless solutions are designed to enable flexibility for funds and employers, they could lead to unintended consequences – for example, improving consistency could lead to an increase in contributions. It is therefore important that the housing association sector continues to engage nationally and locally with the LGPS to ensure that it becomes more effective.


It is unlikely that the Advisory Board will be able to implement changes in time for the 2019 actuarial valuation. Therefore, issues we saw in the 2016 actuarial valuation around consultation, timing and your fund understanding your organisation will remain.

KPMG will carry out a more detailed review of these initial findings over the coming weeks and integrate these into our communications around planning for the 2019 LGPS valuation, which for the best results needs to commence this autumn. If you are a Clearer Pensions member, you and colleagues will be able to access regular updates through the online portal.