It is important that you keep SYPF informed of details of the Contract. If the contract ends and is not extended, or the last active member on the contract leaves employment, your admission agreement will terminate. When an agreement terminates, there are a couple of potential cost implications that the employer needs to be aware of:-
-
The Fund must obtain a final valuation at exit date of the liabilities that were built up in respect if the exiting employer’s current and former employees. The fund use Hymans Robertson LLP as the actuary and the fee is approximately £500-600 plus VAT for this final valuation and must be paid by the exiting employer. This fee has been significantly reduced from earlier years but does assume timely and accurate data is provided to SYPA when required. Additional fees may apply if this is not the case.
-
The final valuation may identify a termination deficit * which will need to be paid by the exiting employer to settle all the liabilities under the admission agreement. In exceptional cases there may be a surplus at termination. In cases where the contracting employer has borne some of the funding risk (e.g. where they have subsidised the employer contributions in some way through the terms of the service contract or where they have agreed to restrict the pensions liability of the exiting employer) any surplus would be credited to the contracting employer’s share of the fund. In cases where the exiting employer has fully funded all the contributions AND carried all the funding risk, any surplus would be paid to the exiting employer.
* The contribution rates paid by the employer during the length of the contract were set based on estimates of the projected liability (re-assessed at every triennial valuation) using a wide number of assumptions - for example around membership movements, investment returns, inflation, etc. These assumptions are unlikely to have been exactly borne out in reality of course so the termination deficit (or surplus) reflects the actual experience at the point the admission agreement terminates and is a final settlement amount which extinguishes any future liability.
Cessation of a Passthrough Admission Agreement
At the end of the contract (or when there are no longer any active members participating in the Fund, for whatever reason), the admission agreement will cease and no further payment will be required from the contractor (or the ceding employer) to the Fund, save for any outstanding regular contributions and/or invoices relating to the cost of early retirement strains and/or augmentations. Likewise, no “exit credit” payment will be required from the Fund to the contractor (or ceding employer).
The actuary will issue a nil cessation notification and there will be associated fees for this work, details of which can be found under the fees section of this page.
If your contract is extended, you must confirm the new contract end date to the Fund as soon as possible, to enable us to update our records.