To seek approval to provide a guarantee to protect the pension fund from any shortfall or additional costs associated with underfunding or unpaid contributions, following the Council’s award of the Mid Kent Waste Contract to SUZE Recycling and Recovery UK. That body is now required to gain Admission Body Status to enabled four long-serving employees to remain within the Local Government Pension Scheme (LGPS).

That the provision of a guarantee to the total value of £383k to the Kent Pension Fund in partnership with Ashford Borough Council, be approved.

In December 2022, the Communities, Housing and Environment Policy Advisor Committee recommended to Cabinet that the Mid Kent Waste Contract be awarded to Suez Recycling and Recovery UK. 

Since then, work has progressed on the mobilisation of the Contract which is due to commence on 24 March 2024.  This has included plans for the service, communications, staff and vehicles. 

As part of the mobilisation, staff currently employed by Biffa Municipal Ltd on the current Mid Kent Waste Contract will transfer to SUEZ Recycling and Recovery UK.

There are currently four employees on this contract that were originally Council employees and as such are members of the Local Government Pension Fund, administered by Kent County Council.  To enable these employees to continue these rights, SUEZ Recycling and Recovery UK are required to become an Admission Body for the scheme.  Maidstone and Ashford Borough Councils, as the Scheme Employer, are required to provide a guarantee to the Pension Fund to ensure that should any shortfall occur, this would be recovered.  The level of guarantee for this is £383k, which is split across Maidstone and Ashford Borough Councils, as both have transferring employees in the LGPS. 

The value of the Guarantee has been calculated at £383k, shared between Maidstone and Ashford Borough Councils.  This value is based on a risk assessment of the fund and considers costs that could arise from underfunding, strain (such as redundancy costs) or unpaid contributions over the 8 year contract period.  The risk of these coming to fruition have been assessed and are considered low, with additional protections to the Council included in the main agreement of the Mid Kent Waste Contract. 

The Housing, Health and Environment Policy Advisory Committee considered the matter on 14 November 2023 and recommended that the recommendation be approved.

The Council could decide it is not willing to offer a Guarantee for the Pension which would prevent the SUEZ Recycling and Recovery UK from gaining Admission Body status and prevent the four affected employees from remaining within the LGPS.

This option was rejected, as the option agreed would retain the four employees on the Local Government Penson Scheme.