Maybe we should have rounded up the severance liability figures just for the sake of uniformity, but I assure you that where the figures have been rounded, they have been rounded up, not down.
On the £2 million discrepancy in the pension figures, when the financial memorandum was drafted, we used the existing triennial valuation of pension liability, which dated from March 2014. We consulted the United Kingdom Government Actuary’s Department, which confirmed that that was the best estimate that we could use at that time, so that is what we did.
The existing triennial valuation was based on the community justice authorities remaining employing authorities for pension purposes. However, the higher figure of £4.5 million to which you have referred is a recalculation based on what is projected for 2017. Although the next triennial valuation is due in 2017, we have asked for it to be done now, but the key difference is that this time we have treated the community justice authorities as ceasing as of 31 March 2017. That has a considerable impact on the cessation value for the fund. Because the CJAs are no longer employing authorities, they can no longer contribute to the fund and therefore any shortfall has to be drawn from them on 31 March 2017.
In plain terms, once the community justice authorities are disbanded, there is no means by which the pension fund can call on them again for any shortfall. Therefore, the actuaries are taking a long-term view. As they do with long-term forecasting, they have made quite a big provision for the risk attached to those pension figures. That explains the increase in the figure from £2.5 million to, potentially, £4.5 million.
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