HEREFORDSHIRE Council paid out nearly £2 million on compulsory redundancies and “agreed departures” over the past financial year.

Overall, 102 compulsory redundancies cost the council £747,900 and 121 other “agreed departures” £1,183,368 - a total of £1,931,268.

By comparison, 60 compulsory redundancies cost the council £801,630 and 20 “agreed departures” £310,291 over 2012-13 -  a total of £1,111,921.

The total cost of actuarial strain on the 2013-14 terminations was £345,000.

Actuarial strain is the upfront cost payable to the relevant pension fund in addition to the normal contribution rate.  This is paid to the pension fund  - administered by Worcestershire County Council (WCC) – over three years.

The actual amount of actuarial strain paid  to WCC in 2013-14 was £818,000 relating to retirements in 2011-12, 2012-13 and 2013-14.

A redundancy provision of £1.8 million was also set up - including schools and the council’s partner organisations - based on the number of planned redundancies as at the end of March this year.

The majority of compulsory redundancies (96) and agreed departures (110)  came within the £0-£20,000 exit package cost band.

Five compulsory redundancies came in the £20,001-£40,000 band along with 11 agreed departures.

One compulsory redundancy came in the £40,001-£60,000 band.

The total number of exit packages by cost band was:

* £0-£20,000 - 206
* £20,001-£40,000 - 16
* £40,001-£60,000 - 1

The total cost of packages in each band was:

* £0-£20,000 - £1,418,649
* £20,001-£40,000 - £457,619
* £40,001-£60,000 - £55,000

The figures include exit packages agreed in the year but not yet actioned at the year’s end.

Herefordshire’s proportion of the net deficit on the WCC pension fund was £159.4 million at the end of March.

That figure is approximately 61 per cent the fair value of the assets - £187.4 million and 80% as at the end of March.

This deficit does not have to be met immediately from the council’s reserves, but action must be taken over a period of years to eliminate it.

In addition the balance sheet deficit also includes £1 million relating to ex-Hereford and Worcester teachers’ unfunded benefits - £1.1 million as at the end of March.

The pension fund position is reviewed every three years and was last re-valued in March 2013.

Herefordshire Council has agreed with the Actuary that in order to recover the deficit over 21 years the employer’s deficit contribution increases from £4.2 million in 2013/14 to £7.6m by 2016/17.

The Actuary has also requested that the element of the employer’s contribution related to clearing the deficit is paid as an annual cash  sum.

In future, the employers service contribution rate, which is paid as a percentage of current employees’ gross pay, is to increase from 11.7 per cent in 2013/14 to 14.6 per cent by 2015/16.