We review pension costs for Northern Ireland Utility Regulator
GAD advised the Utility Regulator of Northern Ireland about pension costs of the electricity company over a 6-year period
Credit: iStockPhoto
We have reviewed the pension costs of the Northern Ireland Electricity Networks Limited (NIEN) for (UREGNI).
The regulator oversees Northern Ireland鈥檚 electricity network and determines whether certain historic pension costs should be passed onto consumers and that ongoing costs are reasonable.
As part of its regulatory function UREGNI asked the Government Actuary鈥檚 Department (GAD) to look at NIEN pensions costs and the .
GAD鈥檚 assessment
Regulated companies have historically passed on pensions costs to consumers. At this review, the proposal was to refund consumers, which was reflective of the improved funding environment.
GAD reviewed NIEN鈥檚 proposal to refund consumers and future pension cost allowances over a 6-year period. The (PDF, 1267KB) analysed the principal factors which determine NIEN鈥檚 cash pension contributions, and the pension cost allowances requested for RP7.
We checked that the proposal to reimburse consumers was reasonable and that NIEN has behaved in a competitive way.
Many regulators have the power to set the price which is charged to consumers. Where charges are deemed to be excessive, they can restrict the level of pension costs due to be passed on.
Credit: iStockPhoto
Supporting regulators
GAD undertook benchmarking on defined benefit and defined contribution pension scheme benefits. This work for UREGNI is just one of a number of regulators we support. As a tool, benchmarking against other, similar schemes can help support regulators鈥� decisions, and GAD鈥檚 reviews can explore:
- benefit design
- investment strategy
- funding strategy
- pensions policy
- the context of defined benefit (DB) funding regulation
We benchmarked pension scheme expenses and assumptions underlying the latest DB valuation, considering scheme-specific features, and taking account NIEN鈥檚 circumstances and position.
Review conclusion
Actuary Simon Gray led the project and said: 鈥淲e review the pension costs associated with NIEN鈥檚 business plan at the start of each reporting cycle, which is typically every 6 years. Our advice to UREGNI in this report focuses on NIEN鈥檚 pension scheme.鈥�