Report of the Director of Finance and Public Value (DF/23/30), attached
(Councillor J Hodgson attended in accordance with Standing Order 25 (1) and spoke to this item and referred to the Employer response outlined in the Report and also asked questions about the consultation exercise with fund members carried out last year and production of a quarterly news-letter).
The Committee considered the Report of the Director of Finance and Public Value (DF/23/30) on a revised Funding Strategy Statement (FSS) drafted in conjunction with the Fund Actuary (Barnett Waddingham) (draft set out at Appendix 1).
The FSS document had been revised in order to reflect updated regulations, practice and actuarial assumptions and its purpose was to explain the funding objectives of the Fund and how the cost of the benefits provided under the Local Government Pension Scheme were met through the Fund. It also defined the objectives in setting employer contribution rates and the funding strategy adopted to meet the objectives. It also analysed the risks to the funding strategy and how those risks were managed and it should be read in conjunction with the Investment Strategy Statement. The assumptions had been updated to reflect the 2022 Actuarial Valuation. This included updating the assumed inflation rates, the discount rate used, the demographic assumptions and the maximum recovery period. The other main changes in the revised FSS were set out in the Report which related to
• A revised policy in relation to cessation valuations;
• Further clarification around the approach to town and parish councils;
• Updated wording around the impact of the McCloud age discrimination case and the proposed remedies to be applied; and
• A new section setting out the potential climate change risks that may impact on the funding strategy.
The draft of the revised Funding Strategy Statement had been sent out to employers for consultation on 26th January with a deadline for responses of 17th February and one detailed response from the University of Plymouth had been received. The key issues raised by the University of Plymouth were outlined in the report with officer comment. Officers would have further dialogue with the University of Plymouth regarding their concerns. The Pension Board had considered the draft Statement at meeting on 7 February 2023 (Minute *6 refers).
Following the 2022 Actuarial Valuation, the Fund was required to publish the Valuation Report and Rates and Adjustments Certificate that set out employer contributions for the next 3 years by 31 March 2023.
Approval of the revised Funding Strategy Statement would ensure that the Valuation Report and Rates and Adjustments Certificate were consistent with the funding policy.
Members’ discussion points with Officers included:
· the projected increase in employer contributions and in exceptional circumstances the rates could be changed prior to the next triennial valuation; and
· there had been no update from Government on any proposed change from 3 years to four years for the re-valuation period.
The Head of Investments also confirmed that the member survey (referred to by Councillor Hodgson) had been sent to all self-service users or emailed to them and had been available on the website and also promoted through employers; and that the quarterly newsletter was available; and further feedback would be provided at the consultation meeting that afternoon.
It was MOVED by Councillor R Bloxham, SECONDED by Councillor Y Atkinson and
(a) that the responses to the consultation with employers and the comments from the Pension Board be noted; and
(b) that the revised Funding Strategy Statement set out at Appendix 1 to this Report be approved.