Issue - meetings

The Board is asked to consider the Actuarial Valuation Report from the 29 April 2022 Pensions Committee by the Director of Finance and Support Services.

5.1        The Board members in attendance received a report by the Director of Finance and Support Services (copy appended to the signed minutes).

5.2        The Board members noted that they had received training from the Fund Actuary prior to the meeting which covered the upcoming fund valuation.

5.3        The Board members in attendance queried why the disclosures for climate risk were of concern.  – Rachel Wood explained that the concern was not linked to the disclosures, but how climate change would impact the fund.  Tests had been performed running climate change scenarios to see fund impact.  A paper would be going to a future Pensions Committee meeting on this, which would then come to the subsequent Board meeting.

5.4        Resolved – That the report be noted.

Report by the Director of Finance and Support Services.

The Committee is asked to note the report.

9.1        The Committee considered a report by the Director of Finance and Support Services (copy appended to the signed minutes).  Rachel Wood introduced the report and highlighted that the year had commenced and continued in a period of financial uncertainty. 

9.2        Steven Law, Fund Actuary at Hymans Robertson, drew members attention to a tabled document supporting the report entitled ‘Regulatory Risks and the 2022 Valuation’, West Sussex County Council Pension Fund (tabled copy appended to the signed minutes).

9.3        Points emphasised by Steven Law included that funding levels were improving and key risks for 2022 related to Climate/Transition, consumer price inflation and the impact of COVID-19 on long term mortality.  Steven Law explained the current issues concerning the McCloud judgement and requirements arising from Academisation.

9.4        The Committee made comments including those that follow.

a.    Questioned, in respect of the outcome of the judicial review on whether the impact of the McCloud case should be included in the cost control mechanism.  - Steven Law advised that if the Government were to lose the judicial review, then cost sharing would impact the LGPS; if the Government wins, there could be further legal challenges. 

b.    Questioned the impact on the Fund of COVID-19.  – Steven Law explained that this related not only to mortality today but to changes in the future if people did not live as long, although with new drug treatments, hygiene practices and survivor bias there were a lot of unknowns

c.    Noted that consumer price index increases increased liability as pensions were index linked.  - Steven Law explained that as part of the valuation Hymans Robertson would test if the fund was well hedged and whether it  has good resilience against this.

d.    Questioned the outcome of the judicial review and how pension benefits would be affected for active members and pensioners.  - Steven Law explained that the cost sharing outcome was intended to affect only active members but as the changes would come into effect from 1 April 2019, some deferred and pensioner members would be impacted.  McCloud itself applied to anyone active in the scheme prior to 2012 who was still active in 2014 and intention is that everyone would have their benefits brought in line with the revised Regulations.  Further guidance on this was awaited. Steven Law also emphasised there was potential for other judicial reviews on this issue.

e.    Questioned, with regard to Multi Academy Trusts (MATs), whether these were likely to look at schemes in surplus and send their funds there.  - Steven Law anticipated this was likely as they would seek the schemes with the lowest employer contributions even if this was not a prudent long term decision.

f.     Questioned whether the County Council scheme had to take on MATs.  – Steven Law confirmed that the Pension Fund was required to admit MATs within its geographical area.  Steven Law also explained that research by the Department of Education suggested there was benefits in keeping MATs small and local.

g.    Questioned why there  ...  view the full minutes text for item 9