Report by the Director of Finance and Support Services.
The Panel is asked to consider the recommendation within the report.
19.1 The Panel considered a report by the Director of Finance and Support Services (copy appended to the signed minutes).
19.2 Rachel Wood introduced the report and explained the current focus for the fund was the actuarial valuation which occurred every three years. Officers were working with Hymans Robertson and Hampshire County Council on the required data.
19.3 The Funding Strategy Statement had been reviewed by the Pension Advisory Board, and feedback from employers had been included in the report. Once the Pensions Panel had approved the Statement, Steven Law would proceed with the valuation work.
19.4 Steven Law gave a presentation to the Panel on the Actuarial Valuation (copy appended to the signed minutes).
19.5 Steven Law spoke through the presentation which outlined the timescales for the valuation, the actuarial assumptions, the projected funding level results and some of the unknowns including the Ministry of Housing, Communities and Local Government (MHCLG)’s consultation on moving towards 4 year valuation cycles to align with the unfunded public sector pension scheme cycle (such as the National Health Service Superannuation Scheme (NHSSS). This cycle change would require either a 3 year, then a 2 year valuation; or a 5 year valuation.
19.6 Cost sharing options from the Scheme Advisory Board and HM Treasury were on hold pending the outcome of the McCloud case. The case concerned age discrimination within public sector pension fund reform. The treasury want one solution to resolve the issues; however the Local Government Pension Scheme may be allowed their own solution which would be likely to include protection for all members who joined before 2012 up to 2022.
19.7 Steven Law finished the presentation by outlining the fund objectives and the aim to maintain a better than 2/3rd‘s chance of full funding over 20 years.
19.8 The Panel made comments including those that follow.
• Queried if it was possible to perform more frequent valuations. – Steven Law confirmed that interim valuations could take place. Additional valuations for high risk employers already took place.
• Asked if the outcome for McCloud would impact other discussions regarding female state pension age issues. – Steven Law was not sure if this would be impacted.
• Queried if a 1% employer rate decrease was a reasonable estimation before McCloud was finished. – Steven Law explained that he would be monitoring this but felt that 1% would be a good estimate at this point in time.
• Sought clarity on the impact of staff turnover on cashflow. – Steven Law explained that this would be discussed with Katherine Eberhart and the Police when modelling work was undertaken on outlook. The approach to risk would have to be considered depending on cashflow.
19.9 Resolved – that the Panel:
1. Notes the update on the McCloud judgment
2. Considers the feedback from Employers relating to the draft Funding Strategy Statement.
3. Agrees the current version of the Funding Strategy Statement as the approach assumed by the Actuary when calculating employer liabilities and determining the pace at which these liabilities are funded.
4. Agrees that further minor changes to the document can be made by the Director of Finance and Support Services in consultation with the Chairman; with any material changes being brought back to the Pension Panel.
5. The Panel agrees that the final response to the valuation cycle consultation and management of employer risk is sent by the Director of Finance and Support Services in consultation with the Chairman.