Agenda item

TheScheme Actuary (Hymans), the Head of Pensions and the Pensions Administration Lead will present the following:

a)    Whole Fund Valuation Results and Employer Results overviews (Hymans)

b)    A revised Funding Strategy Statement and Cessation Policy and a new Prepayment and employer contribution rate review policy (Head of WPF/Pensions Administration Lead)

Barry Dodds and Catherine McFayden presented a report on behalf of Hymans Robertson, the Pension Fund’s Actuary, providing details of the formal triennial valuation required by the Local Government Pension Scheme Regulations. The last valuation was for data on 31 March 2019, with the current for data at 31 March 2022. The report also included proposed changes to a number of policies for consideration by the Committee as presented by Andy Cunningham, Pension Administrations Lead.

Details were provided of the methodology for the valuation, the process for circulation of results to each employer and discussion of specific circumstances, and development of provisional employer contribution rates based on the assumptions set by the actuary and other factors.

The valuation showed an improved funding level of 102% against 97% in 2019, should expected investment returns be delivered. The improvement in position had been driven by strong investment returns, and it was confirmed Covid-19 had had fairly minimal impacts.

During the presentation details were provided on Fund membership and its potential reduction of active members should local government staffing be reduced, discount rates, impact of current and near term high inflation, managing cashflow, valuation of assets, longer term impacts of Covid-19 on life expectancy, and other details as set out in the report.

The Committee discussed the presentation and report and sought further details, including on investment strategies, smaller employers active in the Fund, demographic assumptions, and the valuation process.

The Pensions Administration Lead (PAL) outlined a piece of feedback that officers had received from one employer in relation to the following new statement:

“If no single Scheme Employer guarantor exists and the likelihood of leaving or significantly reducing participation in the Fund in the next 10 years is high then the low-risk exit basis may be used as the funding target”.

The employer had concerns with this statement and requested its withdrawal until such time as it could have a discussion with Fund officers and they wished for this viewpoint to be stated verbally at Committee (as papers had already been circulated by the time of the discussion). The PAL stated he would have the discussion with employer after the meeting.

Queries were raised on consultation with employers on the proposed policies, and discussion at a future employer forum, as well as how the cessation policy would operate. A committee member raised concerns that the introduction of a low risk basis cessation corridor could lead to employers targeting the lower end of the corridor. The actuary agreed to consider this point and to take it away to discuss it with officers.

At the conclusion of debate and discussion, it was,

Resolved:

1)    The Committee is asked to notethe valuation results produced and the approach to releasing and agreeing employer results.

2)    To approvethe draft Wiltshire Pension Fund – Funding Strategy Statement 2022, as attached in the Appendix, subject to the period of consultation of employers not resulting in any material changes being deemed required by officers.

3)    Cessation calculation methodology: To approvethe revised methodology approach (noting the final details will be brought back to the December Committee), with the new approach to apply from 1 April 2023.

4)     Prepayments and Contribution Review policies: To approvethese new policies (to become effective immediately).