A report of the Fund Director was submitted to draw to Members attention issues that needed to be considered ahead of the actuarial valuation due at the end of March 2016.  It was necessary as part of the preparation, to identify potential areas of concern and points for further deliberation.

It was noted that it was likely that funding levels had not improved since the last actuarial valuation in 2013, and the low level of interest rates and bond yields would continue to cause the valuation of the Fund’s liabilities to increase.  As always the Fund would have to have a clear focus on governance and be aware of the policies and positions of district councils and all employers.

In response to Members’ questions, when an employer left the Fund, an exit calculation would be made by the Actuary to ensure no damage would be made to the Fund as a whole.  Problems could be faced if the district councils started to reduce staffing levels, as this would affect the number of staff on the payroll and the normal way that contributions were calculated against payroll.  Membership of the Fund was gradually increasing, although a large proportion of new members were part-time employees.

One of the concerns that had to be confronted was whether or not some of the assumptions the Fund had made in relation to bond yields may not materialise. At the moment it was predicted that the position would not improve between now and 2016.  It was hoped that the Treasurers would be in a better position to comment on their needs once the forthcoming budget was announced.  Any new contribution rates would come into effect from April 2017.Councillor Sangar enquired about the various stages in determining how the valuation was set and how it would be timetabled. Councillor Rodgers referred to the last triennial actuarial valuation, when district treasurers had commissioned work to challenge the Fund’s figures and assumptions.  He did not wish to see such a situation arise again.

J Hattersley commented that it was fit and proper for the district treasurers to feel able to challenge the administering authority on matters which were crucial to their own budgets.  The Fund’s Actuary had proven to be prudent.  The Shadow Advisory Board had commissioned work on comparing actuarial assumptions across the LGPS and was in favour of instigating regulatory requirements for actuaries to prepare assumptions against standard criteria.  The Fund had always adopted a long term view, which had been supported by district treasurers.

Councillor Rodgers encouraged the view that the Authority should ask the major employers about plans to further outsource services or change their service delivery models.

J Hattersley commented that the Fund had been concerned in the past when districts had negotiated outsourcing of services that they had tended to forget about pensions matters until the end of the process. Councillor Lodge acknowledged that this had been the case.  He was concerned in particular about the transfer arrangements surrounding academies and free schools given that some bodies were not fully aware of the obligations that they were taking on board.

Councillor Ellis commented that negotiations should commence as soon as possible with the main employers. It was noted that the Investment Board would be asked to comment upon specific aspects of the valuation assumptions.

RESOLVED – That Members agreed to the points raised in the report.