The Assistant Director – Pensions presented the Fund Actuary’s report on the outcome of the 2025 Valuation to seek approval on the employer contribution rates for the 3 years from 2026/27 set out in the rates and adjustments certificate, referencing Members to points 5.2-5.3 of the report which summarises at the position as of 31^st March 2025 regarding fund assets, liabilities, funding level and average contribution rates.

Steven Scott, Greer Flanagan and Reece Notman, the Fund’s actuaries from Hymans Robertson, presented the results of the Valuation to Members.

Independent Investment Adviser, Aoifinn Devitt raised questions around how higher return expectations fit with the investment outlook and raised her concern about the ‘higher for longer’ view expressed in the report.

The Actuary replied that investment consultants use the same core modelling assumptions that the actuaries use for Valuations whilst also considering the additional factors that Aoifinn mentioned. Contribution rates aren’t set directly from the funding level, otherwise many employers would have a nil rate. Instead, the modelling allows for future yield changes, with central assumptions of around 3% nominal yields over the next 20 years. The Actuary recognises that today’s strong funding levels may not persist, which is why a prudent approach is taken when setting employer contributions.

The Director added that a floor has been set on employer contributions based on what’s needed to fund future benefits accrual. This protects against the risk Aoifinn identified and without it, employers would face much sharper increases.

Members noted that past performance doesn’t guarantee future returns and sought assurance that our assumptions aren’t based solely on historical results, and there is confidence that even if returns fell to 4.2% or lower, the Fund would still be able to meet its obligations.

The Actuary noted that they must report on the funding level every three years, which gets a lot of attention but is highly sensitive to market conditions. Higher expected returns are boosting the funding level at this Valuation; however, the required return is a much more stable measure at 3.5% which is unchanged from the previous Valuation, and it isn’t affected by short term market movements.

RESOLVED: Members

1. Noted the results of the 2025 Valuation carried out by the Fund Actuary set out in the report at Appendix A.
2. Approved the employer contribution rates set out in the rates and adjustments certificate to apply for the three years starting 1^st April 2026.