Agenda item

This report sets out the results of 2019 triennial actuarial valuation and the Funding Strategy Statement (FSS) to the Committee for consideration and Approval.

I have attached 4 appendices some of which contain exempt information for reasons set out under item 17.

This report set out the results of 2019 triennial actuarial valuation and the Funding Strategy Statement (FSS) for consideration and approval. In introducing the report, Sawan Shah (Senior Finance Analyst) referenced the background to the valuation process including the presentation at the meeting in October 2019 at which Hymans Robertson (Fund’s Actuary) gave a presentation on the valuation process, the assumptions used and the initial results. 

Since that meeting the draft valuation results schedules, which set the contribution rate for each employer for the next three financial years, have been produced for the Council and for most employers within the Fund.  Most employers within the Fund had been informed about this. He drew Members’ attention to the draft valuation report, attached in restricted Appendix 1 that summarised the process, the valuation results, funding position and employer contribution rates for 2020/21 to 2022/23.  In line with the valuation process, the Council commissioned a contribution rate modelling exercise to allow officers to consider a long term funding strategy for the stabilised employers within the Fund, that is, Brent Council, academies and local authority schools.

Based on the modelling results and discussions with the fund actuary, officers proposed to freeze contribution rate at 35% of pay for next 3 years and stabilised thereafter at +/- 1% per annum to take account of risks on the 16 or 19 year time horizon. The Fund actuary had agreed this proposal. He drew Members’ attention to the restricted Appendix 2 that set out the full contribution rate modelling report.  He continued that as part of the valuation, the council was considering paying a large part of its employer contributions upfront as a lump sum. A report commissioned by the Fund actuary to model a number of options, set out further in Appendix 3, concluded that there was an economic benefit to the Council in considering this without negative impact on the pension fund. This proposal, quite common across a number of LGPS funds, would require advance clearance with the Council’s auditor and subject to independent advice. Officers envisaged that a decision on this in early March 2020, so that it could be reflected in the formal valuation.

Ms Anna McCormack (Senior Pensions Manager) updated members on the abatement policy, following the Board’s decision to consult with members.  She added that the policy that affected only 7 recipients had gone live since April 2020.

With no further issues to be raised, the Chair thanked all officers for the updates and it was;

RESOLVED:

(i)      That the draft valuation report be noted and agree that delegated authority be granted to the Director of Finance to finalise the report before 31 March 2020.

(ii)     That the contribution rate for the next three financial years, 2020/21, 2021/22 and 2022/23 for Brent Council be approved as 35.0% as set out in section 3.8 of this report and Appendix 2.

(iii)    That delegated authority be granted to the Director of Finance to finalise details of the advance payment of Brent Council’s employer contributions and the subsequent impact on the rates and adjustment certificate, as set out in section 3.9 of this report and Appendix 3.

(iv)    That the Funding Strategy Statement (FSS) as set out in section 3.13 of this report and Appendix 4 be approved.