Report of the Director of Finance
The Pensions Committee received a report of the Director of Finance relating to the Staffordshire Pension Fund 2022 Actuarial Valuation Report, Funding Strategy Statement, and Investment Strategy Statement.
2022 Actuarial Valuation Report
Throughout late 2021 and most of 2022, the actuarial team from Hymans Robertson had attended Pensions Committee meetings to provide training and discuss the 2022 Actuarial Valuation of the Fund at 31 March 2022. Over this period, Members had approved the actuarial approach to be taken, the actuarial assumptions to be used and had received reports on the high-level results of the 2022 valuation and the funding and contribution levels for the different employer groups.
The Report on the Actuarial Valuation at 31 March 2022, attached at Appendix 1 of the report, fulfilled the requirements of Regulation 62(3) and 62(4) of the Local Government Pension Scheme Regulations 2013, in providing a document of record. It contained no fundamentally new information to that already presented by Hymans to the Pensions Committee at their meetings in September and December 2022.
Members were asked to note that the Primary Rate for the whole Fund had increased from 19.7% of pay at 31 March 2019, to 21.5% of pay at 31 March 2022, mainly due to higher inflation. This had been offset to some degree by a decrease in the Secondary Rate, which indicated the amount needed to be paid for past service liabilities, because of better-than-expected investment performance since the last valuation in 2019.
Following each triennial Actuarial Valuation, the Public Service Pensions Act required the Government Actuaries Department (GAD) to publish a report on the health of the LGPS. Using a common set of assumptions determined by the Scheme Advisory Board (SAB), to enable consistent comparison, Hymans had recalculated the Fund’s 2022 Funding position on a local funding basis (120%) which had resulted in a funding position of 128% on an SAB basis; an increase of 16% since the last valuation in 2019.
It was confirmed that the full Report on the Actuarial Valuation of the Staffordshire Pension Fund at 31 March 2022 would be published on the Pension Fund’s website.
Funding Strategy Statement (FSS)
The draft FSS was published on the Fund’s website and was made available to Employers and other interested parties for a period of consultation that ran from 16 December 2022 to 31 January 2023. Feedback and questions arising from the consultation were received which resulted in some changes being made to the draft FSS presented to Pensions Committee previously. The changes centred around the Fund permitting all individual academies within the same Multi Academy Trust (MAT) to be considered as pooled for contribution rate setting purposes. This would be dependent on certain criteria being met and would only be considered at the request of the MAT and agreed at the discretion of the Fund. Minor amendments to allow for this were made in Section 2 of the FSS. The final version of the FSS, incorporating the changes, was attached for the approval of the Pensions Committee at Appendix 2 to the report.
In line with best practice, once the FSS had been approved and published, it would be maintained and updated periodically as Regulation and good governance dictated.
Investment Strategy Statement (ISS)
The Committee was informed that the published ISS was kept under review, and revised from time to time, and at least every three years. The last major review of the ISS was undertaken in April 2020. This incorporated the outcome and outputs from the 2019 Strategic Asset Allocation review and the 2019 Actuarial Valuation. Whilst similar in structure, the April 2023 version of the ISS, attached at Appendix 3 of the report, contained major revisions as it reflected the outcome and outputs from the 2022 Strategic Asset Allocation review and 2022 Actuarial Valuation. The April 2023 ISS also included detail about the arrangements for the Fund’s transfer of assets into LGPS Central Ltd and it incorporated the Fund’s Climate Change Strategy.
Members were informed that the Pensions Panel had reviewed the document at its meeting held on the 7 March 2023 and had recommended it for approval by the Pensions Committee.
Pensions Committee Members were asked to note that revisions may be needed to the ISS following the outcome of DLUHC’s further consultation on Asset Pooling in the LGPS; expected sometime in early 2023. At that stage, wider consultation on the ISS may also be considered appropriate.
a. That the Report on the Actuarial Valuation of the Staffordshire Pension Fund at 31 March 2022, including the Rates and Adjustments Certificate and detailing the contribution rates for individual employers, be noted.
b. That the Staffordshire Pension Fund’s Funding Strategy Statement, as amended post consultation, be approved, but that the potential for further updates, as and when regulatory change is effective and requires implementation, be noted.
c. That the Staffordshire Pension Fund’s Investment Strategy Statement be approved, but that the potential requirement for further updates, once the outcome of the Department for Levelling Up, Housing and Communities (DLUHC) further consultation on Asset Pooling in the LGPS is known, be noted.