Funding and Actuarial Valuations
The Local Government Pension Scheme (England and Wales) (Administration) Regulations 2008 provide the statutory framework from which the Fund is required to prepare a Funding Strategy Statement (FSS). The key requirements for preparing the FSS can be summarised as follows:
- After consultation with all relevant interested parties the Fund will prepare and publish their funding strategy;
- The FSS must be revised and published whenever there is a material change in either the policy on the matters set out in the FSS or the Statement of Investment Principles.
The purpose of the FSS
- to establish a clear and transparent fund specific strategy which will identify how employers’ pension liabilities are best met going forward;
- to support regulatory framework to maintain as nearly constant employer contribution rates as possible; and
- to take prudent longer term view of funding those liabilities.
The Fund’s actuary reviews and amends employer contribution rates every 3 years. The last actuarial valuation was based on Fund membership as at 31 March 2019. The revised employer contribution rates came into effect on 1 April 2020.
When the actuarial valuation has been completed, the actuary prepares a report. This analyses scheme membership by type, assesses the Fund’s financial position (are the Fund’s assets sufficient to meet its projected liabilities), sets out the assumptions for future inflation and investment returns and then provides a schedule of the contribution rates for each of the Fund’s employing bodies. These rates are set at a level sufficient to secure the ongoing viability of the Fund. Scheme members are reminded that their own contribution rates are fixed by statute and that it is the employing bodies who must make good any shortfall in Fund assets relative to liabilities.
Copies of the actuary’s report will be circulated to all the Fund’s employing bodies.