Issue - meetings
Funding Update June 2021
Meeting: 23/09/2021 - Pensions Committee (Item 5)
5 Funding Update June 2021 PDF 248 KB
Additional documents:
Minutes:
Ms Miriam Adams, Interim Head of Pensions and Treasury introduced the report and stated that the funding update provided an illustration of the estimated funding position from 31st March 2019 to 30th June 2021.
Ms Adams said the projected benefit payments used in the calculation were based on the membership data and financial and demographic assumptions used for the 2019 formal valuation. She said this was in line with the Funding Strategy Statement (FSS) dated March 2020.
Mr Barry Dodds from Hymans Robertson LLP then provided Committee members with a detailed explanation of the funding position as of 30th June 2021. He referred members to page 26 of the agenda pack and explained the liabilities the Fund could incur based on future benefit payments. Mr Dodds then referred to the Fund’s assets and the chart on page 27 of the agenda. He said that as of 30th June 2021, based on the Fund’s asset allocation, it was estimated that there was a 70% likelihood of achieving an annual return of at least 3.7% per annum. Mr Dodds said the outlook for future investment returns had worsened since the last formal valuation.
In response to questions and comments from members the following was noted:
- The Chair, Councillor Perry stated that the funding level looked incredible for the last few years. She said the investments had been good, despite the pandemic but wondered if this was normal? If things go wrong, say a fluctuation of ½ or 1 percent in the estimated long term return, could this have a big impact on funding? Mr Dodds agreed with Councillor Perry saying these were unusual times but gains and losses were market related so no one can predict the outcome. He said climate change, politics, and the longevity of people in the Fund would impact the funding position of the Fund.
- Asked if deaths from the pandemic had been taken into account for the triennial valuation, Mr Dodds said they were working closely with ClubVita who were analysing data in relation to the impact Covid-19 had had on the Fund. However, from early indications the impact had been small.
The Pensions Committee RESOLVED to:
- Note the contents of the report; and
- Note that any investment decisions taken which fail to provide the desired returns will impact estimated funding levels.