Mr Douglas Green, from Hymans Robertson introduced the report and explained the role of the Actuary. Mr Green referred to Appendix 1 and the presentation slides therein. He provided a detailed explanation regarding the valuation process and its timeline; why and how assumptions are set, the financial and longevity assumptions which are considered and how these are predicted; as well as the demographic assumptions that are taken into account.

In response to comments and questions from members of the Board the following was noted:

• Mr Green stated that the assumptions made, were over for a 20-year period so it was difficult to back test over that period, however the last three years from the last triennial valuation were looked at, to see if the assumptions made were accurate.
• Referring to paragraph 3.8, and the table therein, Mr Thompson asked if there was any concern about increases in Pension benefits. He said the prediction was there would be a large increase in the autumn. Mr Green said that whilst there would be a spike in years one and two the overall expectation was that this would quickly settle back closer to the 2% long run assumption.
• Mr Green said slide 10 showed the assumptions that were needed to make the valuation. He said some elements were common to all funds however there were individual, fund specific details such as longevity and demographics that impacted the assumptions made. He said it was not easy to compare the LBTH fund with others.
• In respect to how the Hyman Robertson’s views/assumptions compare with other actuary consultants, Mr Green said the modelling used was not dissimilar to the one used by others. However, the predicted investment return would differ depending on consultation with officers and Fund administrators. He said whilst the assumptions made were viewed as prudent, each fund made its own decision regarding investments.  Mr Green said there were 87 LGPS funds and each would be making their own assumptions. The Government Actuary did an analysis of the valuations and provides oversight as required.
• Ms Adams explained that the recommendations were put forward by the Actuary and decisions in relation to the triennial assumptions were made by the Pensions Committee and Board. Thereafter further consultation took place between Officers as well as the Employers Forum.
• In reference to slide 12, Mr Thompson asked if the 2040 climate change target had been considered, especially in terms of stock availability and returns. Mr Green responded stating they had spoken to officers and the investment consultants and had taken a long-term view in relation to asset allocation and had factored in plans for this change.
• In reference to slide 17, salary increases, Mr Green confirmed total salary was taken into consideration including promotional scales, which applied on top of CPI calculations. Mr Green said changes to the total payroll would be in the future post 2022 and this would be picked up in future triennial assumptions.
• Referring to Longevity assumptions, slide 21 Mr Green confirmed their sister company Club Vita provided analytics relating to where fund members lived.  He said this was all taken into consideration when making the valuation. The impact of Covid-19, slide 24 had also been considered although it was too early to tell what impact this had on fund members.

The Chair thanked Mr Green from Hymans Robertson for attending the Board meeting and making his presentation.

The Board RESOLVED to:

Note the recommendation being made to the Pensions Committee who are to consider this report at their meeting of 27^th June 2022.

The Pensions Committee is recommended to:

1. Note and approve the triennial valuation assumptions recommended by the scheme actuary Hymans Robertson.