Issue - meetings

1.    The PFC members noted this report and made themselves aware of the various issues affecting the LGPS.

2.    Members noted the April 2018 Pension Increase; the latest updates on current Regulations and Consultations; and the taxation issues update

            Mr Middleman discussed the LGPS current issues update provided.

            He commented specifically on the April 2018 pension increase (based on the September 2017 annual CPI figure) and the impact on liabilities. He also highlighted that there are a number of consultations in the pipeline in particular the exit cap consultation due imminently. Mr Middleman confirmed it is expected in early 2018 but it has slipped before.

            The Chairman queried whether the pension increase of 3% is high in comparison to recent years and will this have an impact on the Fund. Mr Middleman informed the Committee that as part of the Actuarial Valuation it was assumed that pension increases would be a long term average of 2.2% per annum and so anything above this level would lead to an increase in liabilities.  However, the effect would be relatively small versus other factors (less than 0.5% reduction in the funding level).

            Mr Latham asked whether the exit cap would impact on the assumptions made for pension strain calculations.

            Mr Middleman responded to say that it is partly related to what happens on the exit cap and whether it was implemented in Wales.  He would expect that the LGPS would move to a common set of factors which has been something discussed for a number of years.

            Mr Middleman also noted that Mercer have separately reviewed the life expectancy assumptions for the existing factors as this had not been done for a period of time. He stated that strain costs will go up around 5% due to this and that this will have an impact on employers.  A possible implementation date would be April 2018.  This will be discussed with the administration team.

RESOLVED:

1.    The PFC members noted this report and made themselves aware of the various issues affecting the LGPS.

2.    Members noted the April 2018 Pension Increase; the latest updates on current Regulations and Consultations; and the taxation issues update