Issue - meetings

Committee members noted this report and make themselves aware of the various current issues affecting the LGPS, some of which are significant to the operation of the Fund.

Miss Fellowes gave a brief update on the key issues that are affecting the LGPS at the moment. She noted the following points;

·         CPI has been confirmed as 2.4% for September 2018, this means that pensions will increase by 2.4% in April 2019.

·         The Section 13 report from GAD was published in September where the Fund was not flagged. The four main actuarial firms who advise LGPS funds had a number of concerns about the report and they have jointly written to MHCLG and SAB to express their concerns.  Discussions will no doubt continue regarding these concerns.

·         There have been discussions around moving to a 4-year valuation cycle where the 2019 valuation will still go ahead, but a review of employer contribution rates will follow mid-cycle (likely 2022) with the subsequent statutory valuation being in 2024. Further updates from Mercer will follow on this.

·         In October, the High Court made a decision to equalise GMPs for members who had Contracted-Out of the State Scheme. This affects all members with GMPs dating back to 17 May 1990 and is expected to have an effect on liabilities and costs for private sector schemes. For the LGPS and the Fund, the preliminary view is that the impact will be dependent on the profile of the members and is likely to be much less significant due to the method of indexation which is used, and likely to be extended, in the LGPS. The actuaries are keeping this under review.

Cllr Jones wanted clarification whether all of the LGPS administering authorities are on the same cycle for actuarial valuations. Mr Middleman confirmed that currently all LGPS administering authorities in England and Wales are in line with Scottish LGPS being a year behind. In 2024, it will be aligned if the proposed changes proceed. Mr Middleman noted that a 4-year cycle is a long time when a fund has active risk management policy so it is important were have the power to review contributions mid-cycle if need be.

            Mr Hibbert queried about an update on the Cost Management process. Mr Middleman explained that under the HMT process if costs go up above 2% of the target, the members will have to pick up the costs whereas if the cost go down by more than 2% of the target the members will get the benefit (through benefit improvements or contribution reductions).  However, there is a further process run by the SAB which can override the HMT process where there are some discretions where cost changes are between 0-2% of pay.  It is looking likely that there will be some benefit improvements and/or contributions rate reductions in the LGPS based on latest trend data (in particular life expectancy reductions).

Mr Middleman expects there to be more detail on this topic soon where the intention is that it will be implemented from April next year. The changes that will follow will be in relation to payroll systems, communication and administration, and the Actuarial Valuation will be affected by it  ...  view the full minutes text for item 34