Issue - meetings
2016 Actuarial Valuation, Funding and Flight Path Update
Meeting: 27/09/2016 - Clwyd Pension Fund Committee (Item 34)
34 2016 Actuarial Valuation, Funding and Flight Path Update 
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To update Committee Members on the progress of
the actuarial valuation project, funding position and liability
hedging undertaken as part of the Flight Path strategy for managing
liability risks.
Additional documents:
Decision:
(a) That the report be noted including the progress being made with the actuarial valuation project, the current position regarding the funding and flightpath framework and its review over the coming months; and
(b) That the preliminary results of the Clwyd Pension Fund valuation be noted.
Minutes:
Paul Middleman, Fund Actuary - Mercer, introduced the report to provide an update on the actuarial valuation project alongside an update on the flightpath strategy.
Mr Middleman advised that the Administration team had supplied data regarding the backlog which had been analysed and led to a reduction in the liabilities (and therefore total deficit) estimated to be approximately £0.5million. He explained that, as a part of the valuation project, they had considered the Fund’s demographic experience e.g. ill health trends, life expectancy and withdrawal rates. The Clwyd Pension Fund had a positive liability experience as a result of lower ill health rates and higher pensioner death rates. Based on provisional assumptions the funding rate had moved from 68% to 76% from 2013 to 2016 and an average future service rate (Primary Rate) for the cost of ongoing benefits increasing to 15.3% of pay from 13.9% of pay. However, Mr Middleman also highlighted that a drop in the future service discount rate, the maturing membership and the removal of the 50/50 allowance all contributed to this increase with a slight offset due to the change in life expectancy assumptions.
Mr Middleman explained the consultation of the Funding Strategy Statement would take place over October/November starting with the AJCM in November with a view to reaching agreement on all the employer contribution rates early next year.
Karen McWilliam, Independent Adviser, queried whether the final work on the backlog could impact the liabilities. Mr Middleman confirmed this should not have a huge impact and is comfortable the existing data is fit for purpose and is therefore sufficient to proceed with signing off the results. Mercer will carry out further checks as the backlog is completed and an updated data cut is taken in 2017.
Mr Middleman then introduced the report on the Flightpath Risk Management Framework. He highlighted the potential changes to the Flightpath Framework including hedging against equity markets and noted that recommendations will be brought to the next Committee for consideration.
Steve Hibbert commented that there was no graph for the flightpath. Mr Middleman confirmed the funding check will be rebased once the new Funding Strategy Statement is agreed. He stated that if you measured the position on a consistent basis with the 2013 Valuation was slightly behind plan and the 2016 valuation was slightly ahead at the current time. This is principally to do with the 2013 valuation plan understating the expected future investment returns
RESOLVED:
(a) That the report be noted including the progress being made with the actuarial valuation project, the current position regarding the funding and flightpath framework and its review over the coming months; and
(b That the preliminary results of the Clwyd Pension Fund valuation be noted.