Issue - meetings

To update Committee Members on the funding position, and the implementation of the Flight path and risk management framework.

The Committee noted the Funding, Flightpath and Risk Management Framework update.

            Mr Middleman updated the Committee and said that the Fund had not gone below 100% funded. At 30 June 2021, the funding level was 105% and as at current date was 1%-2% higher than this because of the strong asset performance. He added that there was still some nervousness going forward in regards to inflation, but the Fund was in a positive position.

            As noted at the last meeting, given the positive funding position, consideration was needed on whether to take action to in order to bank some of this gain. The FRMG met after the last meeting and had a detailed discussion on this matter.

            Mr Middleman confirmed that after consideration the FRMG had agreed that  a new soft trigger point at a 110% funding level was a more appropriate to consider whether to make changes to the strategy. He noted that the Fund might hit this trigger sooner than expected, given the direction of travel that the Fund is going.

            Mr Hibbert suggested changing the soft trigger to a hard trigger, as he believed discussions were needed soon, with the intention of making a decision about banking the gain the Fund have made. Mr Middleman noted his point but stated that there were a number of factors to take into consideration before making any changes to the strategy. In particular, there would need to be a balance in the reduction in risk versus corresponding reduction in expected return. As this could affect employer contributions to much if, too much risk was taken out.  A discussion will be needed in order to make these changes factoring in all stakeholder views not just a decision based on the trigger.   Mr Middleman confirmed however that the 110% is likely to mean some change will happen.  Mr Everett agreed that it was important that the Committee were engaged with this matter.

            Mr Everett thanked the Committee for their support over the years and wished everyone the best for the future.

RESOLVED:

The Committee noted the Funding, Flightpath and Risk Management Framework update.