Issue - meetings
Funding, Flight-Path and Risk Management Framework
Meeting: 31/08/2022 - Clwyd Pension Fund Committee (Item 21)
21 Funding, Flight-Path and Risk Management Framework 
PDF 114 KB
To update Committee Members on the funding
position, and the implementation of the Flight path and risk
management framework
Additional documents:
- Enc. 1 for Funding, Flight-Path and Risk Management Framework, item 21
PDF 530 KB
- Webcast for Funding, Flight-Path and Risk Management Framework
Decision:
The Committee noted the update and considered the contents of the report.
Minutes:
Mr Middleman emphasised Mr Harkin’s point regarding the inflationary pressures on the Fund and noted the following key points:
- At 31 March 2022 (at the valuation date), the funding level was estimated to be 101% and despite the challenging investment environment, the Fund was expected to still be ahead of the target funding level of 95% by 2% at 30 June 2022.
- The figures within the report were based on an update from the 2019 actuarial valuation as Mercer were currently in the middle of updating the 2022 actuarial valuation.
- The April 2023 pension increase could result in a possible 10%+ increase in member benefits. This would be beneficial for members but would put a strain on the Fund as it would increase the liabilities and some allowance for this would be made in the valuation.
- The changes in interest rates were noted. Mr Middleman confirmed this matter and how the Fund would deal with this would be discussed at the next FRMG meeting in the context of how it will affect funding and the flightpath.
- As noted in the report, the equity protection had been successful for the Fund in the last quarter despite the challenging period. Mr Middleman believed the Fund was in the best position at the moment due to the protections in place from the funding and flightpath strategy.
The Bank of England had a target to reduce the rate of inflation. Mr Latham therefore asked whether Mr Middleman believed that this was achievable. Mr Middleman said that for the 2022 valuation, it was assumed that the Bank of England would not meet its 2% CPI target as quickly as the Bank of England were stating, but it is not unreasonable that it could be met in, say, 5 years which is what has been built into the provisional assumptions. Reducing inflation more quickly would be positive in terms of the Fund’s liabilities (all other things equal).
RESOLVED:
The Committee noted the update and considered the contents of the report.