Meeting documents

To consider a report by the Fund Administrator (attached) and presentation from the Fund Actuary.

The Committee received a report from the Fund Administrator that gave an update on the progress of the triennial Pension Fund valuation 2016, and ‘lessons learned’

for future valuations.  Graeme Muir, Barnett Waddingham, the Fund’s Actuary gave a

summary of the challenges that had been faced in completing the 2016 valuation,

and added that these challenges were consistent with those faced by most other

LGPS funds.

The Chairman invited the Deputy Chief Financial Officer to comment on behalf of the Dorset Finance Officers Group (DFOG).  The Deputy Chief Financial Officer said he was pleased to see the report and the action plan for the next valuation.  However, he was concerned that as the next valuation was three years away, the action plan may not be fully implemented, in particular improvements relating to the quality and timeliness of data.

The Actuary replied that employers’ data could now be uploaded directly into Barnett Waddingham’s systems and was then subject to an automatic ‘data cleanse’, thus identifying problems with data more quickly.  An on-line monitoring tool would also be available for employers.  A member asked if there was regular cleansing of employers’ data.  The Pensions Benefits Manager commented that the team encouraged employers to do this on a quarterly basis and the Committee strongly supported this approach.  The Pensions Benefits Manager added that issues relating to data were also raised at the quarterly Pension Liaison Officers Group (PLOG) meetings attended by employer representatives.

The Fund Administrator added that, from a Section 151 Officer perspective, for future valuations he wished to see realistic, prudent expectation management with no nasty surprises.  The Actuary agreed but highlighted that the extent of the impact of new oversight arrangements from the Government Actuary’s Department (GAD) on this valuation had not really been understood until late 2016.

The Vice-Chairman asked when the Committee needed to timetable implementation of the action plan for the 2019 valuation into the Forward Plan.  The Interim Chief Treasury and Pensions Manager replied that an update would be reported to the meeting on 13 September 2017.  He added that the timetable for Local Government Reorganisation (LGR), if approved by government, would potentially cause an additional challenge for the next valuation.

The Independent Adviser questioned the statement in the report that the Fund had not performed as well as other funds, as the annualised return for the last three years had been equal to the average return of all LGPS funds, and outperformed the target set at the 2013 valuation.  The Actuary clarified that the comparison was with other Barnett Waddingham clients only not all LGPS funds, and that the liabilities of the Fund had increased more than expected when the discount rate was set.

The Vice-Chairman asked if the Fund’s assets were generating sufficient returns. 

The Fund Administrator replied that this was the reason for the review of the

Strategic Asset Allocation that was discussed later in the meeting.  The Actuary

explained that although increased asset prices improved the valuation of the Fund’s

assets, as the Fund still received net cash contributions from members, increased

asset prices also made further investments more expensive and therefore added to

the challenge to meet the required rate of return.     

Resolved

1.  That indicative future employer contribution rates be provided by the Fund’s Actuary for the years 2020/21 and 2021/22 to provide early planning for medium term financial plans.

2.  That employers conduct regular data cleansing reviews to ensure that the data which the valuation would be based on would be clean to aid a smooth process in 2019.

3.  That a plan be put in place to ensure a more timely release of future valuation results.

4.  That the Committee note the particular difficulties encountered during the 2016 process which were not anticipated in future valuations.

5.  That an update on the timetable for the 2019 valuation be provided to the meeting of the Committee on 13 September 2017.