Decision details

Mr J Livesey, Principal Actuary from Mercers, reported that the main area of the Policy which had been reviewed related to the actuarial assumptions used to assess the value of the liabilities at the point an employer exited the Fund as it was considered that the current methodology did not provide enough protection for the remaining employers from the downside risks.

It was reported that a number of different options for setting a discount rate had been considered and it was proposed to adopt an approach based on the yields available on corporate bonds at the date of exit which was a recognised approach used by a number of other LGPS Funds, based on publically available information, and was similar to the approach used to calculate pension liabilities in employers accounts.

A minor amendment was also proposed for the existing charging structure for new admission agreements and academies joining the Fund which would involve additional interest charges where initial pension contributions were paid to the Fund late.

It was noted that, if approved, the revised Policy would be subject to a 3 month consultation period with employers which would also provide an opportunity for them to prepare to exit the Fund if they wished as a result of the changes in policy.

Resolved:

1.  That the changes to the admission and termination policy, as set out in Appendix 'A' to the report presented, are approved for consultation with the employers in the Lancashire County Pension Fund.

2.  That a further report on the outcome of the consultation specified at 1 above is presented to the Committee on the 23rd March, 2018.