Minutes:
Graeme Muir, Partner, and Roisin McGuire, Associate, from Barnett Waddingham were present for this and the following item at the invitation of the Board.
1. The Chairman thanked Mr Muir and Ms McGuire for attending and Mrs Mings explained that they had been invited to advise the Board of the actuarial valuation results and other actuarial issues.
2. Mr Muir presented a series of slides (tabled) which set out the purpose of the valuation, its key outcomes, the assumptions made, the prudent discount rate, which this time included an extra 0.2% to allow for the McCloud judgement in 2018 and other uncertainties, and the background to the McCloud judgement. He highlighted changes to the rules which had been made since the previous valuation: in 2016, the Government had introduced a section13 valuation stage, which followed funds’ valuations and checked that contributions had been set at an appropriate level. Mr Muir then responded to comments and questions from the Board, including the following:-
a) asked about the average recovery period, Mr Muir advised that the average period for large authorities was 9 – 10 years, for Kent it was 8 years and for smaller authorities it was between 8 and 12 years. It was best to keep contributions at a stable level; if they were reduced, they might need to be increased again at a later stage, requiring funding to be found from elsewhere in an authority’s budget;
b) asked to comment on a number of recent consultations, including changes to the valuation cycle, exit credits and deemed employers; Mr Muir commented that larger local authorities would manage a 4-year valuation cycle better than smaller employers, who would need a more frequent valuation to check that they were on track. Mr Muir also commented that court cases were currently testing the idea of returning a surplus when an employer were to leave the scheme. Responsibility for the pension liability of a deemed employer would remain with the letting authority rather than be transferred to the new contractor. Mrs Mings commented that, currently, the admission process was the same, irrespective of the size of the employer, so costs and time could be saved if the new employer were to be given deemed employer status. Mr Tagg advised that the pension arrangements for the company’s employees would need to be set out in the commercial contract; and
c) concern was expressed about the options open to academies which, unlike local authority schools, could be declared bankrupt. Mr Muir advised that, in respect of those schools in Multi-Academy Trusts (MATs), the MAT would take over liability for staff pensions. Otherwise pensions would be guaranteed by the Department for Education employer covenant. Mr Tagg added that the number of academies in the Kent Fund had grown from 6 in 2010 to 200 in 2019. They all paid the same employer contribution rate and all had to declare their pension accounting liability annually, as at 31 August.
3. It was RESOLVED that the information in the presentation and given in response to comments and questions be noted, with thanks.