This statement has been prepared in accordance with Regulation 34(1) of the Local Government Pension Scheme (Administration) Regulations 2008, and Chapter 6 of the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the UK 2010/11.
The funding policy is set out in the Administering Authority’s Funding Strategy Statement (FSS), dated 4 March 2011. In summary, the key funding principles are as follows:
- to ensure the long term solvency of GMPF as a whole and the solvency of each of the notional sub-funds allocated to individual employers;
- to ensure that sufficient funds are available to meet all benefits as they fall due for payment;
- to ensure that employers are aware of the risks and potential returns of the investment strategy;
- to help employers recognise and manage pension liabilities as they accrue, with consideration as to the effect on the operation of their business where the Administering Authority considers this to be appropriate;
- to try to maintain stability of employer contributions;
- to use reasonable measures to reduce the risk to other employers and ultimately to the Council Tax payer from an employer ceasing participation or defaulting on its pension obligations;
- to address the different characteristics of the disparate employers or groups of employers to the extent that this is practical and cost-effective; and
- to maintain the affordability of GMPF to employers as far as is reasonable over the longer term.
The most recent actuarial valuation carried out under Regulation 36 of the Local Government Pension Scheme (Administration) Regulations 2008 was as at 31 March 2010. This valuation revealed that GMPF’s assets, which at 31 March 2010 were valued at £10,445 million, were sufficient to meet 96.4% of the liabilities (i.e. the present value of promised retirement benefits) accrued up to that date. The resulting deficit at the 2010 valuation was £390 million.
Individual employers’ contributions for the period 1 April 2011 to 31 March 2014 were set in accordance with GMPF’s funding policy as set out in its FSS.
Full details of the methods and assumptions used are described in my valuation report dated 31 March 2011, a copy of which can be found on this website.
The liabilities were assessed using an accrued benefits method which takes into account pensionable membership up to the valuation date, and makes an allowance for expected future salary growth to retirement or expected earlier date of leaving pensionable membership.
A market-related approach was taken to valuing the liabilities, for consistency with the valuation of GMPF assets at their market value.
The key financial assumptions adopted for the 2010 valuation can be seen below.
The key demographic assumption was the allowance made for longevity. As a member of Club Vita, the baseline longevity assumptions adopted at this valuation were a bespoke set of VitaCurves that were specifically tailored to fit GMPF’s membership profile.
|Longevity improvements were in line with standard PXA92 year of birth mortality tables, with medium cohort projections and a 1% p.a. underpin effective from 2010. Based on these assumptions, the average future life expectancies at age 65 are as follows:
Copies of the 2010 valuation report and Funding Strategy Statement are available on request from Tameside
Metropolitan Borough Council, administering authority to GMPF.
The Administering Authority monitors the funding position on a regular basis as part of its risk management programme. The most recent funding update was produced as at 31 March 2011. It showed that the funding level (excluding the effect of any membership movements) remained broadly unchanged over 2010/11.
The next actuarial valuation will be carried out as at 31 March 2013. The Funding Strategy Statement will also be reviewed at that time.
Fellow of the Institute and Faculty of Actuaries
For and on behalf of Hymans Robertson LLP
28 July 2011