Agenda item

Consider report by Executive Director Finance & Regulatory.  (Copy attached).

              There had been circulated copies of a report by Executive Director Finance and Regulatory detailing the results from the Triennial Valuation for the Scottish Borders Council Pension Fund as at the 31 March 2020 which proposed the employer contribution rates for the next three financial years.   The full Valuation Report, prepared by the Fund Actuary, Hymans Robertson, was contained in Appendix 1 to the report.  The report concluded that the Scottish Borders Council Pension Fund had a funding level of 110% compared to the previous 2017 valuation of 114%.  This equated to a funding surplus of £63m.  The revised “Primary rate” calculated had increased from 20.6% to 21.9% and the surplus had reduced to £63m.  However, to allow employer contributions for those in the Scottish Borders Council Pool to remain stable for the first two years the Actuary recommended the surplus be utilised and the rates increased in year 3 by 0.5% to mitigate for uncertainties.  The report explained that there were a number of uncertainties, such as McCloud and the Cost Cap Mechanism, for which the impact to the Fund was unknown.  The 0.5% common pool rate increase provided an element of mitigation.  The full impact would be monitored for possible implications to the liabilities and consequent contribution rates.  Scottish Borders Housing Association (SBHA) and CGI were both operating as closed funds with new employees unable to join the fund.  Due to the increased risk with these employers, individual rates were recommended by the Actuary.  South of Scotland Enterprise has been admitted to the Fund in 2020.  In accordance with the admission agreement they were not within the Scottish Borders Council Pool.  Therefore, individual rates had been calculated with a recommended increase in 2021/22 of 0.5% and further increase of 0.5% in 2023/24.

4.2         In response to questions the Pensions and Investment Manager, Mrs Robb, advised that with regard to the 3.8% investment assumption the Actuary had been prudent in determining this return.  Mrs West added that this allowed for future different scenarios and an element of outperformance.  Returns were anticipated to be in excess of 3.8% but because of uncertainties they made an allowance when setting the rate.   Mrs West further advised that the Funding Strategy determined the contribution rates for each employer in the Fund and was based on the individual circumstances of each employer.  With regard to CGI, the rate reflected that CGI fund was closed to new entrants and that payroll and contributions would decrease.  The Pension Fund Committee and Pension Board thanked the Fund Actuary Hymans Robertson for the work preparing the Triennial Valuation. 

DECISION

(a) NOTED the Fund Valuation Report as at 31 March 2020 as set out in Appendix 1;

(b) AGREED:

(i)      the recommended Scottish Borders Council Pool rates of 18.0% for 2021/22 and 2022/23 and 18.5% for 2023/24;

(ii)     the recommended rates for SBHA of 20.3% 2021/22, 20.8%  for 2022/23 and 21.3% for 2023/24;

(iii)    the recommended rate for CGI of 22% from 1^st April 2021 with additional one of payments of £16,500 for 2021/22 and 2022/23 and £21,000 for 2023/24; and

(iv)    the recommended rates for SOSE of 21.1% for 2021/22 and  2022/23 and 21.6% for 2023/24.