Decision details

Declarations of interest:

None.

Key points raised during the discussion:

1.    The Senior Advisor (Pension Fund) and the Hymans Actuary introduced the report, explaining the benefits of asset unitisation for the Surrey Pension Fund.

2.    The Hymans Actuary clarified that the proposals would not result in a shift of the investment strategy.

3.    In response to a question on whether the impact on employers had been modelled, the Senior Advisor (Pension Fund) stated that this was underway. 

4.    The committee discussed whether unitisations would result in the removal of cross-subsidy, pushing less stable employers into default.  Officers suggested that unitisation offered clearer transparency, allowing the Scheme Manager to identify problems earlier and if necessary work with weak employers to exit the Scheme.  At present, the three year valuation identifies problems only once employers are already in deficit.  Some members were still concerned that if weaker employers default this would result in the rest of the Fund having to pay the debt.

5.    The Senior Advisor (Pension Fund) explained that the classification of employers as large and secure, other well-funded, or poorly-funded was decided by the Scheme Manager, in consultation with employers. 

6.    The Hymans Actuary informed the committee that initially unitisation would require a lot of work and therefore resource.  There was also the possibility of employers rejecting the investment strategy identified for them.  However, the majority would be happy with what is set.

Actions/Further information to be provided:

None.

Resolved:

That the Surrey Pension Fund Committee:

1.    Notes the benefits that asset unitisation would bring to the Fund in order to support a focused employer funding and investment strategy; and

2.    Approved in principle the future implementation of asset unitisation and request officers to work with the Fund’s actuary towards its implementation with effect from 1 April 2016 (the effective date of the next actuarial valuation), and subject to the actuary’s final report being approved by the Committee.

Next steps:
A further report to be brought to committee at a future meeting.

The committee adjourned from 12.30pm to 1.15pm for lunch.