Agenda item

The Chief Executive presented his report. The report set out a series of options for the Pensions Committee to consider on whether the London Borough of Barnet, as an employer, should have a temporary easement in deficit contributions towards the Pension Fund. The Committee was advised that an extraordinary meeting had been convened for the 29 November for the Committee to respond to the request.

The Committee were reminded that at the last triennial evaluation in 2022 the Pension Fund was 95% funded. Since the valuation, the deficit gap has been eliminated, with the Actuary estimating that at the most recent funding update at 30 September that the Fund was 127% funded. This position had arisen primarily due to increased long-term interest rates which also impacts the discount rate for measuring pension benefits. The Committee was advised that, against this background, councils’ budgets throughout the Country were becoming increasingly strained. For example it was forecasted by the County Council Network that 1 out of 10 County Councils will face very significant budgetary pressures.

Officers presenting the case for an easement to deficit contributions advised that 2/3rd of the Council’s overspend was on Adult Social Care and this was related to high number of hospital discharge and the Council having to accommodate social care costs. The Committee was informed that the Central Government funding formulahad not kept up with the level of population growth in the outer London Boroughs

The Committee was advised that the Council had £50million in useable reserves for revenue purposes but that this amount would increasingly be needed in the future to address current revenue overspend. At present, officers are exploring ways to protect the Council’s level of reserves, and this includes reviewing the council’s deficit contribution rate to the Pensions Fund and not increasing the Pension Fund’s current surplus beyond what might be considered prudent. The options viewed include an easement towards deficit contributions. The Committee was advised that following the 31 March 2022 valuation the Council had agreed to pay 1% more than the contribution rate strictly required by the Actuary.

The Committee held a brief discussion and commented on the following: -

·       That the Committee would require detailed and robust legal and actuarial advice before it could give its response (the Head of Pensions and Treasury confirmed he had commissioned such advice)

·         That any agreement would be subject to certain safeguards (e.g., around monitoring and reporting back to the Committee on the financial performance of the Fund and / or the Council, and also ensuring the Council is budgeting an appropriate amount towards pensions for the future)

·        Officers advised that it was not forecasted that the Council would be serving a Sec. 114 Notice within the next 24 months.

RESOLVED

1.    That the Pension Fund Committee considered the request, in principle, of a temporary easement in employer contribution as set out in the paper.

2.    That the Pension Fund Committee considered what additional assurances it would like in respect of any proposal in advance of any formal consideration of such an easement.

3.    That the Pension Fund Committee considered its position in relation to the existing policy.

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