Funding Strategy Statement

The Pension Fund is undergoing its three yearly valuation as at 31 March, 2017 to assess the solvency of the Fund and to set employer contribution rates for the three years from 1 April, 2018 to 31 March, 2021. Underpinning the valuation process is the Funding Strategy Statement (FSS). This describes the funding framework within which the Falkirk Fund intends to operate during the next valuation cycle.

It is requirement of the Scheme rules that ahead of any changes to the FSS, the document is made available to stakeholders for consultation. Accordingly the draft FSS can be viewed by clicking here.

http://www.falkirkpensionfund.org/media/3344/draft-2017-funding-strategy-statement.pdf

Any comments should be submitted to pensions@Falkirk.gov.uk before 7th March, 2018.   

The current round of changes to the FSS includes the introduction of a risk‐based decision making framework regarding contribution rate setting which looks at the:

  • funding target ‐ the amount of money that each employer needs hold in order to pay benefits

  • time horizon ‐ the period over which each employer should target full funding

  • probability of meeting target ‐ the probability for each employer of achieving the funding target by the end of the time horizon

The key principles of the FSS are that the Fund should:

  • take a prudent long term view when funding liabilities

  • pursue a funding target of 100% over a maximum 20 year period (so that liabilities are fully matched by assets

  • ensure there are sufficient funds to pay benefits as they arise

  • maintain as stable as possible employer contribution rates

  • give consideration to affordability when setting employer contributions

  • recognise the different characteristics of Fund employers when setting rates

  • be conscious of the need for inter‐generational fairness in funding liabilities, and

  • not take more investment risk than is necessary