The Pension Fund Committee of Lancashire Council met on Friday 23 January 2026 to discuss key parameters for the 2025 valuation and contribution rates. The committee ultimately decided to set the funding buffer at 115% with a 20-year surplus repayment period, a decision that was made after considerable debate and amendments to the original proposals.

Pension Fund Valuation and Contribution Rates

The primary focus of the meeting was to determine the key parameters for the 2025 valuation of the pension fund, specifically the level of the funding buffer and the surplus repayment period. The committee considered options ranging from 110% to 120% for the funding buffer, with a recommended option of 120% put forward by officers.

Councillor Witt proposed maintaining the current 110% funding buffer and a 16-year surplus repayment period, citing the need for generational equity and the potential impact of higher contribution rates on local authority employment. He argued that the fund was in a strong position and could afford to maintain the status quo without jeopardising beneficiaries. Councillor Smith seconded this proposal, highlighting the fund's significant growth and surplus, suggesting that even with reduced contributions, the fund would remain robust.

However, the actuary, Mark, advised that while the fund was in a healthy position with a £3 billion surplus, a significant portion of this was due to external market factors, such as changes in gilt yields, which could also work against the fund in the future. He explained that a 120% buffer would offer the most protection against future contribution rate increases, while lower buffers would increase the risk of such increases.

Councillor Rylance strongly advocated for the 120% buffer, arguing that it would guarantee intergenerational fairness and protect against future market volatility. She warned that lower buffers could lead to significant contribution increases in the future, potentially impacting local authority budgets and leading to redundancies.

A procedural discussion ensued regarding the order of voting and the validity of proposals for which specific advice had not been received. It was clarified that the actuary had modelled a 20-year recovery period, but not a 16-year period in conjunction with a 110% buffer. This led to an amendment being proposed to strike out the 16-year period and adopt a 20-year surplus repayment period, aligning with the advice received.

Following further debate and clarification, the committee voted on a proposal for a 110% buffer with a 20-year surplus repayment period, which was lost. Subsequently, a motion for a 115% buffer with a 20-year surplus repayment period was put forward. This motion was discussed, with Councillor Brown suggesting it as a sensible compromise given the current economic climate and the need to support local authorities.

The committee then voted on the 115% buffer and 20-year surplus repayment period, which was carried. Miss Rylance requested that her opposition to not following the advice of the actuary and officers on the 120% buffer be recorded in the minutes, along with Mr. Crewe. No further motions were put forward, and the committee agreed to proceed with the decision of 115% buffer and a 20-year surplus repayment period.

The next meeting of the Pension Fund Committee was scheduled for 10:30 am on Friday, 20 February 2026.