The Pensions Committee of Shropshire Council met on Friday 5 December 2025 to discuss the 2025 valuation analysis and funding strategy statement, pensions administration monitoring, and corporate governance. Key decisions included the approval of the final draft of the Funding Strategy Statement and the endorsement of the 2024-25 audit plan.

Valuation and Funding Strategy Statement Update

The committee received an update on the 2025 valuation analysis and funding strategy statement from Ms Michelle Doman and Mr Mark Wilson of Mercer. The preliminary results indicated a significantly improved funding position compared to the 2022 valuation, with a higher funding level and a projected reduction in the average employer contribution rate from 19.1% to 13.0%. This improvement was attributed to factors such as increased investment returns and higher CPI rates.

The presentation highlighted that the 2025 valuation would likely lead to contribution reductions for many employers. Key parameters discussed included the real discount rate, sustainability reserve, and recovery period. The analysis suggested a 51-70% chance of maintaining the proposed 13% contribution rate for the next two valuations, with the use of the sustainability reserve potentially increasing this likelihood.

Policy points were also discussed, including a revised approach for employers without taxpayer backing, changes to the termination policy, and a new approach for academy conversions to ensure consistent contributions.

The Funding Strategy Statement itself was presented, outlining its purpose, key funding principles, and detailed policies on demographic assumptions, deficit recovery plans, surplus policy, new employer admissions, termination policy, and inter-valuation contribution reviews. Several policies had been updated, including the deficit recovery policy, admission and termination policies, and employer risk management policy. New sections on surplus policy and asset share policy were also included.

Pensions Administration Monitoring

The Pensions Administration Manager presented a report detailing the performance of and issues affecting the Pensions Administration Team. The report highlighted that 9 out of 16 Key Performance Indicators (KPIs) were meeting at least 95% of cases completed within legal timeframes. Improvements were noted in KPIs for transfers, attributed to a change in how these cases were resourced. A new process for allocating work within the Membership and Benefits team, based on individual skill sets and capacity, was being introduced.

The report also provided an update on communications, including telephone calls received by the helpdesk, contact us forms/emails, My Pension Online activation keys, incoming post, video appointments, and website visits. The accuracy rate of responses from Penny the Pensions Bot was noted as being between 75% and 83%, with ongoing efforts to improve its information bank. The registration numbers for My Pension Online showed a steady increase for active and pensioner members.

Employer performance was reviewed, with a focus on the timely submission of contributions and data. September 2025 showed a dip in i-Connect data received on time and monthly deficit lump sum payments received on time, attributed to payroll provider changes and new employer onboarding.

Project updates were provided on the Valuation, with individual employer results distributed and an employer meeting held with the fund's actuary. The Pension Dashboards project was also progressing, with an annual address tracing project to enhance data quality. Regulatory updates included the announcement of the September 2025 CPI rate of 3.8%.

The committee resolved to note the KPI chart, the progress of key activities from the business plan, and the progress of the Pension Dashboard implementation.

Corporate Governance Monitoring

The Pensions Investment and Responsible Investment Manager presented a report on corporate governance changes, including updates on the government's LGPS - Fit for the Future consultation and socially responsible investment issues. The report detailed the actions taken by the Fund's key stewardship partners, LGPS Central, Columbia Threadneedle Investments, and the Local Authority Pension Fund Forum (LAPFF), in respect of voting and engagement activity.

The Fund's position regarding investments in companies operating in conflict-affected and high-risk areas (CAHRAs) was discussed, with reference to a letter received from the Palestine Solidarity Campaign (PSC). The report reiterated the Fund's existing statement on CAHRAs, backed by legal opinion, and noted that the Scheme Advisory Board (SAB) was awaiting a response from central government on the matter. The Fund stated it would continue to rely on existing legal advice and its own policies.

Updates were provided on the government's LGPS - Fit for the Future consultation, including the expected timeline for the Pensions Bill and the technical consultation on draft statutory instruments. The report noted that the delay in the Pensions Bill passing through the House of Lords was unlikely to alter the overall direction of travel on pooling and governance reform.

The Fund's continued status as a signatory to the Financial Reporting Council's (FRC's) Stewardship Code was confirmed.

The committee resolved to note and accept the position regarding voting and engagement activity, and to note and accept the changes to the Climate Stewardship Plan.

Other Matters

The committee also received reports on the Audit Plan for Shropshire County Pension Fund 2025/26, and the Pension Fund Treasury Strategy 2026/27, which was approved. The committee also noted the content of Appendix A regarding breaches recorded from 1 April 2025 to 31 December 2025, approved the final draft of the Funding Strategy Statement (FSS), and approved the Funds Medium Term Business Plan for 2026-29.

A significant portion of the meeting involved discussions on exempt items, including New Employers, Financial Markets Update, Investment Strategy Update, Investment Strategy Implementation Update, and Investment Monitoring - Quarter to 31 December 2025. Decisions on these matters were made under exclusion of the press and public.