The Pension Fund Committee of Lancashire County Council met on Friday, 23 January 2026, to discuss and decide on key parameters for the 2025 valuation of the pension fund. The committee ultimately resolved to approve a funding buffer of 115% with a 20-year surplus repayment period, which will result in a provisional average employer contribution rate of 9.1% from April 2026.

Valuation 2025 Key Parameters and Contribution Rates

The primary focus of the meeting was the determination of key parameters for the 2025 actuarial valuation of the Lancashire County Pension Fund, specifically concerning the funding buffer and employer contribution rates. The committee had previously deferred a decision in December 2025 to allow for further information and advice on options ranging from a 110% to a 120% funding buffer.

The report presented detailed the potential impact of different funding buffer levels on employer contribution rates and associated risks. The recommended option from officers and the fund actuary was a 120% funding buffer, which would lead to a provisional average employer contribution rate of 11.0% from April 2026, a significant reduction from the current 17.1%. This option was advised as providing a high likelihood of achieving the fund's long-term objectives of solvency and contribution stability, while also delivering substantial reductions for employers.

Councillor David Whipp proposed retaining the existing 110% funding buffer and a 16-year surplus repayment period, arguing for generational equity and expressing concern about the impact of higher contribution rates on local authority budgets. Councillor Mark Smith seconded this proposal, highlighting the fund's strong current position.

However, during the debate, it became apparent that the proposed 16-year repayment period in Councillor Whipp's motion had not been modelled by the actuary. Following a procedural clarification and a short adjournment, an amendment was proposed to change the repayment period to 20 years, aligning with the actuary's modelling. The amended motion for a 110% buffer with a 20-year repayment period was put to a vote and was lost.

Subsequently, Councillor Whipp proposed a motion for a 115% funding buffer with a 20-year surplus repayment period. This motion was discussed, with the Director of Finance confirming that this level would satisfy the committee's fiduciary duty. The Head of Democratic Services clarified that other parameters from the original recommendation would remain unchanged.

The motion for a 115% buffer and a 20-year recovery period was put to a vote and Resolved: That a Funding Strategy Statement with a funding buffer of 115%, a recovery period of 20 years, a Future Service Discount Rate of CPI + 2.25%, and a Past Service Discount Rate of CPI + 2.65% is approved. This results in a provisional average employer contribution rate of 9.1% from April 2026, a reduction from the current 17.1%. The committee concluded that this option provides a high likelihood of achieving the fund's key long-term objectives while delivering significant contribution reductions.

Following the vote, co-opted members Ms S Roylance and Mr P Crewe, along with County Councillors S Rigby and M Lavalette, requested that their opposition to not following the actuary's and officers' advice for a 120% funding buffer be recorded in the minutes.

Other Business

No urgent business was raised during the meeting. The date of the next meeting was confirmed as 20 February 2026.