The Pension Fund Committee of Lancashire Council met on Friday, 23 January 2026, to discuss key parameters for the 2025 actuarial valuation and to determine future employer contribution rates. The committee ultimately approved a funding strategy with a 115% funding buffer and a 20-year recovery period, resulting in a provisional average employer contribution rate of 9.1%.

Valuation 2025 Key Parameters and Contribution Rates

The primary focus of the meeting was the decision on the key parameters for the Funding Strategy Statement (FSS) following the 2025 actuarial valuation. The committee had previously deferred a decision in December 2025 to allow for further information and advice. The report presented options for the funding buffer, ranging from 110% to 120%, and their impact on employer contribution rates and associated risks.

The recommended option from officers and the actuary was a 120% funding buffer and a 20-year recovery period, which would have resulted in an average employer contribution rate of 11.0% from April 2026, a significant reduction from the current 17.1%. This option was presented as providing a high likelihood of achieving the Fund's long-term objectives of solvency and contribution stability, while also delivering substantial contribution reductions.

However, a motion was put forward by Councillor David Whipp, seconded by Councillor M Smith, to retain the current 110% funding buffer and a 16-year surplus repayment period. This motion was based on arguments of generational equity and concerns that maintaining higher contribution rates could negatively impact local authority budgets and potentially lead to workforce reductions.

During the debate, it became apparent that the proposed 16-year recovery period in Councillor Whipp's motion had not been modelled by the actuary. An amendment was proposed and seconded to change the recovery period to 20 years, aligning with the modelling provided. Following this amendment, the motion for a 110% buffer with a 20-year recovery period was put to a vote and was lost.

Councillor Whipp then proposed a new motion for a 115% funding buffer with a 20-year recovery period. This motion was discussed, with the Director of Finance confirming that a 115% buffer would satisfy the committee's fiduciary duty. The committee then voted on this motion.

Resolved: The committee approved 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%. This results in a provisional average employer contribution rate of 9.1% from April 2026, a reduction from the current 17.1%. This decision was made to provide a high likelihood of achieving the Fund's long-term objectives of solvency and contribution stability, while also delivering significant contribution reductions.

Following the vote, co-opted members Ms S Roylance and Mr P Crewe, along with County Councillor S Rigby and County Councillor M Lavalette, indicated their opposition to the committee not following the actuary's and officers' original recommendation for a 120% funding buffer. They wished for their dissent to be recorded in the minutes.

Minutes of the Last Meeting

The minutes of the previous meeting held on 12 December 2025 were confirmed as an accurate record and signed by the Chair.