The Pension Fund Committee of Lancashire Council met on Friday 23 January 2026 and decided to set the funding buffer for the pension fund at 115%, with a 20-year surplus repayment period. This decision was made after extensive debate regarding the appropriate level of prudence to balance employer affordability with the long-term stability and solvency of the fund.

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 its impact on employer contribution rates. The committee was presented with a report detailing options for the funding buffer, ranging from 110% to 120%, and the associated risks and employer contribution rates.

The recommended option from officers and the fund actuary was a 120% funding buffer, which would have resulted in an average employer contribution rate of 11.0% of pensionable pay, a significant reduction from the current 17.1%. This option was favoured for providing a high likelihood of achieving the fund's long-term objectives of solvency and contribution stability, while also delivering substantial reductions for employers.

However, Councillor David Whipp proposed retaining the existing 110% funding buffer and a 16-year surplus repayment period, arguing for generational equity and expressing concern that higher contribution rates could strain local authority budgets, potentially leading to job losses. Councillor Mark Smith seconded this proposal, highlighting the fund's strong current financial position.

During the debate, it became apparent that the initial proposal of a 16-year repayment period had not been modelled by the actuary. Following a procedural clarification and a short adjournment, an amendment was proposed to align the repayment period with the modelled 20-year period. The amended motion for a 110% buffer and a 20-year repayment period was put to a vote and lost.

Subsequently, Councillor Whipp proposed a motion for a 115% funding buffer with a 20-year surplus repayment period. This option was discussed, with the Director of Finance confirming that it would satisfy the committee's fiduciary duty. The motion was put to a vote and resolved: that a Funding Strategy Statement with a funding buffer of 115%, a 20-year recovery period, and specific future and past service discount rates be approved. This decision results in a provisional average employer contribution rate of 9.1% from April 2026, a reduction from the current 17.1%.

Several members, including Ms S Roylance, Mr P Crewe, Councillor S Rigby, and Councillor Prof. Michael Lavalette, recorded their opposition to not following the actuary and officers' original recommendation for a 120% buffer, citing concerns about not adhering to expert advice.

The meeting also noted the date of the next meeting, scheduled for 20 February 2026.