Contact: Ian Howell, (01962) 847540; email: [email protected]

1 Summary

1.1 Regulations require the Hampshire Pension Fund to prepare and publish a Funding Strategy Statement (FSS). It sets out how the Fund intends to meet its liabilities over the long term and how it will work towards stable employers' contribution rates. The FSS is used by the actuary in preparing the triennial actuarial valuation.

1.2 This report sets out some minor changes to the FSS for the Panel's approval.

1 Recommendation

a) That the updated Funding Strategy Statement be approved.

b) That the progress on the action plan be noted.

2 The Funding Strategy Statement

2.1 The FSS was first drawn up in 2004 for use with the actuarial valuation at 31 March 2004. A draft updated version is attached as Appendix 1. It has been prepared in accordance with the Regulations and the guidance issued by the Chartered Institute of Public Finance and Accountancy.

2.2 The changes are highlighted in Appendix 1. They cover:

· the Fund's target long-term investment return of 2.5% a year above a low-risk portfolio, agreed as part of the review of the investment arrangements last year

· the new investment management structure that took effect in January 2007, including the use of alternative investments

· clarification that the recovery period for the past service deficit of 40 years is the maximum period (25 years is currently used)

· the `new-look' Local Government Pension Scheme to be introduced from 1 April 2008.

2.3 These amendments are minor and do not affect the fundamental content and meaning of the FSS. It has not been necessary to consult further with other stakeholders in the Fund.

2.4 The actuary, Hewitt, have undertaken the work on the actuarial valuation at 31 March 2007 on the basis of the existing FSS, together with their intimate knowledge of the Fund's new investment target and management structure. If approved by the Panel, the updated FSS will be forwarded to the actuary to formalise the basis for their work.

Section 100D - Local Government Act 1972 - background documents

The following documents discuss facts or matters on which this report, or an important part of it, is based and have been relied upon to a material extent in the preparation of this report.

NB: The list excludes:

None.

i:\. . . .\ian\docs\penpanel 161107 fss.doc

Appendix 1

Funding Strategy Statement

Separate document