This is an 8 week consultation exercise on proposed updates to the Funding Strategy Statement (FSS).
The Consultation period will close on the 3rd October 2025.
Responses should be sent to WYPF.Technical@wypf.org.uk
Further information
WYPF’s FSS has been prepared by City of Bradford Metropolitan District Council (the Administering Authority) in collaboration with the Fund Actuary, Aon, and after consultation with officers and the West Yorkshire Pension Fund Advisory Panel.
The FSS has been prepared in accordance with Regulation 58 of the Local Government Pension Scheme Regulations 2013 (the Regulations) and the guidance jointly produced by the Scheme Advisory Board (SAB), the Chartered Institute of Public Finance and Accountancy (CIPFA) and Ministry of Housing, Communities and Local Government (MHCLG). A link to the guidance can be found on the SAB site here.
The new guidance introduces a common structure and terminology, to aid understanding and to allow for changes in the regulatory environment and to reflect feedback received from LGPS Funds. The majority of the changes made to the FSS are therefore presentational, however, as noted below, we have also updated the draft FSS to include the proposed assumptions and approach to be adopted for the actuarial valuation of the Fund at 31 March 2025.
In addition, the Administering Authority has had regard to the Investment Strategy Statement, the supplementary statutory guidance issued by MHCLG: “Guidance on preparing and maintaining policies on review of employer contributions, employer exit payments and deferred debt agreements”, and has also considered the Scheme Advisory Board's “Guide to Employer Flexibilities”.
Proposed key financial assumptions to be used for the actuarial valuation of the West Yorkshire Pension Fund at 31 March 2025
Details of all the assumptions and approaches are set out in the FSS, largely within the “Key Funding Principles” section, however the main areas to note are:
- Funding Targets
A key element of funding strategy is the funding target to be adopted. The funding target is based on the assumptions used to value the liabilities. The funding strategy includes different funding targets/discount rates for different types of employers and the allowance for prudence in the assumptions is concentrated in the discount rate, with all other assumptions set as best estimate.
- Discount Rate
In order to better meet the regulatory requirements of stable primary rates, it is proposed that the discount rate at the 2025 valuation be calculated using an 80% probability of funding success for the secure scheduled and subsumption body employers (which covers the majority of employers in the Fund). This is an increase on the 76% probability of funding success adopted at the 2022 valuation. It is proposed that the probability of funding success for intermediate funding targets is also increased to maintain a more prudent funding strategy than that used for more secure employers. (Note that at this valuation if the probability of funding success is increased as proposed, most employers will still see their contribution rates reduce)
The Orphan exit basis approach was refined in 2024 and we are not proposing to make any further changes to the approach at this valuation.
- Surplus buffer
The surplus buffer of 105% (i.e. using surplus to reduce an employer’s contribution rate where an employer’s asset share is above 105% of the value of its liabilities) has been retained at this point, but this will be considered further at the October WYPF Advisory Panel meeting when market conditions at that point are known.
- Recovery period
Retained a 22-year recovery period to amortize any surplus/deficit in the fund.
- Stepping
Retained the Fund’s policy that employer contribution rate changes “will generally be phased in over 6 years”.
- Changes to CPI (used for pensions increases and revaluation of pension accounts)
At the 2022 valuation there was an uplift of 10% applied to the liabilities to allow for high expected short-term inflation. The outlook at this valuation is different, with short-term inflation not expected to differ significantly from the long-term CPI inflation assumption and as such the short-term inflation uplift has been removed
WYPF employers and stakeholders are encouraged to comment and provide feedback on the draft FSS and the proposed assumptions for the 2025 Valuation.
Any responses should be sent to WYPF.Technical@wypf.org.uk
Next Steps
All responses to the consultation will be presented to the West Yorkshire Pension Fund Advisory Panel meeting on the 23 October 2025 where the Panel will decide on the assumptions to be used by the actuary for calculating initial results and individual employer contribution rates. (Please note - all responses to the consultation will be included in the Appendix to the report to the Panel and as a result you should note that all responses will therefore be available to the public and published online).