Agenda item

Report of the Director of Corporate Resources to present the audited Pension Fund Annual Report and Accounts for 2012/13 and the Annual Governance Report of the external auditors, Grant Thornton, which reports on their annual audit of the Pension Fund accounts.

The Committee received the Pension Fund Annual Report and Accounts, and ISA 260 audit report.

In response to a question from the Committee regarding the date of the next triennial valuation, it was reported that it was expected that this would be completed by the end of the current calendar year. It was confirmed that the Chief Financial Officer was the post responsible for the co-ordination of the Fund Management and Pension Administration arms of the Pension Service. The Committee asked why Pensions AGM meetings were no longer held, and it was advised that a decision had been taken to discontinue these on the basis of available resources and low attendance at previous meetings; it was noted that there was no requirement to hold such meetings. In response to a question from the Committee regarding performance assessment in compliance with Myners Principles, it was reported that officers continue to routinely meet with investment managers, and that arrangements for Committee Members to also meet with investment managers could be arranged should Members wish.

It was confirmed, in response to a question from the Committee, that no matters had been referred on to the Pensions Ombudsman. With regard to the movement in the actuarial deficit as set out on page 54 of the agenda, in particular ‘investment returns lower than expected’, it was agreed that officers would provide information on what the anticipated investment return had been. Officers provided some clarification around Additional Voluntary Contributions, where individuals wished to transfer additional funds further to their usual pension payments, and it was noted that such payments were reflected in a specific line in the Pension Fund accounts. It was confirmed that 90% of the Fund was passively managed, with the remaining 10% managed actively in property and private equity.

With regard to the reported £200m increase in liabilities, officers advised that this was due to the way in which liabilities were calculated and confirmed that this matter was taken very seriously; the outcome of the forthcoming triennial valuation would be important with regards to providing more information around this issue.

In response to a question from the Committee regarding whether there were any tax implications from investing overseas, it was agreed that a briefing on this would be provided outside the meeting. It was also agreed that this issue would be a topic for discussion at the next meeting of the Pensions Working Group. 

The Fund’s external auditor, Subarna Banerjee, from Grant Thornton, provided an outline of the audit findings for the Pension Fund and confirmed for the record that Grant Thornton remained independent of the Pension Fund. The Committee was asked whether anyone was aware of any fraud against the Fund, and it was noted that no declaration was made that anybody was aware of any such fraud. It was anticipated that the auditors would be providing the Fund with an unqualified audit opinion. 

In response to a question from the Committee regarding late payments to the Fund, it was reported that all contributing bodies were being encouraged to set up direct debits or standing orders for payments and that in the most recent quarter there had only been one late payment. Officers were working to ensure that this position continued to improve.

It was noted that new requirements for the governance of Pensions Funds were being consulted upon; changes are planned to come into force from 1 April 2014. Appropriate arrangements would be established in order to comply with these changes and the Corporate Committee will be properly consulted before implementation.

RESOLVED

That the Committee approve the Pension Fund Annual Report and Accounts for 2012-13.

The Committee thanked all Council staff involved in preparing the Pension Fund accounts for their efforts, and thanked Grant Thornton for their work on the audit.