Agenda item

Report of the Director of Finance.

The Committee received the report of the Director of Finance, which set out the draft Pension Fund Annual Report and Financial Statements for the year ending 31 March 2019 on which the Committee’s comments were invited.

An officer introduced the report and highlighted the performance of the Fund in that the net assets of the Fund had increased from £816.1m to £851.3m during 2018/19.  This performance equated to a 6% return on investments during a volatile year in the financial markets.  He drew Members’ attention to the Pension Fund Account as at 31 March 2019 set out at page 45 of the agenda and referred to the pension benefits of £33.527m paid during 2018/19 which had exceeded contributions received but this shortfall been offset by investment income.

The Committee welcomed the Senior Manager, Public Services Audit, Mazars, Council’s external auditor, to the meeting.  He informed Members that the final accounts would be presented to the September 2019 meeting of the Committee.

The advisers to the Committee made the following comments:

-               the table at page 37 of the agenda, ‘actual asset allocation as at 31 March 2019 to the agreed allocation’, needed to be amended to reflect the inclusion of 11% Multi Asset Credit and the reduction in Diversified Growth Funds from 17.5% to 6.5%.  The Director of Finance agreed with this point. An adviser stated that a clear performance benchmark was not always required.  A Fund Manager could be appointed who was benchmark agnostic;

-               the introduction at page 29 of the agenda should be reworded to be less specific with regard to the timing of further investment in the London CIV (Collective Investment Vehicle).  The Director of Finance agreed to revisit the wording;

-               the table at page 34 of the agenda, ‘cost of running the Pension Fund’ was difficult to interpret.  An officer explained that this was a given standard table which Councils had been asked to produce to help and benchmark cost against other Councils.  It was suggested that further information or a footnote might be appropriate in this instance;

-              sponsor risk section at page 40 of the agenda ought to be amended to read ‘The Fund is currently … will require the continued payment from ‘may require’ …

-              how robust was the assumption at page 72 of the agenda.  A representative of Hyman Robertson LLP, Council’s Actuary, reported that an analysis had not yet been carried out but would from part of the 2019 actuarial valuation.  The Chair was of the view that a new valuation needed to be discussed.

In response to a question on fees, an officer reported that there had been an overall reduction in the fees, whilst the value of the Fund had increased.  The reduction in fees had been achieved though the London Collective Investment Vehicle (CIV) and further information would be provided.  The Chair stated that pointers/footnotes might be appropriate.

RESOLVED:  That

(1)          the report be noted, including the proposed changes set out in the preamble above;

(2)          it be noted that a final report would be submitted to the September 2019 meeting of the Committee.