Audit Commission Pension Scheme Newsletter Issue 19

1 Audit Commission Pension Scheme Newsletter Issue 19 January 2015 Pension News 2 Pension News from the Audit Commission Pension Scheme Chair of Trustees report Welcome to the Trustees annual update on the Audit Commission Pension Scheme ( ACPS ). In this Newsletter you will find news about the ACPS s financial activities for the year ended 31 March 2014 and events in the current financial year. It also includes membership statistics and other information concerning the ACPS and your benefits. The funding level of the ACPS has improved from 94% to 95%. This small improvement in the funding level is due primarily to an increase in the yields on the investments used to value the liabilities, which reduced the value placed on the ACPS s liabilities. This has more than offset the fall in the value of the ACPS s assets over the year.

2 The next formal Actuarial Valuation is scheduled for 31 March 2015 to coincide with the planned closure of the Audit Commission . As in previous years, the ACPS remains relatively well-funded and able to meet its benefit commitments. In addition, members will recall that there is a Crown Guarantee which means that the Government would step in to fund ACPS pensions if they can no longer be met from its current assets. The term for the Member-Nominated Trustees is due to come to an end this year and an election will be held to fill these positions. We also bring your attention to Pension scams which are sadly on the increase and provide more information on page 9. The Trustees continue to attend regular training sessions throughout the year to ensure that they remain up to date with legislative changes as well as best practices, and that we all comply with the requirements regarding trustee knowledge and understanding.

3 I hope you will find this Newsletter both interesting and informative. The Trustees would welcome any feedback on its content. Please provide this to the Punter Southall administration team for the Trustees to consider. Contact details are given on page 12. Finally, I would like to thank my fellow Trustees and all our professional advisers for the support provided to the ACPS over the last year. I look forward to continuing to work closely with them as we address the challenges which lie ahead. Sue Timbrell MBE Chair of the Trustees 3 Pension News from the Audit Commission Pension Scheme Contents Actuarial Valuation 4 Trustees report and Accounts 5 Membership movements 6 Investment report 7 Audit Commission closure 9 Member-Nominated Trustees 9 Pension scams campaign 9 Legislation changes 10 Who is involved with the ACPS?

4 11 Contact address 12 Noticeboard 12 12 The material contained within this Newsletter is for general information purposes only. Although every care has been taken in producing the content, it is not legally binding. Full details of the ACPS are set out in the Trust Documentation section of the ACPS Member Website, Should the Newsletter content conflict with the Rules of the ACPS, the Rules will take precedence. 4 Pension News from the Audit Commission Pension Scheme The ACPS s financial position, or funding level, is the percentage of the ACPS s assets measured against its liabilities. The last formal valuation of the ACPS was carried out by the Actuary as at 31 March 2011, and an updated position has been estimated at 31 March 2012, 31 March 2013, 31 March 2014 and 30 September 2014.

5 The next formal valuation of the ACPS will be carried out by the Actuary as at 31 March 2015. 31 March 2011 actuarial valuation Indicative position 31 March 2012 31 March 2013 31 March 2014 30 September 2014 Assets 665m 724m 812m 780m 829m Liabilities 641m 787m 864m 822m 872m Surplus/(Deficit) 24m ( 63m) ( 52m) ( 42m) ( 43m) Funding level 104% 92% 94% 95% 95% Note: the assets and liabilities shown above do not include the value of the ACPS s AVCs for this reason the asset value is slightly different to that shown in the Trustees report and Accounts and elsewhere in this Newsletter . Please note that the estimates as at 31 March 2012, 31 March 2013, 31 March 2014 and 30 September 2014 are not as accurate a calculation as carrying out a full valuation and are purely indicative. The Commission is contributing of pensionable salaries to cover future build-up of benefits, life assurance premiums, and administrative expenses (plus an amount equivalent to the SMART contributions).

6 Why has the position improved since 31 March 2013? Between 31 March 2013 and 31 March 2014 the position improved due to the increase in yields on the investments used to value the liabilities, which reduced the liabilities by more than the reduction in the value of the assets over the year. Crown Guarantee Under the terms of the Crown Guarantee, the Government will top up the assets of the ACPS to fund member pensions, if at the start of the ACPS year the Actuary believes that the assets have fallen below 150% of the benefits that are expected to be paid to members in the following year. With benefit payments running at around 30 million each year the ACPS s assets are clearly sufficient to cover benefit payments currently. While the position is reviewed each year under the terms of the Crown Guarantee, no payments are expected to be paid from the Government in the foreseeable future.

7 Next Valuation Following discussions between the Trustees, the Department for Communities and Local Government ( DCLG ), the Commission and the Actuary it has been decided that the next full valuation should be carried out as at 31 March 2015 to tie in with the planned closure of the Commission in March 2015. This should ensure that the ACPS s investment strategy remains well matched to its future cash flow requirements. Actuarial Valuation 5 Pension News from the Audit Commission Pension Scheme We set out below a brief summary of the key information from the ACPS s audited accounts for the year ending 31 March 2014. You can download the full annual report from the ACPS Website, or using your member access website The value of the ACPS s assets as at 31 March 2014 was 783 million. This has decreased over the year by 33 million from 816 million.

8 These figures include money purchase funds in respect of members additional voluntary contributions (AVCs). Money movements during the year What was paid out? Benefits million Transfers out and payments to leavers million Life assurance premiums ( million) Administrative expenses million Total million What came in? Contributions million Transfers in from other Pension schemes million Other income million Total million What was the return from investments? *Please note that all investment income is reinvested within the Scheme Investment income * million Market value of investments ( million) Investment management expenses ( million) Total ( million) The value of the ACPS (including AVCs) at 31 March 2013 was million Deduct paid out , add received , deduct negative investment return Equals the value of the ACPS (including AVCs) at 31 March 2014 of million Trustees report and Accounts 6 Pension News from the Audit Commission Pension Scheme The change in the membership of the ACPS in the last five years is shown below.

9 05001000150020002500300031 March200931 March201031 March201131 March201231 March201331 March2014 PensionersDeferredActiveWith regret We were very sorry to hear of the death of the following members: Marie Baldwin Brenda Brammer Alexander Brazil Sheilagh Cond Geoffrey Hughes Derek Mathers Brian Mitchell Jan Middleton Edward Pardoe Stuart Pearson Richard Peppler William Todd Gerald Whitfield Membership movements 7 Pension News from the Audit Commission Pension Scheme The Trustees primary objectives in investing the ACPS s assets are as follows: 1. A funding objective to ensure that sufficient assets are available to fund members benefits. Where the ACPS is in deficit, no recovery plan will be put in place. Instead, the ACPS is the beneficiary of a Crown Guarantee, whereby the Government will fund the ACPS pensions if they can no longer be met from assets.

10 2. A stability objective to maintain a stable level of funding within the ACPS. The Trustees recognise that the investment objectives listed above may conflict. There is a balance between achieving high returns and managing investment risk. During the year, the Trustees have sought to fulfil the investment objectives by investing in a range of assets which aim to both grow the value of the ACPS s assets, and match its liabilities. The latest available figures as at the time of publishing are dated 30 September 2014. The underlying holdings as at this date in the ACPS s Diversified Growth Funds were distributed as follows: As at 30 September 2014: 21% of the ACPS s assets were held in a liability matching portfolio. This portfolio is designed to increase (decrease) in value when the ACPS s liabilities increase (decrease).