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Teesside Pension Fund Annual Report and Accounts for the ...

Teesside Pension fund Annual Report and Accounts for the year ended 31st March 2017. Index Report of those charged with Governance .. 3. Membership .. 25. Head of Investments' Report .. 31. Financial Statements .. 37. Statement of Responsibilities for the Financial Statements .. 38. Auditor's Report .. 39. fund Accounts and Net Assets Statement .. 41. Notes to the Financial Statements .. 42. Actuary's Statement .. 67. The Compliance Statement .. 69. Summary of LGPS Benefits .. 71. Contacts and further information .. 74. 2. Report of those charged with Governance Chairman's Introduction Over the past few years, there has been increasing scrutiny over the Local Government Pension Scheme (LGPS). As previously reported, each LGPS fund was asked to group itself with partners to a scale of 25 billion or greater and for the partnership to present initial proposals for pooling assets and managing them on behalf of the fund from April 2018 onwards.

Teesside Pension Fund Annual Report and Accounts for the year ended 31st March 2017

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1 Teesside Pension fund Annual Report and Accounts for the year ended 31st March 2017. Index Report of those charged with Governance .. 3. Membership .. 25. Head of Investments' Report .. 31. Financial Statements .. 37. Statement of Responsibilities for the Financial Statements .. 38. Auditor's Report .. 39. fund Accounts and Net Assets Statement .. 41. Notes to the Financial Statements .. 42. Actuary's Statement .. 67. The Compliance Statement .. 69. Summary of LGPS Benefits .. 71. Contacts and further information .. 74. 2. Report of those charged with Governance Chairman's Introduction Over the past few years, there has been increasing scrutiny over the Local Government Pension Scheme (LGPS). As previously reported, each LGPS fund was asked to group itself with partners to a scale of 25 billion or greater and for the partnership to present initial proposals for pooling assets and managing them on behalf of the fund from April 2018 onwards.

2 During this year legislation was passed which requires all LGPS Funds to participate and declare which pool they are partnering with. After consideration, the Teesside Pension fund decided to partner with the Borders to Coast Pension Partnership. In the markets, the two key events for 2016/17 were the outcome of the EU. Referendum and US Presidential Elections. In both cases, the early polls were wrong and the expected results affected the markets positively. The Teesside Pension fund portfolio benefited in two ways over the year. Equity markets rallied to the news of these key results and with the fund heavily invested in equities, the fund 's valuation also benefited. In addition, over past years, the fund has been increasing its allocation to overseas assets.

3 As a result of the EU. Referendum, the GB Pound's value weakened against other major currencies, which in turn increased the valuation of the overseas assets when converted back to our currency. The overall financial performance of the fund for the year to 31 March 2017 was a positive increase. The fund 's value rose to billion, an increase over the year of approximately 727 million. The membership of the fund has increased, with total membership at the year-end now standing at 68,829, an increase of 2,040 over last year. The number of active members has increased by 1,154 ( ) over the year, and increased by over the past five years. The numbers of pensioners increased by 478 ( ) over the year, and increased by over the past five years.

4 The number of deferred members increased last year by 408 ( ), and increased by over the past five years. Where a member retires early there is a cost to the fund arising from the fact that Contributions are no longer being received for the member, and a Pension is drawn earlier than the Actuary had assumed. It is the policy of the fund to recharge the actuarial cost of these retirements to the employers. This policy has the advantage that the fund recovers the cost of an early retirement at the outset. For the employer the advantages are twofold;. 1 the impact of retirement decisions is transparent; and 2 the cost is invoiced separately rather than being recovered in the employers Contribution Rate, which was once the case.

5 In this financial year the fund received over million from these early retirement recharges, up on last year's figure of million, a 241% increase on last year. 3. Every three years the fund actuary, AON Hewitt, carries out a full actuarial valuation of the fund . The purpose is to calculate how much employers in the scheme need to contribute going forward to ensure that the fund 's liabilities, the pensions due to current and future pensioners, will be covered. Unlike most other Public Sector schemes the Local Government Scheme is a funded scheme. That means there is a pool of investments producing income which meet a significant part of the liabilities. The actuary calculates to what extent the fund 's assets meet its liabilities.

6 This is presented as a Funding Level. The aim of the fund is to be 100% funded, and at the last valuation the actuary was able to declare a funding level of 100%. This is particularly pleasing since it is the second time in succession that the fund is able to declare it is fully funded. The next valuation is due to be carried out in March 2019. Nature of the Scheme The Teesside Pension fund (the fund ) is part of the Local Government Pension Scheme. From April 2014 the scheme is governed by: The Local Government Pension Scheme Regulations 2013 (as amended); and The Local Government Pension Scheme (Transitional Provisions, Savings and Amendment) Regulations 2014. These regulations replaced the Local Government Pension Scheme (Benefits, Membership and Contributions) Regulations 2007 and the Local Government Pension Scheme (Administration) Regulations 2008.

7 Full details of the changes to the Scheme, along with updated scheme guides, are on our website at: The Regulations specify the pensions and other benefits payable and fix the rates of member contributions. Employer contributions are set every three years by the fund Actuary. The purpose of the fund is to provide retirement benefits for local authority employees in the Teesside area and other bodies admitted by agreement. The fund is administered by Middlesbrough Council on behalf of all participating employers. A. full list of participating organisations is given in the Membership section below. The fund is financed by way of contributions from employers and employees, based upon a percentage of pensionable pay, and supplemented by earnings from fund investments.

8 The surplus funds, after payment of benefits, are invested by an Investment Panel. The Panel comprises elected members of Middlesbrough Council, representatives of the other unitary authorities, the Trade Unions and the fund 's Investment Advisers. Management of the fund The fund is administered by Middlesbrough Council via the Teesside Pension fund Pensions and Investment Panel which has plenary powers to make decisions without reference to the Council. This panel acts in a similar manner to the Board of Trustees of a private sector Pension fund . 4. The day to day running of the Teesside Pension fund is delegated to the Assistant Director Interim Finance & Investments of Middlesbrough Council who is responsible for implementing the strategies and policies set by the Pensions and Investment Panel.

9 Supporting him is a team of staff split into two units. The Pensions Administration Unit is responsible for the calculation and payment of Pension benefits and for looking after employer interests in the fund . The Loans and Investment Unit manages the investment of the fund in conjunction with the advice of the fund 's external Investment Advisors. The Teesside Pension fund Pensions and Investment Panel Panel membership and meeting attendance during the year 2016/17. Members With voting rights 29 Jun 28 Sep 7 Dec 8 Mar Chair Councillor SE Bloundele . Vice Chair Councillor J Rostron . Middlesbrough Council Councillor B Brady . Councillor JG Cole . Councillor DP Coupe . Councillor G Purvis . Councillor D McCabe.

10 Councillor L Young . Councillor Sharrocks . Councillor Walters . Councillor J Blyth . Councillor T Lawton .. Redcar & Cleveland BC Councillor C Massey . Hartlepool BC Councillor G Hall . Stockton BC Councillor J Beall . Rep for Other Employers Mr P Fleck . Without voting rights . Trades Unions Unison, GMB and ACTS .. 5. Declaration of Interest Councillor C Massey, J Rostron,B Brady, J Beall, SE Bloundele, P. Fleck Note Councillor McCabe resigned on 18/07/2016. Councillor Young took position on 11/05/16. Councillor Sharrocks took positon on 11/05/16. Councillor Walters took position on 07/09/16. Councillor Blyth took position on 07/09/16. Councillor Lawton took position on 30/11/16. The current Panel consists of representatives from all the district councils in the former Cleveland County area as well as representatives from the Trade Unions.


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