Contents
- Introduction to the Pension Fund Annual Report 2023 to 2024
- Governance Arrangements
- Scheme Management and Advisors
- Risk Management
- Financial Performance
- Administration Management Performance
- Investment Policy and Performance
- Corporate Governance
- Scheme Administration
- Pension Fund Accounts 2023 to 2024
- Asset Pool Background and Governance
- Glossary of Terms
- Contact information
- Appendices
- Annual Report of the Pension Board 2023 to 2024
Financial Performance
The Fund investments asset value increased by £62.7m to £1.029bn as at 31 March 2024 from £956m as at 31 March 2023. This was largely because of strong equities performance in the latter half of the year.
The most recent triennial valuation took place as of 31 March 2022, this covers the three financial years from 2023/24 until end of 2024/25. The funding level during the 2022 valuation was 114%, however, funding levels for different employers vary significantly.
| Fund Account | 2019/20 in thousands of pounds | 2020/21 in thousands of pounds | 2021/22 in thousands of pounds | 2022/23 in thousands of pounds | 2023/24 in thousands of pounds |
|---|---|---|---|---|---|
| Dealings with members | none | ||||
| Contributions | (30,028) | (29,640) | (31,631) | (32,285) | (32,714) |
| Pensions | 35,951 | 38,866 | 39,508 | 41,782 | 44,568 |
| Net (additions)/withdrawals from dealings with members | 5,923 | 9,226 | 7,877 | 9,497 | 11,568 |
| Management expense | 7,670 | 5,376 | 6,758 | 6,543 | 10,148 |
| Investment Income | (17,231) | (12,903) | (14,133) | (16,761) | (20,486) |
| (Profit) and losses on disposal of investments and changes in value of investments | 27,719 | (146,791) | (60,250) | 87,147 | (64,173) |
| Net (increase)/decrease in the Fund | 24,081 | (145,092) | (59,748) | 86,426 | (62,657) |
Over the five-year period, pensions paid have exceeded the contributions received by £44.1m. This is due to the high inflation environment which has increased the benefits paid, in comparison to the contributions received.
During 2023/24, the net increase in the fund value was £62.7m, compared to the net decrease in 2022/23 of £86.4m. This was due to equities performing strongly in the latter half of the year.
Both officers and the Pension Fund Committee monitor investment performance closely and refer to independent investment advice to ensure the Fund’s investments are being managed effectively.
| Net Asset Statement | 2019/20 in thousands of pounds | 2020/21 in thousands of pounds | 2021/22 in thousands of pounds | 2022/23 in thousands of pounds | 2023/24 in thousands of pounds |
|---|---|---|---|---|---|
| Investment Assets | 831,463 | 897,652 | 974,815 | 925,738 | 1,012,507 |
| Cash/Temporary Investments | 16,272 | 105,321 | 76,224 | 30,512 | 9,044 |
| Total Investment Assets | 847,735 | 1,002,973 | 1,051,039 | 956,250 | 1,021,551 |
| Current Assets | 1,619 | 10,352 | 13,238 | 11,868 | 9,468 |
| Current Liabilities | (872) | (10,556) | (10,955) | (1,222) | (1,466) |
| Long Term Liabilities | none | (9,195) | none | none | none |
| Total Net Assets available to fund benefits | 848,482 | 993,574 | 1,053,587 | 966,896 none | 1,029,533 |
The points to note are:
- 36% of pooled investment vehicles comprise of global equity shareholdings, 12.3% in property pooled funds, 9.6% in GILTS, 7.6% in Bonds, 7.9% in Infrastructure, 10.7% in Fixed income, while the remaining is invested in illiquid credit and other alternatives
- the overall value of assets in the pooled London Collective Investment Vehicle increased by £27.3m (excluding passive BlackRock funds). However, the overall proportion of pooled assets within the portfolio has decreased by 1.5%
- cash deposits decreased by £8.2m due to capital calls taking place within the alternative mandates as well as redemptions made on Liquid Credit holdings
- current assets decreased by £2.4m at 31 March 2024, this was mainly due to the reduction of cash balance in the bank account and sundry debtors
Further details are given in the Investment Policy and Performance Section.
Analysis of dealings with Scheme Members
| Contributions Receivable | 2019/20 in thousands of pounds | 2020/21 in thousands of pounds | 2021/22 in thousands of pounds | 2022/23 in thousands of pounds | 2023/24 in thousands of pounds |
|---|---|---|---|---|---|
| - Members | (6,375) | (6,144) | (6,409) | (7,013) | (7,427) |
| - Employers | (19,767) | (17,753) | (21,654) | (21,502) | (20,360) |
| - Transfers in | (3,886) | (5,743) | (3,480) | (3,532) | (4,927) |
| Total Income | (30,028) | (29,640) | (31,543) | (32,047) | (32,714) |
| Benefits/Expenses | 2019/20 in thousands of pounds | 2020/21 in thousands of pounds | 2021/22 in thousands of pounds | 2022/23 in thousands of pounds | 2023/24 in thousands of pounds |
|---|---|---|---|---|---|
| - Pensions | 28,084 | 28,720 | 29,262 | 30,589 | 33,794 |
| - Augmented Service | 7 | 7 | 10 | 0 | 2 |
| - Commutation of Pensions and Lump Sum Retirement Benefits | 3,875 | 4,101 | 5,414 | 4,821 | 4,184 |
| - Lump Sum death benefits | 1,026 | 554 | 750 | 400 | 764 |
| - Refunds | 126 | 107 | 112 | 33 | 56 |
| - Individual transfers out to other schemes | 2,833 | 5,376 | 3,960 | 5,939 | 5,768 |
| Total Expenditure | 35,951 | 38,865 | 39,508 | 41,782 | 44,568 |
| Net dealings with Members | 5,923 | 9,225 | 7,965 | 9,735 | 12,616 |
Income and expenditure is dependent on several factors, some of which are difficult to predict. Transfers in and out are dependent on the numbers of active members joining and leaving the Fund in the year and the value of the assets that relate to them. Contributions are determined by the number of active members in the Fund and, for employee contributions, their salaries. Pensions and other benefits payable are impacted by the age profile of pensioners. Management fees and investment income will vary with investment performance of the Fund.
The unpredictability of some of these factors can lead to significant differences when comparing year on year.
The key variances were due to the following:
- employer contributions increased between 22/23 and 23/24, reflecting the increased membership and increased level of employer contribution rate for some employers
- transfers in increased during the year, reflecting the increased numbers of new starters joining the scheme in comparison to the previous year
- transfers out decreased on 23/24 reflecting the lower number of members choosing to transfer their benefits to another employer or remove them under the freedom of choice legislation
- there was a total increase in 2023/24 in pensions, commutation, and lump sum retirements, reflecting the higher number of people reaching retirement age or taking retirement earlier. Furthermore, this reflects the impact of the high inflationary environment (CPI 10.1%) in September 2022, which impacted the pension payments made in 23/24
| 2020/21 in thousands of pounds | 2021/22 in thousands of pounds | 2022/23 in thousands of pounds | 2023/24 in thousands of pounds | |
|---|---|---|---|---|
| Administration | ||||
| Employees | (N/A)* | 378 | 271 | 350 |
| Supplies and Services | (N/A)* | 209 | 176 | 120 |
| Sub total | 503 | 587 | 447 | 470 |
| Governance and Oversight | ||||
| Employees | (N/A)* | 356 | 217 | 358 |
| Investment advisory services | (N/A)* | 115 | 72 | 96 |
| Governance and compliance | (N/A)* | 29 | 88 | 30 |
| External audit | 16 | 43 | 13 | 99 |
| Actuarial fees | 89 | 148 | 206 | 100 |
| Sub total | 506 | 691 | 596 | 683 |
| Investment Management | ||||
| Management fees | 4,292 | 4,261 | 5,042 | 8,704 |
| Custody and performance measurement fees | 41 | 1,155 | 370 | 291 |
| Transaction Costs | 34 | 64 | 87 | 0 |
| Sub total | 4,367 | 5,480 | 5,499 | 8,995 |
| Total | 5,376 | 6,758 | 6,542 | 10,148 |
The key variances were due to the following:
- during 2023/24, the administration costs increased by 5%, as a result of higher charges from the administrator as well as inflationary staff related-pay
- governance and oversight costs during 2023/24 increased by 35%. This is mainly due to extensive due diligence work provided by our consultants to implement the Investment Strategy, increased inflationary staff pay, as well as an increased in audit fees
- investment management costs have increased by 64%. This is due to increased performance, across the portfolio, and higher fees related to assets under management
*Breakdown at this level not provided in 2020/21 report.