Contents

Introduction to the Pension Fund Annual Report

Councillor Howard Jackson
Councillor Howard Jackson, Chairman of the Pension Fund Committee

Message from the Chairman of the Pensions Committee

The Pension Fund Committee is responsible for overseeing the governance of the London Borough of Bexley Pension Fund, including investment management and pensions administration. As the Chairman of this Committee, I am pleased to introduce the Pension Fund’s Annual Report for the year 2023/2024.

The Pension Fund’s market value was £1.029bn at 31 March 2024, a net increase in the fund value by £62.7m due to a strong equities performance in the final quarter of the year. This is in comparison to the net decrease in Fund value of £86.4m in 2022/23. The Pension Fund Committee continues to monitor the Fund closely at every meeting and challenges the officers, investment advisers and investment managers as necessary to ensure the Fund’s investments are being managed effectively.

The Pension Fund was last valued by the Fund’s actuary, Mercer, at the 31 March 2022 triennial actuarial valuation. The actuary reported that the Fund had sufficient assets to cover 114% of the liabilities.

The Fund continues to work closely with its LGPS pool, the London Collective Investment Vehicle (LCIV), to achieve efficiencies through pooling of Pension Fund assets. The Fund continues to benefit from the lower fees negotiated in active equity and alternative investment managers. The Fund’s proportion of assets pooled with LCIV, including passive holdings, are at approximately 69.4%.

The Pension Fund is committed to being a responsible investor and has made great strides, investing Impact Equities (Global Environment Fund – Ninety One) in the year, with ongoing conversations taking place around Impact Property.

I would like to thank all those involved in the governance of the London Borough of Bexley Pension Fund during the year during 2023/24, especially the members of the Pension Fund Committee and the Local Pension Board, as well as officers and support staff.

Introduction

The London Borough of Bexley Pension Fund is part of the national Local Government Pension Scheme (LGPS), administered by London Borough of Bexley Council. It is a contributory defined benefit pension scheme established under statute, which provides for the payment of benefits to employees and former employees of the London Borough of Bexley Council and the admitted and scheduled bodies in the Fund.

The Fund is financed by contributions from employees, the Council, the admitted and scheduled bodies and returns from the Fund’s investments. Contribution rates for employees and employers are set by the Fund’s actuary at the actuarial valuation which is carried out every three years. The most recent revaluation, carried out as at 31 March 2022, was used to set contribution rates with effect from 1 April 2023 through to April 2026.

A new LGPS scheme was introduced with effect from 1 April 2014. One of the main changes is that a scheme member’s pension is no longer based on their final salary but on their earnings throughout their career. This is known as a Career Average Revalued Earnings (CARE) scheme. Everything built up in the Scheme before 1 April 2014 is protected so benefits up to that date will be based on the scheme member’s final year’s pay.

Benefits payable from the Fund are set out in the Local Government Pension Scheme Regulations 2013, as amended, and in summary consist of:

  • a pension based on career average earnings (revalued in line with the Consumer Price Index)
  • pensionable pay to include non-contractual overtime and additional hours
  • flexibility for member to pay 50% contributions for 50% of the pension benefit
  • normal pension age to equal the individual member’s State Pension Age
  • option to trade £1 of pension for a £12 tax-free lump sum at retirement
  • death in service lump sum of three times pensionable pay and survivor benefits
  • early payment of pensions in the event of ill health

The Fund is governed by the Public Service Pensions Act 2013 and the LGPS Regulations 2013 (as amended) and the LGPS (Management and Investment of Funds) Regulations 2016. The content and format of this annual report is prescribed by the LGPS Regulations 2013.

Publication of this report gives the Council the opportunity to demonstrate the high standard of governance and financial management applied to the Fund. It brings together several separate reporting strands into one comprehensive document that enables both the public and employees to see how the Fund is managed and how well it is performing.

It is in the interest of both employees and the public that the Fund is well managed and continues to provide high returns and excellent value for money.

Detailed guidance on the accounting and disclosure requirements for LGPS financial statements and annual report is published by CIPFA annually and can be found online. This guidance includes a Code disclosure checklist, listed by must, should and may, which the London Borough of Bexley has applied in the preparation of the annual report and accounts.

This annual report comprises the following sections:

  • Management and Financial Performance which explains the governance and management arrangements for the Fund, as well as summarising the financial position and the approach to risk management
  • Investment Policy and Performance detailing the Fund’s investment strategy, arrangements, and performance
  • Scheme Administration which sets out how the Scheme’s benefits and membership are administered
  • The funding position of the Fund with a statement from the Fund’s actuary
  • The Fund’s annual accounts for the year ended 31 March 2024
  • Asset Pools and their governance structure including costs
  • List of contacts and a glossary of some of the more technical terms
  • Appendices setting out the various regulatory policy statements of the Fund:
    • Governance Compliance Statement
    • Investment Strategy Statement
    • Communication Policy
    • Funding Strategy Statement