City and County of Swansea Pension Fund
Total Page:16
File Type:pdf, Size:1020Kb
PENSION FUND ANNUAL REPORT & STATEMENT OF ACCOUNTS 2017/2018 ANNUAL REPORT & STATEMENT OF ACCOUNTS 2017/2018 44484-18 ANNUAL REPORT & STATEMENT OF ACCOUNTS 2017/2018 PENSION FUND Page Introduction 2 Three Year Profile of Statistics of the Fund 3 Part A - Administration Report 4 Membership 5 Premature Retirement – Pension Costs 5 Administration 6 Legislative Changes 11 Wales Pension Partnership 13 Local Pension Board - Annual Report 14 Annual Governance Statement 17 Part B - Statement of Responsibilities 51 Independent Auditors Statement 52 Statement of Accounts 2017/18 5535 Notes to the Accounts 5568 Part C - Investment Report 8879 Budget Forecast 8879 Investment Strategy 9088 Investment Fund Management 9088 Valuation of Investments 9189 Distribution of Investments 9902 Investment Returns 9924 Market Commentary 9935 Investment Performance of the Fund 9946 Part D - Actuarial Report 9957 Actuarial Position 9957 Valuation Assumptions 9968 Certificate of the Actuary 10199 Appendices - Investment Strategy Statement 111214 Funding Strategy Statement 112224 Governance Statement 114952 Communications Policy 117377 1 PENSION FUND 1 Introduction The purpose of the Annual Report is to provide information for contributors and other interested parties on the management and administration of the Pension Fund during the year. The report for 2017/18 includes the accounts for the year, an outline of the City & County Council Pension Fund together with details of membership and changes to basic scheme details that have either taken place during the year or are proposed for the future. In addition, the report includes the Actuarial Statement applicable for the year and a report on Investments and Investment performance for the year. The accounts included in the report have been prepared in accordance with the Code of Practice on Local Authority Accounting in the United Kingdom 2017/18 which is based upon International Financial Reporting Standards (IFRS), as amended for the UK public sector. The key statistics for the Fund are illustrated in the three year profile of the Fund on page 3. Loughor Estuary coastal path 2 2 ANNUAL REPORT & STATEMENT OF ACCOUNTS 2017/2018 PENSION FUND Introduction Three Year Profile of Statistics of the Fund The purpose of the Annual Report is to provide information for contributors and other interested parties on the management and administration of the Pension Fund 2015/16 2016/17 2017/18 during the year. £’000 £’000 £’000 The report for 2017/18 includes the accounts for the year, an outline of the City & County Council Pension Fund together with details of membership and changes to basic scheme details that have either taken place during the year or are proposed Income for the future. In addition, the report includes the Actuarial Statement applicable for the year and a report on Investments and Investment performance for the year. Contributions (Net) 78,392 81,721 87,698 The accounts included in the report have been prepared in accordance with the Transfer Values (Net) - - - Code of Practice on Local Authority Accounting in the United Kingdom 2017/18 which is based upon International Financial Reporting Standards (IFRS), as amended for the UK public sector. The key statistics for the Fund are illustrated in the three year profile of the Fund on Expenditure page 3. Pensions and Benefits 72,912 76,233 77,409 (Net) Transfer Values (Net) 2,267 909 1,261 Other (Net) 1,041 1,067 1,308 Net new money 2,172 3,512 7,720 £’000 £’000 £’000 Net Asset Value at 31 1,512,629 1,855,882 1,916,510 March Number of Contributors at 31 March 17,469 17,903 19,671 Number of Pensioners at 31 March 11,745 12,200 12,763 Number of Deferred 11,226 11,583 11,394 Members at 31 March 3 2 ANNUAL REPORT & STATEMENT OF ACCOUNTS 2017/2018 PENSION FUND 3 PART A ADMINISTRATION REPORT The Pension Fund is governed by Regulations exercised by powers conferred under the Superannuation Act 1972, and includes employees of the City and County of Swansea, Neath Port Talbot County Borough Council and other bodies listed in Appendix 1. Pension administration continues to adapt to the increased complexity of the Scheme, resulting from the change in the LGPS with effect from 1st April 2014, from a Final Salary scheme, to a Career Average Revalued Earnings (CARE) scheme and other overriding legislation. The benefits payable and the employees’ rates of contribution are set out in the Local Government Pensions Scheme Regulations 2013 (as amended) and the Local Government Pension Scheme (Transitional Provisions, Savings and Amendment) Regulations 2014. The rates of contribution by employing authorities are based on actuarial valuation and are set out in Part D. The principal benefits provided by the Fund are: • Retirement pensions • Tax free lump sums on retirement • Lump sum death benefits • Survivors’ pensions (including Children) • Deferred benefits, refunds or transfers of pension rights • Pensions and lump sums payable on premature retirement due to ill health and early retirement/redundancy. Pensions are increased under the Pensions Increase Act each April, in line with the official rate of inflation, the Consumer Price Index (CPI) as at the previous 30 September. The rate for the year ending last September was 1% applied from 10 April 2017 to qualifying pensions. The benefits are statutory and are effectively guaranteed by Parliament. They do not depend on investment performance but the actuary will take account of how well the investments perform in setting the employers’ contribution rate in the actuarial valuation. The LGPS 2014 Scheme has not impacted on the provisions for elected member pensions in Wales as their pension arrangement continues on a career average revalued earning basis. 4 4 ANNUAL REPORT & STATEMENT OF ACCOUNTS 2017/2018 PENSION FUND Membership Membership of the Fund is largely comprised of: • Active members - contributors who are still working and paying money into the Fund • Deferred members – former members who have elected to retain their pension rights in the Scheme until such a time as they become payable • Pensioner members – in receipt of their pension • Survivor members (including children) – in receipt of a pension in respect of a former member Membership of the Scheme is automatic and is open to all employees irrespective of the number of hours or weeks worked. Where an employee is not eligible for automatic entry, they may elect to join the Scheme if they wish. All employees also have the right to choose a personal pension as an alternative or in addition to membership of the LGPS. Membership of the Fund continues to grow and the latest statistics at Appendix 1 shows the total membership of the Fund in 2017/18. Membership is monitored to assess trends and events, publications and employer engagement are utilised to ensure a robust membership. Premature Retirement - Pension Costs (a) Ill Health Retirement Employers do not have to pay separately for the Pension Fund costs for ill health as the cost is included in the employer’s rate as a percentage for such cases; however, the actuarial cost of ill health retirees from current service is calculated for reporting purposes and for the past two years this was: 2016/17 2017/18 Ill-Health Retirement No. of Cost No. of Cost Cases £ Cases £ City & County of Swansea 25 2,584,863 24 2,312,283 Neath Port Talbot CBC 20 934,782 18 1,477,949 Tai Tarian 2 253,063 4 149,220 Gower College 1 63,286 1 47,126 Pobl Group 4 439,341 4 149,435 Celtic Community Leisure 1 30,541 - - Neath Town Council - - 1 6,172 Total 53 4,305,876 52 4,142,185 5 ANNUAL REPORT & STATEMENT OF ACCOUNTS 2017/2018 PENSION FUND 5 (b) Early Retirement Employers are required to take immediate account of the costs of the financial strain on the Pension Fund where they grant early retirement. The actuarial cost of early retirements for the past two years was as follows: Early Access to Pension Employing Body 2016/17 2017/18 No. of Cost No. of Cost Cases £ Cases £ City & County of Swansea 141 3,090,265 119 3,151,461 Neath Port Talbot CBC 65 820,050 21 307,212 Gower College Swansea 1 25,350 - - NPTC Group 1 44,427 2 34,042 University of Wales Trinity St Davids - - 6 113,875 Tai Tarian 1 58,002 1 24,358 Pobl Group - - 1 11,227 Total 209 4,038,094 150 3,642,175 Administration The Pension Section comprises of 16 permanent full-time equivalent staff, including the Principal Pensions Manager and undertakes all aspects of the day-to-day administration of the Fund e.g. setting up new members; making changes to members’ records as they occur; calculating deferred benefits; transfers of pension rights in to and out of the LGPS and paying benefits at retirement. The operational staff undertake regular training to ensure they remain up-to-date with their knowledge and understanding of the LGPS and a number of them have also completed or in the process of completing their professional qualification in Pension Administration and Management. The Pensioner Payroll is administered through the City and County of Swansea payroll system and pensions are paid monthly, in arrears, on the last banking day of each month. 6 6 ANNUAL REPORT & STATEMENT OF ACCOUNTS 2017/2018 PENSION FUND IT systems The Pension Section administers the LGPS through the pension administration system altair, which also includes document imaging and workflow procedures. All member documentation is scanned and indexed on the system. The Fund has invested in an electronic interface to transfer membership data from employers’ payroll systems to the pension administration system. This will be of benefit to both Fund and employer as it will enable clean data to be transferred in a timely manner thus improving the year end submission and ensuring compliance with the requirements of LGPS 2014 and the Pensions Regulator’s Code of Practice for accurate record keeping.