West Pension Fund Report and accounts For the year ended 31 March 2010 1 Contents

Foreword...... 5 Management structure...... 6 Pension administration review...... 8 Membership trends...... 12 Participating employers...... 14 Quality management...... 16 Policy statements...... 18 Investment report...... 20 Actuary’s report...... 36 Audit report...... 38 Accounts...... 40 Resolving complaints...... 52 Further information and contacts...... 54

2 3 Foreword

Three years ago, when the fund exceeded £7 billion for the first time, I began my comments with the phrase ‘another steady year on stock markets saw the assets of the fund rise by £629 million’. I am pleased to say the fund is once again above £7 billion. In fact it is now valued at £7.9 billion, the assets having risen by 33%, almost £2 billion over the year. This reflects the very strong recovery in stock markets over the period, and although this demonstrates that volatility remains an issue for investors, many aspects of the financial crisis are behind us.

The continuing efforts of the in-house investment team mean that the fund has top quartile investment performance among its peer group over three, five and ten year periods, for which I would like to thank them.

As I indicated last year, I was very concerned about the ‘political’ risk to the future of the Local Government Pension Scheme (LGPS), and this has indeed now led to the appointment of the Hutton Commission on the future of public‑sector pensions. I am satisfied that once the facts have been examined, the LGPS, which has been the whipping boy in the press due to its transparency and accountability, will prove to be part of the solution, whereas the unfunded schemes run by central government will be found wanting. We are awaiting the results of the actuarial valuation based on the valuation at 31 March 2010. Based on the policy of the fund not to vary the contribution rates if the valuation falls between 90% and 110% of liabilities, we do not expect to have to vary contributions significantly for the majority of employers.

I am very proud to say that the fund provides a first-class administration service for over 220,000 members. This year the quality of that service has been recognised by the award of the Best Benefit Statement (Public) award at the Pension Scheme of the Year Awards. In addition to adding my congratulations to the pensions administration staff, I would like to thank them for their hard work which results in such a creditable performance.

Finally, it would be remiss of me not to give the credit for the success of both the investment and administration teams described above to Stuart Imeson who retired as director during the year after a long and distinguished career of service to both this fund and the industry, which was publicly acknowledged during the year when he received the Investment Officer of the Year Award.

Councillor Ian Greenwood Chair of Pension Fund Investment Advisery Panel and Joint Advisery Group 4 5 Appointments made by West Yorkshire Pension Fund in the Management structure administration of the Local Government Pension Scheme

2009/2010 Actuarial services Hewitt 40 Queen Square Bristol Members of the Investment Members of the West Yorkshire BS1 4QP Advisery Panel Pension Joint Advisery Group AVC providers

Councillor C Greaves Councillor C Greaves (Deputy Chair) Scottish Widows Equitable Life Assurance Society PO Box 17037 PO Box 177 Councillor I Greenwood (Chair) Councillor I Greenwood (Chair) 69 Morrison Street Walton Street Edinburgh Aylesbury Councillor H Middleton Councillor H Middleton EH3 8WZ Buckinghamshire HP21 7YH Councillor A Feather Councillor A Feather Prudential Councillor B Metcalfe Councillor N Fekri AVC Customer Services Stirling Councillor B Metcalfe FK9 4UE Councillor E Firth Councillor E Firth Appointed Persons (IDRP Procedure) Kirklees Councillor D Ridgway from Sept 2009 Councillor B Smith Tony Reeves Stuart Imeson to November 2009 Chief Executive Rodney Barton from December 2009 Councillor D Ridgway from June 2009 City of Bradford Metropolitan District Council Director – West Yorkshire Pension Fund Councillor P Davey Councillor B Cleasby City Hall City of Bradford Metropolitan District Council Bradford BD1 1HY Britannia House Councillor C Fox Councillor P Davey Hall Ings Bradford BD1 1HX Councillor C Fox Auditors Councillor D Dagger Councillor B Denson Audit Commission Councillor G Stokes Councillor G Stokes 3 Leeds City Office Holbeck Councillor C Tennant to June 2009 Leeds Councillor D Dagger from June 2009 LS11 5BD Peter Meer Sarah Moses Scheme Member Banking services Representatives Robert Coleman Kenneth Sutcliffe HSBC D Harper – UNISON One vacancy PO Box 45 47 Market Street Trades Union S Morris – GMB S Morris – GMB Bradford Representatives BD1 1LW T Pearson (Deputy Chair) – UNISON T Pearson – UNISON Computer services External advisers Heywood Comino plc 2 Victoria Street Vanguard House Noel Mills Altrincham Dewsbury Road Robert Prance Cheshire Leeds WA14 1ET LS11 5DD Mark Stevens Legal adviser Medical adviser (IDRP Procedure) Director – West Yorkshire Pension Fund Suzan Hemingway Dr. B Yew, AFOM Stuart Imeson to November 2009 Assistant Director Corporate Services (City Solicitor) Connaught City of Bradford Metropolitan District Council Greyfriars Rodney Barton from December 2009 City Hall Coventry Assistant Director of Finance – Bradford Bradford CV1 3PJ BD1 1HY Sue Mawson

6 7 Pension Investors In People review The increase is linked to movements in the Retail Price Index. The increase also applies to members who have During September 2009 WYPF underwent an Investors left the scheme but who have deferred benefits in WYPF administration in People review as part of the City of Bradford for payment later, usually at normal retirement age. Metropolitan District Council work, to determine whether the council as a whole continues to meet the This year the increase was applied on 6 April 2009 and, review standards to be recognised as an Investor in People. The for those who met the qualifying conditions, the basic review team found that the section met all 10 indicators increase was 5.0%. and mentioned the following good practices: • a fully embedded appraisal process Pension administration section • use of supervisory journals, and As in previous years, the workload of the pension • an embedded culture of mentoring and coaching. administration section continued to expand, with an increase in the number of scheme members Training and development participating in the WYPF. Service delivery continues to be underpinned by WYPF’s accreditation to Overview and legal status of West WYPF continued its commitment to the training and ISO 9001:2008, the Quality Management System. Yorkshire Pension Fund WYPF’s 2009 benefit statement design gained the development of all members of its staff, and to all Best Benefit Statement (Public) award at the Pension representatives on the Investment Advisery Panel and WYPF staff are committed to providing the best possible West Yorkshire Pension Fund (WYPF) is part of the Local Scheme of the Year Awards held in London. Joint Advisery Group. service to customers, and will continue to work to Government Pension Scheme (LGPS). ensure that WYPF’s service represents Best Value to all During the year WYPF supported a number of staff its stakeholders. The cost of the pensions administration The LGPS is a statutory scheme and the benefits are Ninth annual meeting held with their studies for vocational qualifications. These service in WYPF, when compared with all other local paid under the provisions of the LGPS Regulations 1997, included: authority pension funds, shows it to be well below Max Ramirez, a Pension and Insurance Specialist with the LGPS (Transitional Provisions) Regulations 1997, the national averages. In 2009/10, the cost for WYPF equated Goldman Sachs, gave the keynote address at our ninth • Pensions Management Institute (APMI) LGPS Regulations 2008, and other applicable overriding to £23.44 per scheme member, and compared with the annual meeting for members at the Queens Hotel in • Institute of Payroll Professionals (IPP) Diploma legislation. The government issues the pension scheme average for all local-authority pension funds of £28.31 Leeds on 23rd October 2009. regulations through the Department of Communities • Vocationally Related Qualification (VRQ) in Public per scheme member. and Local Government. The Regulations have the Sector Pensions Administration (QPSPA) The meeting was chaired as usual by Councillor Ian force of law. Greenwood, chair of WYPF’s Investment Panel and Joint In addition to the vocational training a number of other LGPS review Advisery Group. There were also presentations from City of Bradford Metropolitan District Council is the different training opportunities enabled staff to develop Stuart Imeson, WYPF’s director, and from the fund’s Since July 2001 the framework of the Local Government administering authority for WYPF. Bradford Council’s their management and leadership, pensions, technical external investment advisers. and overriding legislation, and IT knowledge. Pension Scheme has been under review. The main areas administering authority responsibilities are met that were covered included simplification, flexibility, by WYPF’s in-house pensions administration and sustainability, benefits and administration. investment teams. Customer Services Week Employer workshops Phase one of the review was introduced to the scheme Between 5th and 9th October, WYPF took part in the WYPF’s Pension Schemes Registry number is 10041078. During the year WYPF rolled out a series of one-day and with effect from 1 April 2004 by the Local Government National Customer Services week and held a series of half-day workshop sessions for employers. Four different Pension Scheme Amendment Regulations 2004. Contributing members are contracted out of the State coffee mornings in the fund’s contact centre. workshops were held: Second Pension. The main purpose of phase two was to remove the Visitors to our contact centre were invited to take part in • Introduction to West Yorkshire Pension Fund (full day) 85-year rule from the scheme. This was achieved with HM Revenue and Customs (HMRC) has granted the a customer survey which showed that customers were • Complete guide to administration (half day) effect from 1 October 2006, however members of the scheme exempt approval for the purposes of the extremely happy with the level of service they received. • Your responsibilities (half day) scheme as at 30 September 2006 were given protection Income and Corporation Taxes Act 1988. The scheme • Contributions and year-end data (half day) to 31 March 2008 and older members were given became a Registered Pension Scheme under Part Appointment of an additional further protections. 4 of Chapter 2 of the Finance Act 2004 with effect AVC provider The workshops are delivered by WYPF staff and from 6 April 2006. designed to give the employers a thorough The final phase of the review of the scheme commenced In addition to Equitable Life and Scottish Widows, understanding of the pension scheme. on 30 June 2006 when CLG published its consultation Achievements during the year Prudential has been appointed as an additional document Where Next? – Options for a new-look Local AVC provider. This appointment will give our Changes in benefits Government Pension Scheme in and Wales. The WYPF picked up another prestigious pension industry members more choice when deciding about paying new Local Government Pension Scheme came into force award in the year, recognising the fund’s position as extra contributions. Each year, WYPF pensioners receive an annual increase on 1 April 2008. One of the provisions of the new scheme one of the best large schemes in the UK. In September in accordance with pension increase legislation. was that CLG was committed to the introduction of

8 9 a cost-sharing mechanism by 31 March 2009. To this • Supplementary guidance for Independent Registered effect the LGPS (Amendment) Regulations were laid Medical Practioners. This guidance does not replace before parliament on 23 April 2009. The cost-sharing CLG’s statutory guidance issued in November 2008, arrangements involve a national model fund being but aims to further clarify several areas. established which will be the tool used to benchmark • The LGPS (Miscellaneous) Regulations 2009. These the scheme costs relative to future service accrual, and contain mostly technical and minor amendments, will require administering authorities to supply certain and largely originate from comments made by data to CLG by 31 August 2010 and every third year stakeholders in earlier consultations. afterwards. The cost-sharing arrangements are intended • The LGPS (Amendment) Regulations 2010, which to both inform and take account of future actuarial contain special provision for members who valuation exercises for the scheme, and for individual transferred to local authorities from the Learning fund actuaries to consider when setting new employer and Skills Council on 1 April 2010, and requirements contribution rates following each fund’s valuation. where Probation Boards merge to form a The results of the cost sharing could also influence Probation Trust and there is a change of the future design of the overall benefit package or administering authority. cost, which members may be required to bear in providing an affordable and viable defined‑benefit pension arrangement going forward. Whilst the review of the scheme has now been completed, further amendments to the regulations are likely as a result of the cost‑sharing exercise and/or the recommendations of the Independent Commission set up by the government to undertake a ‘fundamental structural review’ of public-service pension provisions.

During 2009/10 CLG also issued the following regulations and guidance:

• Guidance on publication of pension fund annual reports • The LGPS (Management and Investment of Funds) Regulations 2009 • Guidance under Regulation 12(3) of the LGPS (Management and Investment of Funds) Regulations 2009 regarding publishing a Statement of Investment Principles • Guidance on Admitted Body status provision in the LGPS when services are transferred from a local authority or other scheme employer

10 11 Almost 224,000 members and beneficiaries, employed by 205 separate organisations, participate in the WYPF. The numbers shown for 31 March 2009 have been re-stated to reflect changes after the 2008/09 financial statements Membership trends were finalised.

The number of active and pensioner members in WYPF continues to grow.

31 March 2010 31 March 2009 Active members 96,912 96,325 Beneficiaries Current pensioners (including widows’ 63,084 60,397 and children’s pensions in payment) Deferred members deferred pensioners 57,413 55,348 undecided leavers 2,828 2,376 frozen refunds 3,676 3,739 Totals 223,913 218,185

Admissions to the fund Employees joining the fund were as follows.

2009/2010 2008/2009 Employees/councillors joining with no previous service 8,837 13,293 Employees with transfers from: other local-government funds 71 57 other pension schemes 178 224 Totals 9,086 13,574

Withdrawals from the fund Benefits awarded to members leaving employment were as follows.

2009/2010 2008/2009 Members awarded immediate retirement benefits 2,491 2,370 Benefits awarded on death in service 90 88 Members leaving with entitlement to deferred 5,878 8,451 benefits, transfer of pension rights or a refund. Totals 8,459 10,909

12 13 J Joseph Priestley College R R M Education plc Rastrick High School K Keelham Primary School Rentokil Initial Management Services Participating employers Keighley Town Council Rentokil Pest Control Kier Support Services Ltd (North West) Ripon Diocesan C of E Council For Social Aid Kier Support Services Ltd (South) Ripon House Killinghall Primary School At 31 March 2010 WYPF had 205 participating Royds Community Association Kirkburton Parish Council employers as detailed below. New employers who Russell Hall First School Kirklees Active Leisure joined WYPF during 2009/10 are shown in bold. Ryburn Valley High School Kirklees College Ryhill Parish Council Kirklees Metropolitan Council Kirklees Neighbourhood Housing Limited S Salterlee Primary School Schools Linking Network L Lady Elizabeth Hastings School Sea Fish Industry Authority Laisterdyke High School SERCO Ltd Leeds Citizens Advice Bureau Shipley College Skills for Care Limited Leeds City Council Society for the Blind Dewsbury, Batley and District Leeds College of Art & Design South Elmsall Town Council Leeds College of Building South Hiendley Parish Council Leeds College of Music South Leeds Academy A ABM Catering Ltd Creative Management Services Ltd Leeds Grand Theatre and Opera House Limited Southern Electric Contracting Limited Ackworth Parish Council Crescent Further Education Ltd Leeds Housing Concern Southern Pennines Rural Regeneration Company Aire Valley Homes Leeds Crossley Heath School Leeds M.I.N.D. Limited All Saints C.E. J.I. School Leeds Metropolitan University D David Young Community Academy St Anne’s Community Services Amey Community Limited IT Services Leeds Racial Equality Council Dearne Valley Leisure Trust St Catherine’s Catholic High School Amey Community Limited FM Services Leeds Society for Deaf & Blind People Denby Dale Parish Council St Chad’s C of E Primary School Amey Infrastructure Services Limited (Calderdale) Dine Hospitality Ltd St John’s C of E Primary School Amey Infrastructure Services Limited (Wakefield) Lightcliffe C.E. Primary School Dixons Allerton Academy St John’s CE (VA) Primary School Appleton Academy Longroyde Junior School Aqumen Services Limited Dixons City Academy St John’s Hostel Arts Council England E East North East Homes Leeds M Mellors Catering Service St Michael & All Angels C of E School Meltham Town Council Aspire Education Bradford T Taylor Shaw Metropolitan Borough of Calderdale Education Leeds Taylor Shaw Ltd – Bradford Academy B Barnados Micklefield Parish Council English Basketball Association The Anah Project Bell Isle Tenant Management Organisation Mirfield Free Grammar School Enterprise Managed Services Limited Thornton Grammar School Bingley Grammar School Mitie Cleaning (North) Limited Todmorden Town Council Boston Spa School F First (Development Agency Wakefield MDC) Ltd Mitie PFI Ltd Training for Bradford Ltd Bradford Academy First West Yorkshire Limited Morley Town Council Trinity and All Saints College Bradford City Centre URC Limited Fleet Factors Ltd Myrtle Park Primary School Bradford College FOCSA Services (UK) Ltd U University of Bradford Bradford District Care Trust N Nab Wood School Foundation Housing - Leeds University of Bradford District Credit Union Limited National Assembly for Wales Foxhill Primary School UPP Leeds Metropolitan University Bradford Trident Limited National Coal Mining Museum For England High School G Greenhead Sixth Form College New College, Pontefract W Wakefield & District Housing Brooksbank School Greenvale Homes Limited Normanton Town Council Wakefield College Bullough Contract Services Limited Groundwork Leeds North Halifax Grammar School West North West Homes Leeds Bullough Contract Services ( School) Ltd Groundwork Wakefield North Kirklees Citizens Advice Bureau West Vale Primary School Bullough Contract Services (Ilkley Grammar) Ltd H Halifax Opportunities Trust Northern School of Contemporary Dance West Yorkshire Fire & Civil Defence Authority Burley Parish Council Hanson School Northorpe Hall Trust West Yorkshire Police Authority Buttershaw Business and Enterprise College HBS Business Services Group Limited Notre Dame Sixth Form College West Yorkshire Probation Service NPS (North East) Ltd West Yorkshire PTA C CAFCASS Hebden Royd Town Council West Yorkshire PTE Calderdale & Kirklees Careers Service Partnership Heckmondwike Grammar School O Oakbank School West Yorkshire Valuation Tribunal Service Limited Hemsworth Town Council Oakworth Primary School Wetherby Town Council Calderdale Colleges Corporation Hill Top First School OFSTED William Henry Smith School Careers Bradford Limited & Lightcliffe High School Open College Network West and North Yorkshire Wilsden Parish Council Carr-Gomm Society Hochtief Facility Management UK Ltd Limited Hollingwood Primary School Castle Hall School Ossett Trust Holly Bank Trust Catholic Care (Diocese of Leeds) Otley Town Council Y Yorkshire and Humberside Fire Control Holme Valley Parish Council City of Bradford Metropolitan District Council Outwood Grange Academy Yorkshire and Humberside Local Authorities Holy Trinity C.E. Senior School City of Wakefield Metropolitan District Council Employers’ Forum Huddersfield New College P Pennine Housing 2000 Limited Clayton Parish Council Yorkshire Community Housing Limited People in Action (Leeds) Limited Coalfields Regeneration Trust I IGEN Yorkshire Forward Pinnacle Commission for Social Care Inspection Ilkley Parish Council Yorkshire Purchasing Organisation Prospect Services Ltd (LCSC) Community Accord Incommunities Compass Contract (Buttershaw School) Initial Catering Services Limited Compass Contract Services (UK) Ltd Interserve Project Services Craft Centre & Design Gallery

14 15 Quality management

WYPF was reaccredited to the ISO 9001:2008 Quality Management System in June 2009. Key Performance Indicators

The scope of the certification WYPF has set several performance indicators against which we monitor our achievements. Bradford Council has also set several Customer Services Performance Indicators. The administration of the Local Government Pension Scheme (LGPS) on behalf of participating scheduled admitted bodies as defined in the LGPS regulations, and the administration of the Police and Fire pension schemes in Performance accordance with Police Pension Regulations and the Firefighters’ Pension Scheme orders respectively. 2007/08 2008/09 2009/10 We have now been accredited to a quality management standard for over 16 years (WYPF gained accreditation back Key Performance Indicator in 1994 to BS5750 and then ISO 9002 prior to ISO 9001:2008). The percentage of lump sum and first instalment of As part of the Quality Management System, several systems and procedures have been put in place to ensure the pension paid within three days from the later of receipt 98.90% 95.82% 93.57% service provided continually improves. These include: of notification of retirement or date of retirement The number of active members in the LGPS • having procedures in place for dealing with customer complaints and faults and ensuring the appropriate at 31 March each year as a percentage of 82.43% 81.16% 83.96% corrective and preventative actions are taken the number eligible to join the LGPS • conducting internal quality audits to ensure quality is maintained, and to identify improvements The number of deferred benefit statements • statistical monitoring of our processes, including calculating and paying pensions so we can ensure benefits are sent to members each year as a percentage of 97.57% 97.80% 96.80% paid on time deferred members eligible to receive one • surveying customers about their experience of our service, and Employers’ satisfaction with the 84.20% 83.30% 82.70% service provided by WYPF • holding regular Management Review meetings to review quality issues. Corporate Performance Indicators The percentage of visitors waiting less 100% 100% 100% than 7 minutes at a reception point (3469 visitors) (3245 visitors) (3178 visitors) The percentage of phone calls answered 99.18% 98.91% 98.49% within 6 rings (20 seconds) (73569) The percentage of letters responded 99.57% n/a n/a to within 5 working days (5013)

16 17 Policy statements

Local authority pension funds have a statutory responsibility under the regulations governing the scheme to prepare and publish five policy statements. For the full text of each statement please follow the links to our website.

Statement of Investment Principles

The Statement of Investment Principles describes the investment decision-making process, the types of investment to be held and the balance between them, the risk and expected return on investments, the realisation of investments, socially responsible investment, responsible ownership and the exercise of rights attached to investments and compliance with the Institutional Shareholders Committee principles, the latest development of the Myners principles. (www.wypf.org.uk/Members/WYPF/Investments/Principles.htm)

Funding Strategy Statement

The Funding Strategy Statement establishes a clear and transparent strategy for the fund, identifying how employers’ pension liabilities are best met while maintaining a stable contribution rate and taking a prudent long‑term view of funding those liabilities. (www.wypf.org.uk/Members/WYPF/Admin/FundingStrategy.htm)

Pension Administration Strategy

The Pension Administration Strategy is concerned with ensuring that everything runs smoothly for members, employers and the fund, covering procedures for liaison and communication with employers, levels of performance for employers and the fund, and procedures to ensure that employers and the fund comply with statutory requirements. (www.wypf.org.uk/Members/WYPF/Admin/AdminStrategy.htm)

Communication Policy Statement

The Communication Policy is designed to provide members, representatives of members and employers with the information they need to understand their pension arrangements. (www.wypf.org.uk/Members/WYPF/Admin/ CommunicationsPolicy.htm)

Governance Compliance Statement

The Governance Compliance Statement sets out the arrangements made by City of Bradford Metropolitan District Council for the administration of the fund. It has delegated responsibility to the Corporate Governance and Audit Committee, assisted by the Investment Advisery Panel and the Joint Advisery Group. (www.wypf.org.uk/Members/ WYPF/Investments/GovernanceCompliance.htm)

18 19 Investment report Review of the operation of the investment advisory panel 2009/10 In the previous report covering the activities of the the fund was discussed. It is during these meetings that investment panel, which covered the 2008/9 period, the allocation of new money from net contributions the predominant theme was one of extreme volatility and dividend income is determined. The panel takes and systemic failures across the investment landscape. into consideration a wide range of factors when making The global financial credit crisis had played out over these decisions. The panel will use information and the preceding 18 months with virtually every asset views from a range of sources including both the class and region of the world delivering poor returns. internal fund managers and the external investment The panel had for some time been avoiding placing advisers to the fund. They take into account the global new money into global stock markets and had sought economic and financial picture and with reference to to increase the diversification of the fund’s portfolio. the fund’s own specific benchmark, the panel will agree This was achieved with a programme of investment the allocation of funds for the next quarter. In addition in assets whose performance was expected to be to the allocation of new funds the previous quarter’s far less dependent upon the performance of global investment transactions are monitored and adherence stock markets. Investments had also been made in to the agreed plan reported. government fixed-interest stocks. As the new financial year began, the sharp decline However, the extreme nature of the crisis and the in global stocks markets had opened up some good virtual freezing of many financial markets caused many opportunities to allocate funds into equities for the first previously uncorrelated asset classes to perform in time in years. Investments were made into a number a similar fashion. Many of the alternative assets also of overseas markets including areas that were moving produced negative returns although not of the same strongly ahead of the western economies such as Asia magnitude that was seen in the world’s stock markets. and Latin America. The panel were also made aware The 1st quarter of 2009 turned out to be the low point in of some attractive investment opportunities that had terms of market levels for the year. The unprecedented become available as a direct result of the financial crisis. easing put in place by governments of both a monetary One example of this was the emergence of investment and fiscal nature began to bring confidence back into funds offering attractive returns at very low risk by markets as fears of financial Armageddon receded. utilising the US Government’s Term Asset-Backed Securities Loan Facility or TALF. The panel moved swiftly to take advantage of these opportunities. As well as The unprecedented easing allocating to equities for the first time in a number of years, the continuing investment programme into assets put in place by governments that are not as dependent on stock market movements of both a monetary and was to continue over the year with additional funds being allocated to active currency managers and fiscal nature began to fund of hedge fund managers. As the global recession bring confidence back into continued, opportunities for Private Equity managers markets as fears of financial to realise investments diminished, resulting in a net call on funds. Within the equity portfolios the rebuilding Armageddon receded. of company balance sheets led to an increase in rights issues during the period and these were met from In the UK and US quantitative easing initially supported cash flow. government bonds, but subsequently equity markets also began to benefit. Global equity markets rallied In addition to monitoring the investment activities of strongly moving sharply higher over the next six the internal managers at the regular quarterly meetings, months. The strong rebound in markets continued into the panel meets twice each year in London to question 2010 with the global economy returning to growth. the managers of the other assets in which the fund has However, the strength and sustainability of the recovery invested. The pension fund has investments in a wide remains in doubt, particularly in economies where spread of assets whose aim is to provide additional indebtedness of both the public and private sector sources of return and increased diversification. These remains high. assets include areas such as commercial property, private equity, funds of hedge funds and active currency It is against this background that the quarterly meetings management. The meetings, which take place over of the full panel took place and the asset allocation of several days, were held in September 2009 and March 2010. These face-to-face meetings provide the panel

20 21 with an excellent opportunity to ask questions of the leader in the field of socially responsible investment and measured by the WM Company. The panel takes the fund’s overseas assets, and for the settlement managers and to monitor the investment landscape in has had a very successful year. One notable initiative a genuinely long-term investment view which is of transactions, income collection, overseas tax which these investments are performing. In addition carried out in the period was the tabling of a resolution consistent with the long-term nature of the liabilities reclamation and other administrative actions in to gaining an insight into the general outlook for the at the Marks & Spencer annual general meeting aimed attached to the fund. It is however still relevant to relation to these assets. Following a full tender exercise various investment types, the panel can monitor any at ending the dual role of Chairman and Chief Executive, monitor investment performance over the short term. conducted in 2009, HSBC was reappointed as custodian. changes to investment style and approach in the Sir Stuart Rose. The resolution, although not passed, Over the year to December the fund returned 17.6% appointed managers. Each of the external managers presented Marks & Spencer with one of its largest compared with 17.7% for the local-authority average. appointed by the fund has been selected for their shareholder rebellions in its 125 year history. This places the fund in the middle of the range over one Investment management and strategy particular investment style and the extent to which year. However over longer periods the fund remains they complement the other managers the fund invests In October the panel responded to concerns over the significantly ahead of the local-authority average. The The fund’s entire investment portfolio continues to be in. Any changes to a manager’s investment approach, for proposed introduction of the European Directive on performance, along with more detailed information managed on a day-to-day basis in-house, supported whatever reason, is closely monitored and may result in Alternative Investment Fund Managers by writing a about the fund, was presented at meetings held in by the fund’s external advisers. Investment strategy the panel taking action and reallocating funds. letter to the Swedish Presidency of the EU and Minister October. The employers’ meeting in Bradford, and and asset allocation is agreed at quarterly meetings for Financial Markets, Mats Odell. It is the panel’s view a second for employees and pensioners in Leeds, of the Investment Panel. There are twelve professional Since 2005 the investment performance of the fund that the Directive as initially proposed would increase were both very well attended and provided a good investment managers and five administration/ has been measured against a fund specific benchmark costs to managers, leading ultimately to reduced returns opportunity to meet the panel and ask questions. settlement staff in the in-house investment team. in addition to the Local Authority benchmark. The for investors. It would also limit the scope to which benchmark is reviewed each year and takes into alternative investments could be used to diversify the In 2009/10, the fund’s in-house investment management consideration the asset liability study carried out by assets of the fund, with possible negative impact for The in-house investment costs equated to £7.97 per scheme member compared Mercer in 2008. No major changes were made to the both tactical and strategic asset allocation. with the national average for all local-authority pension benchmark at the January review although 1% was management costs continue funds of £68.41 per scheme member. added to the weighting of hedge funds reflecting During the period, two significant departures from the to be among the lowest of all The panel adopted a fund-specific benchmark the continuing investment programme in this area. investment panel took place. Stuart Imeson, Director of commencing from 1 April 2005, which is reviewed and It was noted that the triennial actuarial valuation West Yorkshire Pension Fund, who had worked with the local authority pension funds revised annually, and details of the benchmark currently that takes place in March 2010 will provide a good fund for twenty-five years, retired in October. Stuart had being used are shown in the Statement of Investment opportunity to undertake an in-depth review of the been instrumental in maintaining the panel and fund The 2009/10 period was another busy year for the panel. Principles. The benchmark represents the optimal fund‑specific benchmark. at the highest levels of best practice and adherence to The panel continued to meet its objectives set out in its the principles laid out in the Myners’ report. Stuart was investment portfolio distribution between asset classes business plan and continues to operate in accordance to deliver the WYPF back to 100% funding in accordance As part of an ongoing programme, members of the a well known and very well respected figure within the with best practice as laid out in the revised Myners’ panel have attended a number of conferences over the Local Authority investment world. The difficult task of with the principles outlined in the Funding Strategy principles. The coming year is, again, expected to be Statement. The panel does, however, make tactical year and undertaken training in order to serve better replacing Stuart falls to Rodney Barton who emerged busy with the implications of a fragile global recovery on the panel. The fund has been represented at all the from a very strong field of candidates as the stand out adjustments around the benchmark for each asset class and the triennial actuarial review expected to keep the within a set control range. major conferences arranged by the Local Authority individual. Rodney was previously Head of Investments panel occupied over the period. Pension Fund Forum (LAPFF) during the year. In at East Riding Pension Fund and brings with him a Investment in funds of hedge funds commenced in addition, Councillors Greenwood and Greaves attended wealth of experience and deep investment knowledge. April 2005 to implement a strategy of investing up the Rights and Responsibilities of Institutional Investors Several members of the panel including the external Voting policy to 5% of the total investment portfolio in this asset conference in Amsterdam in March and Councillor advisers were asked to assist in the recruitment process. class. An element of the new money during 2009/10 Greaves represented the panel at a conference focused Rodney came on board in December after a period The fund will vote on all Resolutions put to the Annual continued therefore to be invested in funds of hedge on protecting shareholder value in New York. of handover. and Extraordinary General Meetings of all companies funds. Other new money was invested predominantly in in which it has a shareholding. The basis of the voting bonds. An allocation of new money to currency funds, The fund continues to exercise responsible share External adviser Bob Prance, who had worked with the policy is set out in the fund’s Statement of Investment which commenced in Quarter 1 of 2008, also continued ownership by using its voting rights. The panel panel for six years, retired at the April meeting. Bob had Principles. Full details of the voting policy is also during 2009/10. continues to adopt the PIRC Shareholder voting made a very valuable contribution to the work of the available for viewing on the fund’s website, as are guidelines in order to fulfil this function. The decision panel during this time. He was replaced by Mark Stevens details of the fund’s voting activity at companies’ Annual The cash element of the investment portfolio was to subscribe to the extended service that was taken last who had been working with Bob and the panel since General and Extraordinary Meetings. maintained during the year and stood at 3.4% as at year allows the fund to exercise its vote on any company his appointment in the previous October when Bob had 31 March 2010. held anywhere in the world. The fund continues first announced his retirement. Mark will work alongside to reserve the right to engage with any company Noel Mills who has been with the fund for six years and Custody of financial assets management where there are specific areas of concern continues as an external adviser. Over the period Bob in terms of good governance and social responsibility. and Noel had introduced a number of improvements The fund is a registered member of CREST in its own This engagement would normally be conducted via and innovations to the information available to the right, and the fund’s UK fixed interest and equity the LAPFF. panel, and to the monitoring and communication with shareholdings are held on CREST in dematerialised the internal and external fund managers. Both Noel and form. Consequently, all custodial responsibilities Over the year, the panel continued to be closely Mark will continue to develop this process further. relating to these assets are undertaken by the in-house associated with and active in the work of the LAPFF. Investments Section. Councillor Ian Greenwood remains Chair. The LAPFF is a Investment performance continues to be independently A custodian is appointed for the safe keeping of

22 23 Investment performance are stretched in many cases. Performance for all managers was positive for the year to 31 March 2010, with the best manager delivering The fund performed well in 2009/10 with a return of The WYPF’s private-equity portfolio is well diversified 5.6% and the worst 0.3%. During the twelve months 33.1% reflecting the sharp bounce in markets following across industry sectors, geographies, vintage years, to 31 March 2010 a decision was taken to withdraw the impact on the world economy and stock markets of financing stages and managers. After adjusting for two of the managers from the programme. Following the credit crunch in previous periods. The return of 33.1% cashflows and foreign-exchange movements, the values various progress meetings since investment, the panel in the year was marginally below both the return on of the underlying portfolio of companies fell 3.5% and is satisfied that the styles, models, holding periods and the fund-specific benchmark of 34.9%, and the average 5.4% in Q2 and Q3 2009 respectively, before recovering currencies employed by the remaining four managers return for all local authority pension funds of 35.2%. by 2.5% in Q4 2009 and 1.2% in Q1 2010. In aggregate, are sufficiently diverse. This positioned the fund in the 65th percentile of the this resulted in a valuation fall at portfolio level of 4.9%. local‑authority universe. Including adverse foreign exchange movements, this fall Fund of Hedge Funds was increased to 9.1%, mainly due to sterling’s strength The fund’s long-term investment performance in Q2 2009. 49.6% of the private equity is denominated The hedge fund industry as a whole has recovered compared with other local authority pension funds in US dollars and 43.8% in euros. from the nadir of December 2008. As one might continues to be extremely good. The WYPF’s average expect, those managers that performed poorly in the annualised return over the last three, five and ten years Net investment into the private-equity portfolio for the twelve months to 31 March 2009 rebounded the most was 2.8%, 8.4% and 4.6% respectively. These top quartile year to 31 March 2010 was £36 million. The weighting and performed the best for the year to 31 March 2010, returns are well above the local authority pension fund of this portfolio as a proportion of the total was to and vice versa. The WYPF’s allocation to FoHFs for the averages of 1.7%, 7.1% and 3.8% respectively, which on a 3.7%, down from 4.8% last year. This was mainly due year to 31 March 2010 returned 14.25%, compared to league table basis places WYPF in the 24th, 8th and 15th to adverse currency effects and the time lag in private -16.6% for the prior year. The best fund returned 23.0%, percentile over these periods. equity reported values at a time when the public equity and the worst, 6.1%. The oscillating fortunes of the markets performed strongly. managers and strategies demonstrate the benefits of The out-performances against the local‑authority being able to diversify investments among a number average have been achieved through a combination of Commitments made during the year were via a mix of of managers. This provides a degree of protection positive contributions from both asset allocation and direct and fund-of-fund vehicles: against manager‑specific risk and also ensures a greater stock selection. This demonstrates the excellent work of diversification of underlying manager and strategy risk. the Investment Panel, the external investment advisers WYPF on asset allocation, and the in-house investment Fund commitment Cumulatively, since inception in March 2005, the WYPF’s management team through their discretionary work on (£m) FoHF managers have performed, in aggregate, broadly stock selection. Lexington Middle Market Investors II 23.300 in line with the industry average, delivering 3.7% p.a. This is well below the 7.5% benchmark set by the panel. Pantheon Global Infrastructure Fund 30.000 Private equity Key Capital Partners III 3.625

Private equity has undergone a turbulent two years. Elysian Capital 6.000 The last twelve months in particular have seen Goldman Sachs 15.600 institutional investor appetite for new funds wane, and Infrastructure Partners II some investors selling their interests as they struggle Total 78.525 to meet their existing commitments. Fund General Partners have also shifted their focus, with many now spending their time supporting portfolio companies At 31 March 2010, net un-drawn commitments and restructuring balance sheets to reduce leverage, amounted to £301.6 million. Cumulative drawdowns rather than executing new deals. Very few underlying to date equal £427.5 million, while realisations to date portfolio companies have been sold and the market is equal £225.2 million. The valuation of invested capital just beginning the process of de-leveraging the large equates to £296.2 million. inventory of peak‑cycle leveraged buyouts. As a result, The strategy and approach to this asset class remains deal activity on WYPF investments slowed again for the unchanged, seeking to achieve a 5% exposure to private year to 31 March 2010, but to a lesser extent than for the equity. Net investment will continue to be monitored previous twelve months. Drawdowns on committed closely, particularly given the economic changes of the capital were down 27.0%, while realisations fell 22.4% last 24 months. compared to last year. This compares to falls of 25.0% and 47.3% respectively for the year to 31 March 2009. Reduced availability of debt for deals, rising borrowing Currency funds costs and uncertainty over corporate earnings have The WYPF programme of investing £200 million into dampened private‑equity volume. Recapitalisations are six currency funds, managed by six different managers, still few and far between, given that banking covenants will be completed by the beginning of December 2010.

24 25 Property £100–200 billion of stock held as the property markets recover in 2010. Key results for the 12 months to 31 March 2010 All Property capital values (recorded by IPD) rose in 60 For the 12 months to 31 March 2010 (as measured by IPD), August 2009 – the first month-on-month increase since 50 June 2007 – and went on to deliver a capital return of All Property has seen rental values decline by 5.94%. This 40 7.64% (offsetting prior monthly falls) and a total return again has been most pronounced in the office sector, 30 of 16.34% for the year to 31 March 2010. The comparison particularly City and West End Offices, where rental % with Gilt and UK Equity returns is detailed in the bar values have fallen by 8.7% (prior year fall, 15.6%) and 20 chart below. The positive returns from property were 10.1% (prior year fall, 19.9%). 10 entirely driven by yield reduction. During this time, the 0 attractive income yield offered by property relative to The worst performing sub-sectors during the 12 months –10 other asset classes drove a resurgence of interest from to 31 March 2010 were Shopping Centres (8.2%), the rest All property Gilts (5–15 years) Equities (all-share) investors. Strong demand for stock saw a sharp rise in of South-East Offices (8.9%) and the rest of UK Offices (11.3%). WYPF is underweight in Shopping Centres but Total capital values and a consequential reduction in yields. return 16.34 –0.39 52.30 Despite the strong investment market for property over overweight in rest of South-East and rest of UK Offices. Capital this period, occupier markets generally remained fragile, 7.64 –4.97 46.67 The best performing sub-sectors during the 12 months growth with falling rental values and higher-than-average voids to 31 March 2010 were All Retail Warehouses (26.3%) reflecting the underlying weakness in the UK economy. and West End Offices (19.9%), where the WYPF is To date, the much-feared flood of repossessed property marginally underweight. coming to the market has not materialised because As recorded in last year’s report and accounts, the (i) lenders are aware of the weakness in transaction AVC investments strategy over the medium to long term is to move to markets, and (ii) policy measures such as interest rate an 80:20 geographical split between UK and non-UK cuts and bank recapitalisations have lowered the WYPF has three AVC providers: Equitable Life, Scottish property on the fund’s Property Unit Trust investments. carrying cost of debt for borrowers and lessened the Widows, and Prudential who became a provider in 2009. The current split is approximately 92:8 in favour of UK pressure on banks to reduce their balance sheets. But In line with Regulation 5(2)(b) of the Local Government property. Net investment during the year was directed these trends are at risk of reversal if occupier markets Pension Scheme (Management and Investment of towards the UK market given the relative attractiveness deteriorate further, adding pressure on asset values and Funds) Regulations 1998, AVCs are not included in of risk and reward compared to other geographies. bank balance sheets. The market expects that the banks WYPF’s Fund Account and Net Assets Statement. will begin off-loading some of the The scheme values and membership information at 31 March 2010 are as follows.

Equitable Scottish Prudential Life Widows Scheme value £ 4,369,500 13,597,998 170,933 Scheme members with an AVC policy Sector results for the 12 months to 31 March 2010 At 31 March 2010 1,104 2,049 75 30.00 At 31 March 2009 1,211 2,170 0

20.00 Members still contributing 87 668 70

% 10.00

0

–10.00 Rental value Total return Capital return Income return growth Retail 19.20 10.58 7.85 -5.69 Office 13.43 4.82 8.24 -7.84 Industrial 14.16 5.13 8.62 -4.24

26 27 Commentaries on world stockmarkets Once the immediate financial crisis was over and By the end of this fiscal year some signs of economic The oil price, having collapsed from record highs in emerging market growth looked resilient, markets recovery were apparent. Quarter on quarter GDP figures 2008, started the year at a low level of $47.74. The price In the report and accounts at March 2009 we speculated began to recover, both in forecast earnings and in had reached a low of minus 2.6% in early 2009; by the steadily climbed over the following 12 months to end that we may be somewhere approaching the bottom valuations. These two factors pushed the FTSE100 final quarter of this financial year, GDP was back in the financial year at $81.30. Within the Oil Exploration of the cycle, having experienced a severe fall in markets steadily upwards over the year. positive territory at 0.3%. The level of unemployment and Production sector, the smaller stocks out-performed over the previous two years. It is therefore particularly has also recovered or at least stabilised, although the strongly whilst the majors under-performed the FT All pleasing to report that the UK equity market did recover In addition to the recovery of the bank sector from rock basis of measurement is not consistent over time. The Share index. The Oil Equipment and Services sector had from a low in March 2009, and very significantly. The All bottom, the mining sector also enjoyed a phenomenal UK headline jobless rate is now 7.8% compared with a very strong year, buoyed by increasing demand from Share return over the 12 months ended 31 March 2010 performance. The FTSE All Share Mining sector returned 10% in the eurozone, 9.5% in the US and 5.2% in Japan. the oil producers who upped production as a result was a phenomenal 52.3%. However, some perspective 102.38% in the period having fallen nearly 49% in the However, the number of part-time workers has reached of the stronger oil price. There was also an increase in should be provided to give a more enlightened view. previous financial year. Commodity prices were buoyed an unprecedented high of 27%. corporate activity, with a number of smaller companies by demand from developing countries such as China, being taken over, pushing share values higher still. The graph below illustrates the volatility experienced which showed enduring industrial growth aided by The Bank of England kept the base rate at 0.5% in the market over recent years. The FTSE100 Index rose government stimulus in the developed markets. The throughout the year and this has stimulated the housing In the final quarter of the year the markets experienced from 3926 to 5679 over the year, to almost the same level mining sector’s out-performance persisted as investors market. Although first-time buyers have the hurdle of some volatility as the UK general election loomed. it had been in March 2008. The top of the last cycle in sought hard assets and fled sterling exposure. The up to 20% deposits to find, those already on the housing A potential change in government and therefore June 2007 saw the FTSE100 exceed 6700. Therefore the proportion of the FTSE All Share in the mining sector has ladder have had the advantage of low mortgage uncertainty of government policy was compounded by market has recovered two thirds of that loss. doubled over the last four years, therefore the impact of payments. Research from the Halifax found that the cost the risk of a hung parliament. such an out-performance of the sector has been huge. of owning and running a home fell by 6% over the last Markets behave in a forward-looking manner. During two years. Average mortgage rates reduced from 5.8% Looking forward there is a risk that a double dip will the market sell off, analysts had slashed forecast However, the real economy remained fragile even as to 3.67% over that time. occur, plunging the country back into recession. The earnings. Market pessimism then valued these reduced markets recovered. new coalition government’s priority is understandably forecast earnings cheaply. For those still in work, this has meant an increase in to reduce the deficit. However, in order to do this a By March 2009 a package of economic stimuli had been disposable income, and many have sensibly taken severe austerity plan is proposed. This has the potential At the beginning of the fiscal year the view was bleak, implemented. The Bank of England had just made its the opportunity to pay down debts. For those made to kill off the fragile recovery. the credit crunch had plunged most western economies final cut in UK base rate, bringing it to a historic low of redundant, the government’s majority ownership in into recession and there was a much talked of fear that a 0.5%. Quantitative easing had begun with an initial £125 both Lloyds and RBS has put pressure on banks not to The UK equity market remains good value, even after 1930s style depression could occur. The UK government, billion limit, and during the year this limit increased repossess quite so swiftly. the extraordinary performance over the last year, along with most other western governments, had to £200 billion adding further liquidity to the banking and the yield of over 3% adds to the attraction. An suffered a massive increase in public finance deficit system. Other government-led schemes included the The effect of such low interest rates has increased the illustration of this is the takeover of Cadbury by Kraft as a result of bailing out the banks. The bail-out was UK car scrappage scheme and the temporary reduction fear of inflation. After the temporary reduction in VAT which was completed in the final quarter of the year. justified in that it will never be known how close to a in VAT from 17.5% to 15%. These economic stimuli were came to an end in January 2010, inflation spiked. It has Kraft clearly considered the valuation of this stock as total collapse of the banking system we came, but it was designed to reduce the severity of falling GDP, and avoid been reducing slightly since but is still a risk for the Bank too cheap. The UK equity market continues to be a undeniably close. The short-term fix for banks triggered mass unemployment. of England, and will be the factor most likely to change target for takeovers due to valuation levels. Given that a recovery of the markets but weighed heavily on the policy and increase interest rates. approximately 70% of earnings in FTSE100 companies the economy. originate overseas, it remains a good way to gain cheap

90 Brent crude oil price 2009/10 (USD)

7500 FTSE 100 index March 2007 to March 2010 (£) 80 7000

6500 70 6000

5500 60 5000

4500 50 4000

3500 40 3000 Apr 07 Jul 07 Oct 07 Jan 08 Apr 08 Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09 Jan 10 30 April 09 June 09 August 09 October 09 December 09 February 10

28 29 Government bond yields generally remained low. In 550 FTSE emerging markets March 2007 to March 2010 (£) Germany they started at 3%, rose to 3.4% then fell to 3%. The mid-year rise was due to fears of long-term 500 inflation caused by the extremely loose monetary and fiscal policies around the world. UK yields rose from 3.3% to 3.9%, US from 3% to 3.6%. The exception was Greece, 450 and to a lesser extent Spain, Portugal and Italy. These countries are seen as the weaker ones in the euro with 400 poor budget control and high debts. After a change of administration in Greece the new government 350 announced that the previous government’s budget was hopelessly optimistic and the budget deficit was in 300 fact 12% of GDP. This panicked the markets and Greek bonds went from a 4.4% yield late in 2009 to 7.2% in 250 January. This also dragged out the yields of other ‘Club Med’ countries although most are in better condition 200 than Greece. Italy has a high debt but lower deficit 01.04.07 01.07.07 01.12.07 01.01.08 01.04.08 01.07.08 01.10.08 01.01.09 01.04.09 01.07.09 01.12.09 01.01.10 (it has been working on that since it joined the euro). Spain has a high deficit but a low starting point of 40% debt to GDP. Interestingly, Ireland had this type of crisis exposure to more exciting earnings growth than the UK US and Japan rose 36%, Europe rose 40% and Asia rose the previous year. It had to effectively nationalise all its domestic economy can deliver. 62% over the year. Emerging markets were strongest banks and has had a severe austerity budget. The bond with Latin America up 88% due to its exposure to markets approved of it so much that Irish bonds started Overseas stock markets performed in a very similar commodity prices, and Eastern Europe up a similar 86% the year at 5.3% (from a January 2009 trough of 6%) and fashion to the UK, which is hardly surprising since the with Russia more than doubling for similar reasons. came in to 4.4% in late 2009, but then improved even underlying problems started in America. The developed further to finish the year at 4%. America does of course markets of Europe, America and Asia had extremely While Asia was a good performer, Hong Kong and have similar issues but economic recovery has started similar graphs to the UK FTSE Index, the degree of China were only up around 40%. Although China was earlier so bond markets are more forgiving. fall and recovery varying by a few percent. Emerging the driver behind Asia decoupling somewhat from the markets were the exception due to an extremely strong Western recession, its own markets did not benefit as In sector terms the best performers over the year were performance by Latin America, especially Brazil where much. There was a fear that the $586bn budget stimulus those related to the growing recovery, the cyclical areas the recovery was so strong that they ended the year at in China, and the even larger but unquantified amount such as autos, capital and consumer goods, mining an all-time high, having bounced 135% from the bottom lent by the banks, was not entirely well spent. It did its and metals companies, and a recovery in the financial in late 2008. job in maintaining GDP growth at 8.7%, but there are sectors as recapitalisation programs proceeded. There worries of speculative construction lending, and fears are still worries over both long-term inflation arising The strength of commodity prices has been referred that a banking crisis may be about to occur in China. from all the cash washing around the world (although to already, unusual given a global recession, but due Beijing has subsequently curbed property lending and this seems to be staying within the financial markets and to huge stimulus spending by China in particular. This raised the deposits required on second properties to try not being lent out to end-consumers) and a possible kept demand for Brazilian exports strong and continued to stop a property bubble. double dip in the short term, caused by austerity progress by their government has caused a re-rating budgets in Greece, Spain and the UK, which will slow of their stock market and prospects to Asian levels, On this subject, governments kept interest rates at European recovery. An interesting point in terms of whereas Latin America had generally been seen as an record lows. In Europe only Norway raised rates by double dip is that gold has continued to rise (21% last also-ran in the emerging market growth story due to lax 0.5%, but they are very much an oil economy so are year), which is usually an indicator of inflation worries, fiscal and debt policies. doing very well. Other commodity-related countries rather than recession. began to raise official interest rates as well: Australia The result of this was that the MSCI World Equity Index has moved from 3% to 4% since last October, and India rose 43% in sterling terms after falling 22% the year and Malaysia raised in March. So far China has not lifted before. After weakening substantially in the prior year, rates but has tightened reserve and lending standards sterling recovered a little: 6% against the US dollar substantially. In the UK, US and Europe however there and 4% against the euro although with considerable has been no move and none seems likely for many volatility. The starting rate was $1.43, which rose to $1.70 months yet as economic recovery remains weak. in August, spending much of the second half of 2009 around $1.65 before falling back in 2010 to finish at $1.52. The emerging market index, however, rose 75% in sterling terms with Brazil more than doubling.

30 31 Analysis of investments held at 31 March 2010 Analysis of UK equity investments as at 31 March 2010

Book cost Market value Cost Market value Number of companies £m £m % £m % £m % Oil and gas producers 235.5 14.0 522.6 18.5 12 Oil equipment and services 11.9 0.7 17.5 0.6 7 Quoted Chemicals 2.1 0.1 10.1 0.4 3 Public-sector bonds 346.2 359.4 4.6 Fixed interest Industrial metals and mining 3.5 0.2 3.4 0.1 2 Corporate bonds 165.0 162.7 2.1 Mining 132.2 7.9 367.5 13.0 16 Public sector 308.1 386.6 4.9 Construction and materials 6.9 0.4 8.1 0.3 4 Index linked Corporate 34.2 42.7 0.5 Aerospace and defence 27.4 1.6 55.6 2.0 8 General industrials 14.0 0.8 20.3 0.7 6 Ordinary and convertible shares (equities) 1,670.7 2,828.3 36.0 Electronic and electrical equipment 9.4 0.6 10.8 0.4 9 Property 184.2 248.4 3.2 Unit trusts Industrial engineering 12.4 0.7 24.7 0.9 15 Other 36.5 81.3 1.0 Industrial transportation 3.3 0.2 3.5 0.1 3 Fund of hedge funds 320.0 344.3 4.4 Support services 58.1 3.5 87.6 3.1 25 Currency funds 123.3 128.1 1.6 Automobiles and parts 3.5 0.2 4.9 0.2 1 Unquoted Beverages 25.1 1.5 83.7 3.0 2 Food producers 10.6 0.6 54.9 1.9 5 Cash deposits 265.9 265.9 3.4 Household goods 20.3 1.2 57.7 2.0 7 Private equity 63.9 76.4 1.0 Personal goods 0.9 0.1 5.5 0.2 1 Sub-total UK 3,518.0 4,924.1 62.7 Tobacco 37.6 2.3 118.8 4.2 2 Foreign Healthcare equipment and services 2.8 0.2 11.7 0.4 4 Quoted Pharmaceuticals and biotechnology 74.6 4.5 199.7 7.1 5 Food and drug retailers 27.3 1.6 85.9 3.0 4 Public-sector bonds 112.2 136.6 1.7 Fixed interest General retailers 24.3 1.5 44.3 1.6 16 Corporate bonds 51.3 52.9 0.7 Media 84.7 5.1 72.2 2.6 14 Public sector 50.6 67.8 0.9 Travel and leisure 55.6 3.3 71.0 2.5 20 Index linked Corporate 0.8 1.0 0.0 Fixed-line telecommunications 51.1 3.1 26.0 0.9 5 Ordinary and convertible shares (equities) 1,285.1 2,029.5 25.7 Mobile telecommunications 141.8 8.5 148.1 5.2 2 Property 21.7 20.8 0.3 Electricity 14.3 0.9 31.1 1.1 3 Unit trusts Gas, water and multiutilities 31.9 1.9 69.4 2.5 5 Other 176.3 412.9 5.2 Banks 291.1 17.4 337.4 11.9 5 Unquoted Non-life insurance 23.1 1.4 25.3 0.9 8 Private equity 184.0 219.8 2.8 Life insurance 73.8 4.4 71.8 2.5 7 Sub-total foreign 1,882.0 2,941.3 37.3 Real-estate investment services 2.6 0.2 1.7 0.1 2 Total 5,400.0 7,865.4 100.0 Real-estate investment trusts 28.1 1.7 34.3 1.2 10 Financial services 45.1 2.7 42.5 1.5 16 Equity investment instruments 42.0 2.5 59.9 2.1 28 Software and computer services 23.3 1.4 26.8 0.9 9 Technology hardware and equipment 18.5 1.1 12.0 0.4 10 Totals 1,670.7 100.0 2,828.3 100.0 301

32 33 Analysis of overseas equity investments as at 31 March 2010 List of 20 largest equity holdings at 31 March 2010

Book cost Market value Number of Company/stock Market value Percentage of total fund Country companies £m £m £m % Australia 54.6 132.2 47 BP 260.5 3.3 Austria 3.9 5.8 8 HSBC 163.8 2.1 Belgium 1.5 0.8 2 Royal Dutch 145.4 1.9 Canada 24.1 35.4 6 Vodafone 141.9 1.8 China 34.6 58.9 24 Glaxosmithkline 122.6 1.5 Denmark 9.1 18.0 8 Rio Tinto 108.9 1.4 Ireland 13.9 16.9 14 BHP Billiton 103.9 1.3 Finland 18.3 25.2 12 British American Tobacco 80.9 1.0 France 57.0 114.0 30 Astrazeneca 71.0 0.9 Germany 45.8 92.7 32 BG Group 68.2 0.9 Greece 6.4 4.9 13 Hong Kong 40.7 66.1 37 Tesco 64.8 0.8 India 6.8 14.2 4 Anglo American 62.9 0.8 Indonesia 4.2 10.6 7 Barclays 61.5 0.8 Italy 46.4 48.7 38 Standard Chartered 60.3 0.8 Japan 259.1 292.2 94 Jupiter India Unit Trust (India) 51.1 0.7 Korea 35.0 84.4 23 Diageo 49.6 0.6 Malaysia 13.0 21.2 13 Xstrata 49.3 0.6 Netherlands 26.9 43.8 16 Reckitt Benckiser 44.7 0.6 Norway 18.2 35.6 20 Unilever 44.6 0.6 Philippines 9.3 13.3 9 Threadneedle Latin America 43.9 0.5 Portugal 6.7 9.3 9 22.9 Singapore 26.1 47.8 22 South America 26.4 63.1 18 Spain 53.7 96.3 22 Sweden 31.1 56.1 32 Switzerland 34.4 103.3 19 Taiwan 31.9 39.3 23 Thailand 13.4 28.9 14 United States 268.1 354.5 92 Other Asian 1.8 7.3 4 Other Eastern European 8.1 16.3 3 Other Western European 26.6 33.2 12 Other International 28.0 39.2 19 Totals 1,285.1 2,029.5 746

34 35 Actuary’s report For past service liabilities For future service liabilities Rate of return on investments: • Pre retirement 6.90% pa 6.50% pa • Post retirement 5.40% pa 6.50% pa Rate of pay increases 4.85% pa 4.50% pa Rate of increases in pensions in payment 3.10% pa 2.75% pa (in excess of Guaranteed Minimum Pension)

6 The valuation was carried out using the projected This Statement must not be considered without unit actuarial method, and the main actuarial reference to the formal valuation report which assumptions used for assessing the funding target details fully the context and limitations of the and the common contribution rate were as shown in actuarial valuation. Statement of the actuary for the year ended 31 March 2010 the table above. The assets were valued at market value. Hewitt Associates Limited does not accept any responsibility or liability to any party other than our Further details of the assumptions adopted Introduction client, City of Bradford Metropolitan District Council, for the valuation were set out in the actuarial the Administering Authority of the Fund, in respect valuation report. The Scheme Regulations require that a full actuarial Plus of this statement. valuation is carried out every third year. The purpose • 2.6% of pensionable pay to restore the assets to 7 The valuation results summarised above are based of this is to establish that the West Yorkshire Pension 100% of the liabilities in respect of service prior on the financial position and market levels at the Fund (the Fund) is able to meet its liabilities to past to the valuation date, over a recovery period of Hewitt Associates Limited valuation date, 31 March 2007. As such the results do and present contributors and to review employer 22 years. 20 July 2010 contribution rates. The last full actuarial investigation not make allowance for changes which have occurred subsequent to the valuation date. into the financial position of the Fund was completed This would imply an average employer contribution as at 31 March 2007 by Mercer Limited, in accordance rate of 15.8% of pensionable pay in total. 8 Contribution rates will be reviewed at the next with Regulation 77(1) of the Local Government Pension actuarial valuation of the Fund as at 31 March 2010 Scheme Regulations 1997. 4 In practice, each individual employer’s position is which is currently underway. The formal actuarial assessed separately and contributions are set out valuation report and the Rates and Adjustments in Mercer Limited’s report dated 31 March 2008. In Actuarial position Certificate setting out the employer contribution addition to the contribution rate shown, payments rates for the period from 1 April 2011 to 31 March 2014 to cover additional liabilities arising from early 1 Rates of contributions paid by the participating are required by the Regulations to be signed by retirements (other than ill-health retirements) will be Employers during 2009/10 were based on the 31 March 2011. made to the Fund by the employers. actuarial valuation carried out as at 31 March 2007. 9 This Statement has been prepared by the current 5 The funding plan adopted in assessing the 2 The valuation as at 31 March 2007 showed that the Actuary to the Fund, Hewitt Associates Limited, for contributions for each individual employer is in funding ratio of the Fund had improved since the inclusion in the accounts of the Fund. It provides accordance with the Funding Strategy Statement previous valuation with the market value of the a summary of the results of the actuarial valuation (FSS). Different approaches adopted in implementing Fund’s assets at that date (of £7,306m) covering which was carried out as at 31 March 2007 by Mercer contribution increases and deficit recovery periods 90% of the liabilities allowing, in the case of current Limited, based on the information provided in their were as determined through the FSS consultation contributors to the Fund, for future increases in report, dated 31 March 2008, and previous such process. For certain employers, in accordance with pensionable remuneration. Statements. The valuation provides a snapshot of the the FSS, an increased allowance has been made funding position at the valuation date and is used to for assumed investment returns on existing assets 3 The valuation also showed that a common rate of assess the future level of contributions required. contribution of: and future contributions, for the duration of the employer’s deficit recovery period. • 13.2% of pensionable pay per annum was required from employers. The common rate calculated as being sufficient, together with contributions paid by members, to meet the liabilities arising in respect of service after the valuation date.

36 37 Audit report accounting statements and related notes, and of whether the accounting policies are appropriate to the Authority’s circumstances, consistently applied and adequately disclosed.

I planned and performed my audit so as to obtain all the information and explanations which I considered necessary in order to provide me with sufficient evidence to give reasonable assurance that the pension fund accounts and related notes are free from material misstatement, whether caused by fraud or other irregularity or error. In forming my opinion I also evaluated the overall adequacy of the presentation of information in the pension fund accounting statements and related notes.

Independent auditor’s report to the Members of City of Opinion Bradford Metropolitan District Council In my opinion the pension fund accounting statements Opinion on the West Yorkshire Pension Fund and related notes give a true and fair view, in accounting statements I report to you my opinion as to whether the pension accordance with the Code of Practice on Local Authority fund accounting statements give a true and fair view, Accounting in the United Kingdom 2009: A Statement of I have audited the pension fund accounting statements in accordance with relevant legal and regulatory Recommended Practice, of the financial transactions of for the year ended 31 March 2010 under the Audit requirements and the Code of Practice on Local Authority the Pension Fund during the year ended 31 March 2010, Commission Act 1998. The pension fund accounting Accounting in the United Kingdom 2009: A Statement of and the amount and disposition of the fund’s assets statements comprise the Fund Account, the Net Assets Recommended Practice, of the financial transactions of and liabilities as at 31 March 2010, other than liabilities Statement and the related notes. The pension fund the pension fund during the year and the amount and to pay pensions and other benefits after the end of accounting statements have been prepared under disposition of the fund’s assets and liabilities, other than the scheme year. the accounting policies set out in the Statement of liabilities to pay pensions and other benefits after the Accounting Policies. end of the scheme year. I read other information published with the pension Paul Lundy This report is made solely to the members of West fund accounting statements and related notes and District Auditor Yorkshire Pension Fund in accordance with Part II consider whether it is consistent with the audited of the Audit Commission Act 1998 and for no other pension fund accounting statements. This other September 2010 purpose, as set out in paragraph 49 of the Statement information comprises the Explanatory Foreword Audit Commission of Responsibilities of Auditors and of Audited Bodies and the content of the Annual Report. I consider the 3 Leeds City Office Park published by the Audit Commission in April 2008. implications for my report if I become aware of any Holbeck apparent misstatements or material inconsistencies Leeds Respective responsibilities of the Strategic with the pension fund accounting statements and LS11 5BD Director: Corporate Services and auditor related notes. My responsibilities do not extend to any other information. The Strategic Director: Corporate Services’ responsibilities for preparing the pension fund Basis of audit opinion accounting statements, in accordance with relevant legal and regulatory requirements and the Code of I conducted my audit in accordance with the Audit Practice on Local Authority Accounting in the United Commission Act 1998, the Code of Audit Practice issued Kingdom 2009: A Statement of Recommended Practice by the Audit Commission and International Standards are set out in the Statement of Responsibilities for the on Auditing (UK and Ireland) issued by the Auditing Statement of Accounts. Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts My responsibility is to audit the pension fund and disclosures in the pension fund accounts and accounting statements and related notes in accordance related notes. It also includes an assessment of the with relevant legal and regulatory requirements and significant estimates and judgments made by the International Standards on Auditing (UK and Ireland). Authority in the preparation of the pension fund

38 39 Accounts the private equity funds in which WYPF has invested. Transfers These valuations are prepared in accordance with the International Private Equity and Venture Capital Transfer values represent amounts received and paid Valuation Guidelines, which follow the valuation during the period for individual and bulk transfers that principles of IFRS and US GAAP. Valuations are came into or out of the fund. performed annually and mainly as at the end of December. Cash flow adjustments are used to roll Investment income forward the valuations to 31 March as appropriate. The ultimate return on these investments may be materially Investment income is accounted for when received different from that indicated by the estimated valuation except that interest due on fixed-interest securities, in the balance sheet. index-linked securities and short-term investments is accounted for on an accruals basis, and income from UK The values of investments in Hedge Funds are based equities is accounted for on the date when stocks are on the net asset values provided by the fund managers quoted ex-dividend. as at 31 March 2010. Assurance over these valuations is gained from fund managers in the form of SAS70 reports Contributions and audited accounts which are prepared in accordance The Statement of Accounts Statement of Accounting Policies with appropriate accounting standards. Values are Contributions are accounted for when due. normally received by West Yorkshire Pension Fund The City of Bradford Metropolitan District Council The financial statements have been prepared in 30 days after the month end to which they relate. The Employers have met the indirect costs of early (Bradford Council), as administering authority for accordance with the revised Code of Practice on Local values reported in the financial statements are therefore retirement. The costs have been recharged and the West Yorkshire Pension Fund, is required to make Authority Accounting in the United Kingdom 2009: A based on February month-end values, adjusted income received is made up of both one-off lump sum arrangements for the proper administration of its Statement of Recommended Practice published by the according to estimates of fund performance in March, as payments and instalments where the employer has financial affairs, and to secure that one of its officers Chartered Institute of Public Finance and Accountancy, informed by fund managers. chosen to spread the cost. has the responsibility for the administration of those which requires that the fund’s accounts should conform affairs. In this authority, that officer is the Strategic with the Statement of Recommended Practice: Financial Investments in Currency Funds are valued using AVCs are accounted for when due, in the same way as Director (Corporate Services). Reports of Pension Schemes (revised 2007) as approved net asset values provided by fund managers as at 31 other contributions. by the Accounting Standards Board. March 2010. Assurance over these valuations is gained The Strategic Director (Corporate Services) is responsible from fund managers in the form of SAS70 reports and Expenditure for the preparation of the Statement of Accounts, which The financial statements summarise the transactions of audited accounts which are prepared in accordance is required to present fairly the financial position of the the scheme and deal with the net assets at the disposal with appropriate accounting standards. No account is taken of long-term liabilities to fund at 31 March 2010 and its income and expenditure of West Yorkshire Pension Fund. They do not take pay benefits. for the year ended 31 March 2010. account of obligations to pay pensions and benefits Additional Voluntary Contributions (AVCs) which fall due after the end of the scheme year. The Accruals have been included for lump-sum benefits In preparing this Statement of Accounts, the Strategic actuarial position of the fund, which does take account In line with Regulation 5(2)(b) of the Local Government arising but not paid until the following year. Director (Corporate Services) has issued a Code of of such obligations, is dealt with in the statement by the Pension Scheme (management and Investment of Practice for all finance officers employed by the council, actuary in this report, and these financial statements Funds) Regulations 1998, AVCs are not shown in the and a manual on the practices to be adopted in the should be read in conjunction with it. Fund Account and Net Assets Statement. Details of AVC preparation of the year-end accounts. These documents investments are, however, included in the commentary set out arrangements for ensuring the accounts are Investments in the Investment report and in the Notes to the prepared in a consistent and prudent manner in line accounts (note 4). with suitable accounting principles. Listed investments are shown at Bid Prices. The Bid Value of the investments is based on the Bid Market quotation AVC investments are valued by the Equitable Life of the relevant stock exchange. Assurance Society, Scottish Widows and Prudential. Those AVC funds that relate to the with-profits fund are Property Funds are valued at closing bid price. Property valued at contributions. The value of the unit-linked valuations are normally undertaken by the Property fund element is based on the bid price of the relevant Trusts’ own valuers. The values disclosed in the financial fund at the year-end date. statements are extracted from valuation statements issued by the Property Trusts. Valuations are performed Currency translation in accordance with RICS (Royal Institution of Chartered Surveyors) Valuation Standards (The Red Book). Assets and liabilities in foreign currency are translated into sterling at exchange rates ruling at the financial The values of investments in private equity are based year-end. Any gains or losses arising are treated as part on valuations estimated by the general partners to of the change in market value of investments.

40 41 Fund account for the year ended 31 March 2010 Net assets statement at 31 March 2010

Note 2009/10 2008/9 Note 2009/10 2008/09 £’000 £’000 £’000 £’000 Investments 9 Contributions and benefits Fixed-interest securities 711,601 643,160 Contributions receivable 1 357,738 327,820 Equities (including convertible shares) 5,154,025 3,497,591 Transfers in 2 38,629 35,292 Index-linked securities 498,100 483,530 Other income 1 68 Pooled funds 1,235,760 936,180 Non-statutory pensions and pensions increases recharged 3 19,058 18,681 Other – sterling deposits 265,889 320,289 415,426 381,861 Other investment balances 24,682 23,870 Benefits payable 5 342,398 302,964 Investments at market value 31 March 7,890,057 5,904,620 Non-statutory pensions and pensions increase 3 19,058 18,681 Current assets and liabilities Leavers 6 32,184 24,214 Debtors 11 45,484 29,966 Administrative and other expenses borne by the scheme 7 5,095 5,214 Cash balance (repayable within 12 months) (9,286) 5,404 398,735 351,073 Creditors (9,345) (8,504) Net additions from dealings with members 16,691 30,788 Net current assets and liabilities 26,853 26,866 Returns on investments Net assets of the fund at 31 March 7,916,910 5,931,486 Investment income 8 198,308 226,365 Change in market value of investments 9 1,770,493 (1,535,923) – realised and unrealised Becky Hellard Stock lending 10 1,641 1,509 Underwriting commission 24 1 Strategic Director – Corporate Services City of Bradford Metropolitan District Council Investment management expenses (1,733) (1,585) Net return on investments 1,968,733 (1,309,633) Net increase/(decrease) in the fund during the year 1,985,424 (1,278,845) Opening net assets of the fund 5,931,486 7,210,331

Closing net assets of the fund 7,916,910 5,931,486

42 43 Notes to the accounts 3. Non-statutory pensions and pensions increase recharged

1. Contributions receivable 2009/10 2008/09 £’000 £’000 2009/10 2008/09 Pensions 19,058 18,681 £’000 £’000 Lump Sums 0 0 Employers’ contributions 19,058 18,681 Normal 182,789 163,895 Deficit funding 38,276 35,862 The costs of added years granted by participating employers for early retirement Augmentation 854 1,270 together with associated inflation‑proofing costs are reimbursed to the fund by Other 26,691 21,995 the employer out of current revenues.

248,610 223,022 Costs of annual inflation-proofing for non-participating employers are Employees’ contributions 109,128 104,798 also recharged. Total contributions received 357,738 327,820 4. AVC scheme with Equitable Life, Scottish Widows and Prudential Employers are required to pay contributions at a rate set by the fund’s actuary at three-yearly intervals. Details of AVC transactions are as follows.

The employers’ contributions for 2009/10 reflect the rates set for the three 2009/10 2008/09 financial years 2008/2009 to 2010/11 arising from the 2007 actuarial valuation. £’000 £’000

Employees’ contributions are as set out in the new LGPS from 1 April 2008, and Income there are several tiered employee contribution rates. For 2009/10 the rates start Contributions received 860 896 at 5.5% payable by employees with salaries up to £12,600 a year, and the highest Transfer values 92 239 rate is 7.5% to be paid on salaries over £78,500 a year. Internal transfers from other policies 11 0 The fund has made provision for employees to make additional voluntary 963 1,135 contributions (AVCs) under AVC schemes with Equitable Life, Scottish Widows and Prudential (which became a provider in 2009/10). All contributions by employees Expenditure to the AVC schemes are made direct to Equitable Life, Scottish Widows and Life assurance premiums 4 5 Prudential, further details of which are shown in note 4. Retirement benefits 775 864 2. Transfers in Leavers (transfers and withdrawals) 1,472 1,147 Deaths 19 50 2009/10 2008/09 £’000 £’000 Refunds/surrenders 5 1 Individual transfers in from other schemes 38,629 27,281 2,275 2,067 Bulk transfers in from other schemes 0 8,011 38,629 35,292

44 45 5. Benefits payable 7. Administrative expenses

2009/10 2008/09 2009/10 2008/09 £’000 £’000 £’000 £’000 Pensions Administration and processing 4,761 4,936 Retired employees 223,847 206,113 Actuarial fees 257 209 Dependants 20,930 19,783 Audit fee 71 69 244,777 225,896 Legal and other professional fees 6 0 Lump sums 5,095 5,214 Lump sums on retirement 90,331 70,503 Lump sums on death 7,290 6,565 8. Investment income 97,621 77,068 2009/10 2008/09 Total benefits payable 342,398 302,964 £’000 £’000 Income from fixed-interest securities 34,751 33,432 For participating employers, all basic pensions plus the costs of annual Dividends from equities 142,167 158,087 inflation‑proofing are met from the assets of the fund. Income from index-linked securities 8,728 9,893 Details of AVC Benefits are shown in note 4. Income from managed and unitised funds 12,506 12,979 6. Payments to and on account of leavers Interest on cash deposits 2,893 15,577 201,045 229,968 2009/10 2008/09 Irrecoverable withholding tax (2,737) (3,603) £’000 £’000 198,308 226,365 Refunds of contributions 44 78 Individual transfers 29,746 24,136 Bulk transfers 2,394 0 32,184 24,214

All transfer values paid during the year were calculated either in accordance with the provisions of the Local Government Pension Scheme Regulations, or where applicable, in the manner required by Chapter IV of Part IV of the Pension Schemes Act 1993. Where both methods of calculation could be applied, the higher amount was paid in all cases.

Details of AVC refunds and transfers are shown in note 4.

46 47 9. Investments AVC investments

Opening value Closing value at Purchases cost Sales proceeds Change in MV The fund provides an AVC scheme for its contributors, the assets of which are at 1 April 2009 31 March 2010 invested separately from the main fund. The scheme providers are Equitable Life £’000 £’000 £’000 £’000 £’000 Assurance, Scottish Widows, and Prudential (who became a provider in 2009/10). Fixed-interest Additional benefits are secured on a money purchase basis for those contributors 643,160 276,791 (246,858) 38,508 711,601 securities electing to pay Additional Voluntary Contributions. The aggregate amounts of Equities 3,497,591 471,275 (274,693) 1,459,852 5,154,025 AVC investments are as follows. Index-linked securities 483,530 82,173 (92,750) 25,147 498,100 Managed and 936,180 107,434 (54,840) 246,986 1,235,760 2009/10 2008/09 unitised funds £’000 £’000 Cash deposits 320,289 0 (54,400) 0 265,889 Equitable Life 4,369 4,749 Other investment 33,017 0 (3,195) 0 29,822 debtors Prudential 171 0 Other investment (9,147) 4,007 0 0 (5,140) Scottish Widows 13,598 11,697 creditors 18,138 16,446 Totals 5,904,620 941,680 (726,736) 1,770,493 7,890,057 The change in market value of investments during the year comprises all increases and decreases in the market value of investments held at any time during the year, including profits and losses realised on the 10. Stock lending sale of investments during the year.

2009/10 2008/09 2009/10 2008/09 £’000 £’000 £’000 £’000 Fixed-interest securities Stock-lending income UK public sector quoted 359,404 412,928 Fixed interest 134 105 UK other quoted 162,700 94,313 UK equities 475 418 Overseas public sector quoted 136,605 95,985 International equities 1,240 1,164 Overseas other quoted 52,892 39,934 711,601 643,160 1,849 1,687 Equities Less costs 208 178 UK quoted 2,828,259 1,869,462 1,641 1,509 UK unquoted 76,396 72,250 Overseas quoted 2,029,532 1,341,833 As at 31 March 2010, £1,028 million of stock was on loan to market makers, Overseas unquoted 219,838 214,046 and this was covered by collateral totalling £1,081 million (which includes an 5,154,025 3,497,591 appropriate margin) comprising bonds (£196 million), government bonds (£257 Index-linked securities million) and stocks and shares (£628 million). UK public sector quoted 386,593 352,040 UK other quoted 42,710 28,001 11. Debtors Overseas public sector quoted 67,775 102,919 2009/10 2008/09 Overseas other quoted 1,022 570 £’000 £’000 498,100 483,530 Contributions due from employers 25,935 24,002 Managed and unitised funds Currency funds 128,132 90,031 Other debtors 19,549 5,964 Fund of Hedge Funds 344,275 292,198 45,484 29,966 Property 269,215 232,885 Other 494,138 321,066 1,235,760 936,180 Cash deposits Sterling 265,889 320,289

48 49 12. Related Party Transactions

In accordance with FRS 8 ‘Related Party Disclosures’, material transactions with related parties not disclosed elsewhere, are detailed below.

In 2009–10, City of Bradford Metropolitan District Council charged West Yorkshire Pension Fund £568,356 in respect of support services provided (£565,306 in 2008–09). The charge included accommodation, financial, legal and information technology services.

Under legislation introduced in 2003/04, eligible councillors are entitled to join the scheme.

No senior officers responsible for the administration of the fund have entered into any contract, other than their contract of employment with City of Bradford Metropolitan District Council, for the supply of goods or services to the fund.

The fund has an investment in Montanaro European Smaller Companies Fund plc, which at 31 March 2010 was valued at £12.1m, and has an original cost of £4.9m. There has been no investment activity with the fund during 2009/10. Rodney Barton, Director of West Yorkshire Pension Fund, is a non-executive director of Montanaro European Smaller Companies Fund plc, for which he is paid a fee.

13. Contingent liabilities and contractual commitments

At 31 March 2010 West Yorkshire Pension Fund had investments in private equity funds valued at £296.2m; however the fund has un-drawn commitments to invest in private equity amounting to £301.6m.

50 51 Resolving complaints

Internal Dispute Resolution Procedure

Pensions are a complicated issue at times so it’s Further help needed? inevitable that disagreements occasionally arise between members, employers and WYPF. The Pensions Advisery Service (TPAS) can also help with resolving disputes if both stages of the Internal Dispute When disagreements do happen we do all we can to try Resolution Procedure have not provided an agreement. to resolve them informally and reach an agreement. The Pensions Ombudsman settles disputes and But this isn’t always possible. And the scheme provides investigates complaints that TPAS has not been able to a formal way for disagreements to be resolved: the settle. The Ombudsman’s decision is final and binding Internal Dispute Resolution Procedure. on all the parties to a dispute.

The Internal Dispute Resolution Procedure is a Policing pension schemes two‑stage process. The Pensions Regulator was set up following the 1995 From June 2004, stage 1 gives scheme members a Pensions Act, replacing the Occupational Pensions chance to have a disagreement reviewed by either the Regulatory Authority (OPRA). Its main role is to protect employer or WYPF, depending on who the dispute is pension scheme members’ interests and it can step in against. The review will be undertaken by the person and run schemes when employers, professional advisers, specified by the body that was responsible for making trustees or administrators have failed in their duties. the original decision being appealed against. The member must apply for a review under Stage 1 within six months of the disagreement coming to light.

If the scheme member or their employer is not happy with the outcome of the Stage 1 review, they can refer the matter to the administering authority for review under stage 2 of the procedure.

52 53 Further information and contacts

Senior management team

Director – West Yorkshire Pension Fund Rodney Barton Phone: 01274 432317 Fax: 01274 437700 E-mail: [email protected]

WYPF Administration WYPF Investments

Development Manager – Quality Chief Investment Officer (UK) Caroline Blackburn Debra Hopkins/Joanna Wilkinson (job-share) Phone: 01274 434523 Phone: 01274 432318/01274 432038 Fax: 01274 437658 Fax: 01274 308016 E-mail: [email protected] E-mail: [email protected] E-mail: [email protected] Development Manager – Strategic Yunus Gajra Chief Investment Officer (Overseas) Phone: 01274 432343 Andrew Braid Fax: 01274 437658 Phone: 01274 434219 E-mail: [email protected] Fax: 01274 308016 E-mail: [email protected] Service Centre Group Manager Grace Kitchen Phone: 01274 434266 Fax: 01274 437678 E-mail: [email protected]

Operations Group Manager Anne Turley Phone: 01274 437721 Fax: 01274 437624 E-mail: [email protected]

A Minicom text service is available for people with hearing difficulties on 01274 724472. Our offices at Argus Chambers, Britannia House, Hall Ings, Bradford are open Monday to Friday between 8.45am and 4.30pm.

54 55 West Yorkshire Pension Fund PO Box 67 Bradford BD1 1UP www.wypf.org.uk and www.wypfemployers.org.uk November 2010

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