Local Government Pensions Scheme Annual Report and Statement of Accounts 2009–2010

NORTHAMPTONSHIRE LOCAL GOVERNMENT PENSION SCHEME

Annual Report and Statement of Accounts 2009–2010

Registered Pension Scheme Number: 00329946RE

Contents

Page

Introduction 3

Management and Financial Performance Report

Scheme management and advisers 4

Risk management 6

Scheme Framework 8

Funding Strategy Statement 9

Scheme Administration Report 10

Financial performance 12

Management performance 13

Investment Policy and Performance Report

Benchmark April 2009 27

Fund Manager profile 28

Investment Review 2009–10 30

Investment Performance 2009–10 33

Performance by Asset Class 34

Local Authority Universe 34

Benchmark April 2010 36

Actuarial Reports

Actuarial Report on the Fund 38

Actuarial Position Statement 39

Investment Return Assumptions 40

Governance Arrangements 41

Fund Account and Net Assets Statement 45/46

Notes to the Accounts 47

Auditors Report 57

Glossary 59

2 INTRODUCTION

This Annual Report and Statement of Accounts sets out the arrangements by which the Local Government Pension Scheme operates, reports changes which have taken place and reviews the investment activity and performance of the Northamptonshire Fund during the year.

The Statement of Accounts has been prepared in accordance with the Code of Practice for Local Authority Accounting in Great Britain and the Statement of Recommended Practice on Local Authority Accounting in the (Pension Scheme Accounts) (SORP) 2009.

Mr D Lawrenson Assistant Chief Executive, Finance and Commercial Management (Section 151 Officer)

Dated 29th September 2010

3 Management and financial Performance Report Scheme Management and Advisers

Administering Authority Northamptonshire County Council P.O. Box 136 County Hall NN1 1AT

Administrator Mr D Lawrenson, Assistant Chief Executive Finance and Commercial Management (Section 151 Officer)

Pension Committee and Investment Advisory Panel County Council Members Ken Melling (Chair) Sue Homer (Vice Chair) Michael Tye Chris Long Chris Stanbra Andrew Langley (substitute member) Bill Parker (substitute member) District/Borough Malcolm Ward ( Borough Council) Councils Representative Universities and Roger Morris (Effective June 2010) Colleges Representative Employees Representatives Peter Cox Josie Mason Andy Langford (Substitute Representative)

Key Officers supporting the Fund Strategic Finance Manager – Steve Dainty Pensions, Projects and Shared Services Pensions Manager Ian Gibbon Legislation Officer Ray Cheeseman Fund Group Accountant Paul Tysoe Investment Advisors Paul Meredith Mercer Investment Consulting

4 Investment Managers UBS Aberdeen Majedie Martin Currie [Ceased March 2010] Alliance Bernstein Newton CBRE RREEF Fauchier Partners Group [Ceased March 2010] Wellington [New April 2010]

Custodian Northern Trust AVC Providers Prudential Assurance Standard Life

Fund Actuary Hymans Robertson LLP Auditor KPMG LLP Legal Advisors Sackers & Partners Performance reporting WM Company Mellon

Bankers Nat West Contacts Further information regarding the accounts and investments can be obtained from: Paul Tysoe, Pension Fund Group Accountant E‑mail: [email protected] Telephone: 01604 236481

Enquiries relating to benefit and administration should be directed to: Ian Gibbon, Pensions Manager E‑mail: [email protected] Telephone: 01604 236527

5 Risk Management

This section sets out the key aspects of risk management within the Scheme. This section should be also read in conjunction with the Governance arrangements section on page 41.

Governance Risk The Governance arrangements explain the legal framework of the Scheme, the make up of the Pensions Committee and how the Scheme manages investment asset allocation and the management of external Fund managers. In addition the role of the Custodian which is fundamental, covering accounting and pricing of assets risk is covered.

Investment Risk Investment Risk is covered in detail in the Scheme’s Statement of Investment Principles which is available on the Northamptonshire County Council website. See link below http://www.northamptonshire.gov.uk/Democracy/finance/NLGPS/nlgps.htm

Key Risks and Controls The Scheme considers all types of operational risk through risk audits, working with the County Council risk manager. Some of the current key risks with actions to mitigate include:-

Risk Inappropriate long‑term investment strategy

Mitigation Fund specific benchmark informed through regular asset liability modelling with support of the Scheme’s Actuary.

Risk Investment manager under performance

Mitigation Pension Committee and Investment Advisory Panel monitoring of Fund manager performance at least once every three months. [This may be via officers of the Fund as well as formal Panel scrutiny.]

Risk Pensioners living longer than previous valuation assumptions

Mitigation Triennial valuations to review and update longevity expectations

6 Risk Regulatory change

Mitigation Members of the Pensions Committee and officers of the Fund regularly attend seminars and training sessions to maintain knowledge and understanding, to ensure regulatory changes are fully understood and implemented.

Risk Administering Authority not advised of an employer closing to new entrants.

Mitigation The Fund has an effective Communication policy with all employer bodies to inform the importance and impact of such changes

7 Scheme Framework

The Local Government Pension Scheme is a statutory, funded pension scheme. It is “contracted‑out” of the state scheme and is termed a defined benefit (or final salary) scheme. The operation of the Northamptonshire Local Government Pension scheme is principally governed by the Local Government Pension Scheme (Benefits, Membership and Contributions) Regulations 2007 [as amended] (effective from April 2008) and the Local Government Pension Scheme (Administration) Regulations 2008. These replaced the Local Government Pension Scheme Regulations 1997. The scheme covers eligible employees of the County Council, the Police Authority, District and Borough Councils within the county area other than teaching staff, police officers and fire‑fighters for whom separate statutory arrangements exist. A number of other bodies are also members of the Scheme. A list of all those bodies with employees currently participating in the Scheme is shown on pages 21 to 26. This defined benefit scheme provides benefits related to salary for its members and is unaffected by the investment return achieved on the Scheme’s assets. Pensions paid to retired employees, their dependents, and deferred benefits are subject to mandatory reviews and, where applicable, increases in accordance with annual pension increase legislation. The amount is determined by the Secretary of State and is based on the Retail Price Index (RPI).

Contributions The Scheme is financed by contributions from employees and employers, together with income earned from investments. The surplus of contributions and investment income over benefits being paid is invested. The contributions from employees are prescribed by statute and up to 31 March 2008 were at the rate of 5% or 6% of pensionable pay depending upon their conditions of service. From 1 April 2008, under the new scheme, contributions are banded ranging from 5.5% for members on a full time annual pay rate of £12000 to 7.5% for a full-time pay rate of more than £75000. There is transitional protection for employees who were paying 5%; they will pay 5.5% this year, 2009/10, increasing to the standard rates over the next 3 years. Employers’ contribution rates are set following the actuarial valuation which takes place every three years. The contribution rate reflects the Fund deficit or surplus and is the rate at which employers need to contribute to achieve a 100% funding level. The Fund currently recovers deficits over a maximum period of 17 years commencing April 2008, as set out in the Funding Strategy Statement.

Contribution rates for 2009–10 were assessed by the Fund’s Actuary on the last completed valuation of the Scheme’s financial position as at 31st March 2007 and are shown on pages 21 to 26. They also took account of the anticipated effect of the new pension scheme from 1 April 2008. The next actuarial valuation will be undertaken as at 31 March 2010 and the subsequent change in contribution rates, as a result of this valuation, will take effect from 1 April 2011.

8 Funding Strategy Statement

The Fund is required to ensure that sufficient funds are available not only to meet its current liabilities but also to make advance provision of accruing future liabilities. Decisions taken regarding the approach to funding will therefore determine the rate or pace at which this advance provision is made, in addition to the need to ensure sufficient funds are available for its current liabilities. Although the Regulations specify the fundamental principles on which funding contributions should be assessed, implementation of the funding strategy is the responsibility of the Administering Authority, acting on the professional advice provided by the actuary. The purpose of this Funding Strategy Statement is: • to establish a clear and transparent fund‑specific strategy which will identify how employers’ pension liabilities are best met going forward; • to support the regulatory requirement to maintain as nearly constant employer contribution rates as possible; and • to take a prudent longer‑term view of funding those liabilities. The Fund currently has a strong net cash inflow, which it distributes to Fund managers to invest on behalf of the Fund. The investments of the Fund are predominately liquid therefore should the need arise the Fund can realise sufficient cash flow to meet its requirements. This strategy is both cohesive and comprehensive for the Scheme as a whole, recognising that there will be conflicting objectives which need to be balanced and reconciled. Whilst the position of individual employers must be reflected in the statement, it must remain a single strategy for the Administering Authority to implement and maintain. The Funding Strategy Statement is reviewed in line with the Valuation cycle to ensure that the strategy is appropriate and relevant. The Strategy is currently under review to accommodate the challenges of the 2010 valuation with particular emphasis on current longevity pressures and deficit recovery period implications. In addition the review due for completion for September 2010 will consider categorising employers on a risk based approach, against criteria such as employer covenant and strength of balance sheet. The most recent version was approved in March 2008 and is available through the following link: http://www.northamptonshire.gov.uk/Democracy/finance/NLGPS/nlgps.htm

9 Scheme Administration Report

The financial year 2009/10 has been a year where we have embedded changes to the Scheme and considered and acted on how to improve the service offered to all our stakeholders. Following the introduction of the new pension scheme from 1 April 2008 a great number of drafting anomalies were identified that led to more regulations, guidance and consultations being produced, which sought to resolve errors and improve the Scheme provisions. The Pensions Committee deliberated on and responded to the Department of Communities and Local Government on the consultations in its role as the Administering Authority, providing considered opinion on potential changes and offering alternatives where appropriate. 2009/10 has provided us with the opportunity to consider and review the service provided by the Pension Administration Section and also to prepare for future requirements. • A major data cleansing exercise has been carried out in conjunction with the Scheme’s Actuary to ensure the data is as robust and accurate as possible. This is particularly important this year as we prepare for the triennial Valuation of this Fund and determine future employer contribution rates with our Actuary. • Involvement with an arrangement called ‘Club Vita’ has allowed us to identify how the changes in longevity affect not only this part of the country but all the employers in this Fund. Again this data will be invaluable for the Valuation of the Fund. • Processes have been detailed and compared with other authorities to challenge existing procedures and determine best practice leading to greater efficiencies. • The last Benchmarking exercise again identified this Authority as being one of the lower cost authorities; however this needed to be considered together with the level of service being provided. Following discussions with the Actuary it was determined that the staffing structure should be reviewed and improved. The Pensions Committee also committed to annually review staffing levels to ensure the appropriate resource is provided for both the ever increasing demands of an ever increasingly informed membership and to respond to changes in technology. The administration of the Pension Administration Scheme is undertaken in house, supported by a pension system called Axise. This is a system provided and supported by an external contractor, Heywood (part of Aquila Heywood). The system holds detailed data on all Scheme members, past and present. In addition this system provides a Task Management (work flow) functionality to monitor workloads and individual procedures. The pension payroll service is provided by another external company called Mouchel.

10 The Pension Administration Section works continually within a national and regional group and with other authorities to continually review and improve the systems used. The future for pension administration will be very demanding and necessitate major changes in both culture and technology. The Pensions Committee is committed to working with the Pension Administration Section to review, challenge and enhance current practices.

11 Financial Performance

Contributions The chart shows the timeliness of contributions received on or before the due date and shows the improvements made in reducing late contribution payments during 2009–10.

An analysis of contributions is set out on page 49 as part of the notes to the accounts.

12 Management Performance

Membership Members are made up of three main groups. Contributors: – those who are still working and paying money into the Fund. Pensioners: – those who are in receipt of a pension and Deferred Pensioners: those who have left their employment with an entitlement to a deferred benefit on reaching pensionable age. The table below provides the composition of the Fund’s membership for the five years 2005–06 to 2009–10

2005–06 2006–07 2007–08 2008–09 2009–10 Contributors Northamptonshire County 10,908 12,447 13,657 13,447 12,631 Council Probation 237 257 259 256 225 1,016 1,081 1,135 1,215 1,202 Authority

District Councils 379 390 397 386 374 347 330 295 284 264 193 194 194 205 194 473 445 432 433 431 Northampton 1,277 1,189 1,131 1,120 1,100 318 315 293 219 210 Wellingborough 396 367 300 282 301

University of Northampton 630 607 572 581 580 Northampton College 272 264 273 303 309 Tresham College 293 245 250 247 220 Moulton College 175 193 206 214 204

Northamptonshire Connexions 177 162 156 157 151 Shaw Healthcare 196 143 111 94 80 United Learning Trust 44 54 62 71 66 Amey Plc 68 80 61 56 50

Other bodies 748* 848* 396 554 717

18,147 19,611 20,180 20,124 19,309

13 2005–06 2006–07 2007–08 2008–09 2009–10 Pensioners Northamptonshire County 4,716 5,096 5,559 5,886 6,284 Council Probation 97 106 117 121 132 Northamptonshire Police 308 334 366 389 421 Authority

District Councils Corby 455 468 487 497 510 Daventry 225 241 252 258 272 East Northamptonshire 204 212 213 210 213 Kettering 406 426 443 449 465 Northampton 1,347 1,454 1,482 1,482 1,544 South Northamptonshire 240 242 249 257 276 Wellingborough 357 371 385 384 403

University of Northampton 201 220 245 268 300 Northampton College 64 75 87 102 112 Tresham College 68 88 101 111 130 Moulton College 25 29 37 46 53

Northamptonshire Connexions 18 22 30 33 36 Shaw Healthcare 11 22 33 39 49 United Learning Trust 2 2 5 4 6 Amey Plc 1 6 11 17 21

Other bodies 518* 460* 375 393 421

9,263 9,874 10,477 10,946 11,648

14 2005–06 2006–07 2007–08 2008–09 2009–10 Deferred Pensions Northamptonshire County 4,908 5,959 6,314 7,300 8,863 Council Probation 69 81 82 99 127 Northamptonshire Police 321 411 429 547 578 Authority

District Councils Corby 292 295 282 308 336 Daventry 194 212 204 216 240 East Northamptonshire 95 105 103 109 121 Kettering 190 225 231 259 273 Northampton 687 754 765 809 837 South Northamptonshire 178 195 198 209 217 Wellingborough 191 207 204 216 218

University of Northampton 261 331 346 400 422 Northampton College 133 163 150 155 173 Tresham College 135 174 183 211 216 Moulton College 81 99 105 121 166

Northamptonshire Connexions 81 101 102 116 120 Shaw Healthcare 6 35 42 48 62 United Learning Trust 1 5 5 6 13 Amey Plc 0 14 14 16 21

Other bodies 467* 495* 325 316 340

8,290 9,861 10,084 11,461 13,343

* Figures include what were grant maintained schools. Later included within NCC figures.

Mar‑09 Mar‑10 Number of new starters throughout the year 2,549 2,343 Number of new pensioners throughout the year 705 941 Number of new deferred beneficiaries throughout the year 1,952 2,506 Number of refunds and transfers out throughout the year 214 321

In addition to the 13343 deferred records an additional 3502 records have been closed awaiting final determination of whether the accrued benefits are to be refunded, transferred elsewhere or are to remain within this scheme as deferred benefits.

15 The membership analysis below shows the age profile of membership.

at at at 31/03/2010 31/03/2010 31/03/2010 Members in LGPS Actives Deferred Pensioners Age 17 Up to and including 20 193 88 0 Age 21 Up to and including 25 801 613 0 Age 26 Up to and including 30 1,374 1,053 0 Age 31 Up to and including 35 1,671 1,193 1 Age 36 up to and including 40 2,647 1,902 8 Age 41 Up to and including 45 3,449 2,672 24 Age 46 up to and including 50 3,278 2,494 43 Age 51 Up to and including 55 2,696 2,089 264 Age 56 Up to and including 60 2,135 1,591 947 Age 61 Up to and including 65 984 310 2,807 Age 66 Up to and including 70 110 18 2,174 Age 71 Up to and including 75 14 5 1,490 Age 76 Up to and including 80 901 Age 81 Up to and including 85 761 Age 86 Up to and including 90 337 Age 91 Up to and including 95 100 Age 96 Up to and including 100 21 Total 19,352 14,028 9,878 Average age of members 44 years 44 years 69 years

Membership Profile as at 25 August 2009 We have analysed the profile of the membership by the key characteristics of gender and role (where available) in the charts below. The ‘not classified’ members relate to the membership which joined the scheme after 1 April 1998. For members who joined prior to that date it is possible to identify the role performed by an individual as manual or as non‑manual.

16 Historic membership

Active membership at Fund year ends

17 Deferred membership at Fund year ends

Pensioner membership (excluding widow(er)s) at fund year ends

18

The LGPS national average pension is just below £4k per annum. However approximately 68% of the pensioners in the Northamptonshire scheme receive a pension of £4k or less putting this scheme below the national average.

19

20 Contribution Participating Employers Rate 2009–10 % of Payroll Major Scheduled Bodies Borough Council of Wellingborough 25.20% Corby Borough Council 24.20% Council 22.50% East Northamptonshire Council 22.90% Kettering Borough Council 21.50% Northampton Borough Council 26.00% Northamptonshire County Council 18.70% Northamptonshire Police Authority 15.00% Northamptonshire Probation Trust 16.70% South Northamptonshire Council 22.70% Moulton College 13.50% Northampton College 16.90% Tresham Institute 13.90% University of Northampton 15.80%

Other Scheduled Bodies Brooke Weston Academy 16.10% Corby Business Academy 14.10% Coroner 18.70% Kettering Science Academy 17.00% Kettering Buccleuch Academy 15.60% Northamptonshire County Council – Councillors 18.70% Borough Council of Wellingborough 25.20% South Northamptonshire Council – Councillors 22.70% Abbeyfield School 18.70% Abington Vale Primary 18.70% Barry Road Primary School 18.70% Bishop Stopford CE School 18.70% Boothville Primary School 18.70% Broughton Primary School 18.70% Bugbrooke Community Primary School 18.70% Campion School 18.70% Caroline Chisholm School 18.70% Chacombe Primary School 18.70% Chenderit School 18.70% Clipstone Primary School 18.70% Collingtree Primary School 18.70% Corby Danesholme Junior School 18.70%

21 Contribution Participating Employers Rate 2009–10 % of Payroll Corby Lodge Park Technical College 18.70% Corby Studfall Junior 18.70% Croyland Nursery School 18.70% Danetree School 18.70% Deanshanger Kingsbrook School 18.70% Duston School 18.70% Ecton Brook Primary School 18.70% Fairfields Special School 18.70% Finedon Infant School 18.70% Finedon Mulso Junior School 18.70% Friars Special School 18.70% Gateway School 18.70% Grange Community School 18.70% Primary 18.70% Greenfields School 18.70% Guilsborough School 18.70% Hardingstone Primary School 18.70% Headlands Primary School 18.70% Henry Chichele School 18.70% Huxlow Science College 18.70% Primary 18.70% Junior School 18.70% Isebrook School 18.70% Kettering Montagu School 18.70% Kettering Millbrook Infant School 18.70% Kettering Millbrook Junior School 18.70% Kingsley Primary School 18.70% Kingsley School Kettering 18.70% Kingsthorpe Community College 18.70% Magdalen College 18.70% Mawsley Primary 18.70% Montsaye Community College 18.70% Moulton Primary School 18.70% Moulton Secondary School 18.70% Newton Road Community School 18.70% Northampton School for Boys 18.70% Northampton School for Girls 18.70% Primary School 18.70%

Continued overleaf

22 Contribution Participating Employers Rate 2009–10 % of Payroll Park Infant School Raunds 18.70% Park Junior School Kettering 18.70% Parklands Primary School 18.70% Prince William School 18.70% Raunds Manor School and Sports College 18.70% Raunds Windmill Primary School 18.70% Ringstead Primary School 18.70% Community School 18.70% South End Infant Rushden 18.70% South End Junior Rushden 18.70% Southfields School for Girls 18.70% Sponne Community School 18.70% St Andrews Primary School 18.70% St Mary’s Primary Northampton 18.70% St Mary’s Primary School 18.70% St Patrick’s Primary School 18.70% Standens Barn Primary 18.70% Stimpson Avenue Primary 18.70% The Ferrers College 18.70% The King John School 18.70% The Kingswood School Corby 18.70% Thomas Beckett Catholic School 18.70% Thorplands Primary School 18.70% Thrapston Primary School 18.70% Primary School 18.70% Trinity Lower Aldwincle 18.70% Unity College 18.70% Vernon Terrace Primary 18.70% Wallace Road Nursery School 18.70% Weldon Primary School 18.70% Welford, Sibbertoft and Sulby Endowed School 18.70% Wellingborough Croyland Primary School 18.70% Wellingborough Oakway Infant School 18.70% Wellingborough Oakway Junior School 18.70% Wellingborough Our Lady’s Catholic Junior School 18.70% Wellingborough Redwell Infants School 18.70% Wellingborough Sir Christopher Hatton School 18.70% Wellingborough Weavers School 18.70%

23 Contribution Participating Employers Rate 2009–10 % of Payroll Wellingborough Wrenn School 18.70% Weston Favell School 18.70% Wollaston Primary School 18.70% Woodford Halse Primary School 18.70% Woodnewton Learning Community 18.70% Small Scheduled Bodies Barby Parish Council 18.90% Billing Parish Council 18.90% Town Council 18.90% Daventry Town Council N/A Brixworth Parish Council 18.90% Grange Park Parish Council 18.90% Irthlingborough Town Council 18.90% Parish Council N/A Moulton Parish Council 18.90% Oundle Town Council 18.90% Raunds Town Council 18.90% Rushden Town Council 18.90% Stanwick Parish Council 18.90% Towcester Town Council 18.90% Wollaston Parish Council 18.90% Wootton & East Hunsbury Parish Council 18.90%

Admitted Bodies Amey plc 17.30% Daventry & District Housing 14.70% DC Leisure 13.50% EMBC plc 17.60% May Gurney 19.50% Northampton High School 15.10% Northamptonshire Connexions Partnership Ltd 16.00% Northamptonshire Enterprise Ltd 11.90% NSL Ltd 15.70% Rockingham Forest Trust 14.70% Shaw Healthcare 17.80% South Northants Homes 15.80% Spire Homes Limited 31.80% The Castle (Wellingborough) Limited 20.00%

Continued overleaf

24 Contribution Participating Employers Rate 2009–10 % of Payroll The Northampton Theatres Trust 18.00% United Learning Trust – Northampton Academy 10.70% Wellingborough Homes Ltd 16.10% West Northants Development Corporation 14.70% WSP 19.70% Small Admitted Bodies Age Concern (Northampton and County) 28.00% East Northants Cultural Trust 12.00% EMLC 40.50% Develepment Corporation 24.30% The Stationery Office 20.90%

Employers Whose Active Membership Ceased during the Financial Year Ending March 2010 Carillion plc 16.00%

Employers with NO Active Members AWA Ex WNRA N/A Corby Development Corporation N/A Daventry Town Council N/A Derngate Housing Association N/A Department of Constitutional Affairs (Magistrates) N/A Former Health Pensioners N/A Former Nene College Pensioners N/A Long Buckby Parish Council N/A Nene Valley Waste N/A Newton in the Willows Trust N/A Northampton and County Blind Association N/A Northampton Borough Council Ex Transport N/A Northampton Development Corporation N/A Northampton Joint Valuation Panel N/A Northampton Transport Limited N/A Northamptonshire Enterprise Agency N/A Pest Express N/A Pytchley Town Council N/A Scholorest N/A Society of County Archivists N/A Wicksteed Memorial N/A Bellinge Primary School N/A

25 Contribution Participating Employers Rate 2009–10 % of Payroll Corby Beanfield Primary School N/A Corby Queen Elizabeth School N/A Corby Woodnewton Junior School N/A Kettering Brambleside Primary School N/A Northampton Kingsley Park Middle School N/A Stanion CE Primary School N/A Wellingborough Hardwick Infants School N/A

26 Investment Policy and Performance Report Benchmark April 2009

The asset allocation and benchmarks applied during the 2009–10 financial year is shown below. This can be compared to the asset allocation and benchmarks revised as at 31 March 2010 for the 2010–11 financial year, on page 36.

Weighting % Market Benchmark adopted UK Equities 34.5 FTSE All Share Overseas Equities 34.5 6.80% FTSE AW All World ex UK 7.00% FTSE AW Developed World ex UK 6.07% FTSE AW Developed Europe ex UK 6.07% FTSE AW North America 6.07% FTSE AW Developed Asia Pacific 2.50% FTSE AW Emerging Bonds 18 3.19% FTSE Government All Stock 1.20% FTSE Government All Stock > 15 Years 5.80% Iboxx Sterling Non‑Gilts 2.30% FTSE Index Linked Gilts > 5 Years 3.50% 20 Year Sterling Inflation Linked Swap 1.00% Lehman Bros 240 Month Sterling Swap 1.00% Lehman Bros 600 Month Sterling Swap Property 8 8.00% HSBC AREF All Balanced Funds Hedge Funds 5 5.00% 1 month LIBOR + 5% p.a. Total 100

27 Investment Policy and Performance Report Fund Manager Profile

The asset allocation and bench marks shown above require external Fund managers to undertake the specific investments against a performance framework by asset class and indices. Set out below are the investment managers employed by the Fund together with the asset class they are appointed for and the outperformance target they are expected to achieve. Performance against the benchmark is monitored on a quarterly basis, the performance for the 2009–10 financial year is set out on pages 36 to 40. In order to measure on a fair and reasonable duration a three year rolling target is set. However should a manager show signs of unsatisfactory performance the Fund can immediately terminate the appointment.

Investment Manager Asset Class Individual Target UBS Multi‑asset 1% Aberdeen Bonds 1.3% Wellington Bonds 1% [From April 2010] Majedie UK Equities 2% Martin Currie UK Equities 2% [Ceased March 2010] Alliance Bernstein Global Equities 2% Newton Global Equities 2% UBS Passive Overseas Equities [From April 2010] Fauchier Hedge Fund of Funds LIBOR + 5% Partners Group Hedge Fund of Funds LIBOR + 5% [Ceased March 2010] CBRE Property 1% RREEF Property 0.75% Overall Fund Target 1.3%

28 Bid Market Value as Asset Class Manager Holding (%) at 31 Mar 2010

Multi Asset UBS 237.9 20.0

Majedie 143.6 12.0 UK Equity Martin Currie 89.9 7.5

Alliance Bernstein 187.4 15.7 Global Equity Newton 191.3 16.0

Passive Global Equity UBS 74.2 6.2

Aberdeen 135.1 11.3 Fixed Income Wellington 28.0 2.3

CBRE 31.7 2.7 Property RREEF 16.3 1.4

Fauchier 31.2 2.6 Hedge Fund of Funds Partners 23.3 2.0

Venture Capital Catapult 2.1 0.2

Total 1,192.0 100.0

29 Investment Review 2009–10

Economic and market background In early 2009 financial markets were still reeling from the collapse of Lehman Brothers in September 2008 and the shocking fragility of the banking system that it revealed. A sharp credit contraction was expected to cause a significant global recession and there were fears of widespread bank failures and potentially even a re‑run of the Great Depression of the 1930s. However by March state support for banks was ensuring that credit was again flowing to finance global trade and the dreaded “domino” effect of further major bank failures was receding. Shares rallied as investors identified fundamental value and were encouraged short‑term by evidence that de‑stocking by companies was finally abating. Some re‑leveraging by hedge funds replaced former violent de‑leveraging and forced selling and contributed to the sharp recovery in equity prices. As the year unfolded the economic downturn proved a little less severe than previously expected as leaders of western consumer centric democracies did everything possible to stimulate activity and refused to be shackled by resulting burgeoning budget deficits. Despite the virtual demise of securitisation, the credit squeeze though severe was less acute than feared. Also China’s industrialising command economy delivered and any protectionism was restrained. The UK economy benefited from the boost to competitiveness from the significant fall in the pound sterling in 2008/9. Most “risk” assets rebounded dramatically over the year. Global equities were again touted as an alternative to low yielding government bonds and recovered much of the loss suffered in the six months immediately post Lehman, returning 48% with cyclical companies to the fore. Emerging markets and Pacific Basin [ex Japan] led the way with returns of respectively 74% and 67%. UK returned 52%, Europe [ex UK] 49%, US 42% and Japan 30%. UK gilts returned just 1% but index‑linked 10% as concerns over inflation rose but the ML sterling non‑gilt index returned 22% as corporate debt and particularly banking debt recovered from former virtual paralysis caused by forced selling by leveraged funds. UK property and hedge funds both returned about 12% as confidence and liquidity recovered, whilst the performance of other alternatives was generally poor.

Performance The value of the Fund rose over the year from £0.87bn to £1.20bn. The return at 36.1% was marginally below the primary bespoke benchmark of 36.5% and just ahead of the average Local Authority Pension Fund return of 35.2%. With the bond managers heavily exposed to bank debt and therefore recovering strongly from poor results in the previous year, this was disappointing. Two equity managers and one hedge fund manager performed poorly. Two of these three under‑performers have been discontinued at year‑end, albeit for reasons of general assessment rather than just performance. The third remains under review.

Economic Outlook A widespread recovery is now generally expected led by emerging economies as free capital markets and free trade once again facilitate a quick return to normal levels of economic growth. However this time it might be somewhat different, as the fundamental causes of recent financial instability have still to be adequately addressed. There is still an intractable trade imbalance between the big exporters and the importing economies, which are dependent largely on consumer spending, funded mainly by housing debt. The manufacturing behemoths, Germany and China, still seem to view the US, UK and fringe Euro area trade deficits as a problem of past profligacy. However if the exporters do not stimulate domestic consumption then overall demand will be restrained and imbalances 30 will continue to haunt international coordination of trade and regulation and threaten further currency instability. In the Euro, where devaluation at least relative to Germany is not an option, trying to regain lost competitiveness is proving particularly painful. The banking system is still very thinly capitalised even after a few heavy rights issues, including government stakes, and a renewed flow of retained profits. Very low interest rates were required to kick‑start economic recovery but they are now once again giving a windfall margin or “carry” to banks from the difference between the generally short‑term return offered to depositors relative to the generally longer term rate charged to corporate or individual borrowers. However profits, even if windfall, seem inexorably to beget bonuses and with implicit government support this almost incites further speculation by traders employed or financed by the very banks baled out by taxpayers. Specialist “boutiques” could supply all the services required by bank clients but, until the major banks can be weaned off state support, any new entities will struggle – low cost airlines took many years to challenge the monopolistic and previously protected national carriers. There is much uncertainty as moral suasion by national authorities lacks traction in a global market and international coordination seems to have been sidelined by domestic politics of being seen to make the bankers pay. The US has announced some restraining measures but everywhere the authorities remain paranoid about a renewed banking crisis with the attendant probability of a “double dip” recession. The UK’s heavy dependence on the financial services sector leaves it particularly conflicted and exposed. The extent of economic stimulus provided by governments has been unprecedented. But now the hard part starts with public spending cuts to reflect the lower tax base, to an extent that maintains confidence in funding deficits in skittish global markets.The relatively disciplined Irish and the chaotic, even anarchic, Greek experience reveal a wide range of possible out turns. The UK budget deficit is amongst the highest and the recent Emergency Budget was intended to convince international investors that it would be tackled progressively. However, the extent of proposed cumulative cuts in some departmental budgets is so great as to almost defy belief and there is a risk that implementation will prove so difficult that the pace will need to be slowed and taxes will need to take more of the strain. Timing is also a tricky judgement as it is vital that the incipient recovery in activity is not stunted. However, in this dawning age of austerity it is inevitable that public spending will be heavily restrained for many years and, however undesirable, this will inevitably include capital spending on infrastructure. So the strength and durability of recovery remains worryingly dependent on a pick‑up in private sector capital investment and job creation, both on an unprecedented scale, and all this whilst maintaining consumer confidence.

Strategic asset allocation The core strategic decision is the extent of the Fund’s exposure to equities. The best generally accepted fundamental valuation guides are the cyclically adjusted price earnings ratio and market value compared to net worth. These measures gave a buy signal in the turmoil of early 2009 and tended towards sell in early 2010. They now suggest that after the recent relapse equities globally are approximately correctly priced by very long‑term historical standards – albeit a bit under‑priced compared to the “great moderation” to 2007. So broadly valuations seem to reflect a reasonable balance between the risks to sustained economic recovery in the developed world and the enormous momentum generated by industrialisation of China, India, Indonesia and Brazil. Therefore the bulk of the Fund continues to be held in equities to produce the higher long‑term returns that should help to minimise employer contributions. Government and corporate debt, and property provide diversification, though, except for government debt, to a much lesser extent than generally supposed before the crowding and correlation of all “risk” assets in recent years.

31 As a result of the last formal strategic review a number of changes to the structure and managers have been implemented as at 31st March 2010. The management of equities has been changed with a slightly reduced commitment to the UK, which has become dominated by a few multi‑national companies with limited UK business. Global equity management has been introduced in lieu of the former overseas [i.e. excluding UK] including 1/3rd in a new index‑tracking mandate. One of the two specialist UK equity managers and one of the two hedge fund managers have been discontinued and a new bond manager introduced. The overall structure and all the managers remain under active review to help ensure the best possible prospect of adding long‑term value whatever the shape of the Local Government Pension Scheme.

Paul Meredith 8 July 2010

32 Investment Performance 2009–10

Further investment performance details comparing the Northamptonshire Pension Fund with other local authority funds and indices are shown in the table below:

% Returns per annum for the financial year ended 31 March 2010 Local Northamptonshire The Retail Price Average Authority Pension Fund Benchmark Index Earnings Average 2009–10 1 year 36.1 36.5 4.4 4.9 35.2 2007–10 3 years 0.6 2.7 2.6 3.4 1.7 2005–2010 5 years 5.8 7.6 3.0 3.6 7.1 2000–2010 10 years 3.7 4.2 2.7 3.7 3.8

Investment Manager Performance This table sets out the investment manager performance for 2009–10.

1 Year 3 Years % pa Asset Class Manager Return Benchmark Variance Return Benchmark Variance Multi Asset UBS 44.5 36.3 8.2 0.5 0.7 -0.2 Majedie 51.0 52.3 -1.3 6.6 -0.2 6.8 UK Equity Martin Currie *

Alliance 48.1 48.0 0.1 -0.4 5.3 -5.7 Bernstein Global Equity Newton 33.8 47.8 -14.0 4.5¹ 8.9¹ -4.4¹

Fixed Income Aberdeen 16.4 5.8 10.6 5.4 6.7 -1.3 CBRE 17.6 11.7 5.9 -9.2 -10.2 1.0 Property RREEF 6.6 11.7 -5.1 -11.8 -10.2 -1.6 Hedge Fund Fauchier 13.6 6.1 7.5 3.7² 9.1² -5.4² of Funds Partners *

* Dismissed during March 2010. ¹ Appointed 1 April 2008, therefore annualised return over rolling two year period to 31 March 2010. ² Appointed 1 July 2007, therefore annualised return over two years and nine months to 31 March 2010.

33 Performance by Asset Class

Investment returns and the Local Authority Average The Fund participates in the WM Company’s benchmarking of Local Authority investment performance, which provides useful information on how well the Fund has performed in comparison with other Local Authorities.

The graph shows that the Fund’s asset mix is broadly comparable with the Local Authority Average, the main variances indicating the Fund’s preference for equity.

Local Authority Universe

The LGPS is a national scheme with over 90 schemes these schemes compare many aspects of Fund performance the key areas of which are shown on the following pages.

NB: The Fund figure for Alternatives includes Hedge Funds only, whilst the Local Authority’s figure for Alternatives includes Private Equity, Hedge Funds, GTAA, and Commodities etc. The comparison above shows that the outperformance of the Fund against the Local Authority Average was most significant in Bonds and Hedge Funds.

34 Year 2000– 2001– 2002– 2003– 2004– 2005– 2006– 2007– 2008– 2009– Annual 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Return Total Fund -2.9 0.5 -21.8 27.0 11.8 24.9 4.1 -5.7 -20.7 36.1

WM -6.3 -0.5 -19.5 23.4 11.7 24.9 7.0 -2.8 -19.9 35.2 Benchmark

The table above compares the Fund’s performance with the Local Authority Average for the nine years since 2001. This is shown graphically below where the relative returns are plotted.

Local Authority Universe

The graph demonstrates the volatility of annual return comparisons of Fund performance against the Local Authority Universe. Of the ten years shown the Fund has outperformed the Local Authority Average on four occasions, underperformed on four occasions and matched the average on two occasions. The latest years 2007–08 and 2008–09 show underperformances against the Local Authority Average. The Fund has recognised these underperformances and is planning an Asset Allocation Review in 2011.

35 Asset Allocation and Fund Specific Benchmark April 2010

The asset allocation and benchmarks were reviewed and amended during the 2009–10 financial year. Set out below is the new structure to be applied for the 2010–11 financial year. This can be compared to the benchmarks used for the 2009–10 financial year set out on page 27. The table below shows the asset allocation and associated specific benchmarks (indices) against effective from April 2010.

UK Equity 23.00% Majedie 11.50% FTSE All‑Share index UBS 11.50% FTSE All‑Share index

Global Equity 46.00% Alliance Bernstein 15.30% MSCI AC Newton 15.30% MSCI AC UBS 15.40% FTSE All World (inc EM)* Passive

Property 8.00% CBRE 4.00% HSBC/APUT All Balanced Funds Index RREEF 2.00% HSBC/APUT All Balanced Funds Index UBS 2.00% HSBC/APUT All Balanced Funds Index

Hedge FoF 3.00% Fauchier 3.00% Sterling 3 month LIBOR +5%

Bonds 20.00% Aberdeen 10.00% 1.80% FTSE All Stock Gilts 3.20% iBoxx Sterling Non Gilts 3.20% Barclays Capital Inflation Swap GBP 20 Year Real Rate TR 0.90% Barclays Capital Nominal Swap GBP 20 Year Coupon TR 0.90% Barclays Capital Nominal Swap GBP 50 Year Coupon TR UBS 5.00% 1.67% iBoxx Sterling Non Gilts 1.67% FTSE Over 5 Year Index Linked Gilts 0.83% FTSE All Stocks Gilts 0.83% FTSE Over 15 Year Gilts

Continued overleaf

36 Wellington 5.00% 3.33% Merrill Lynch Sterling Broad Market 1.67% Merrill Lynch Index Linked Gilts Index GTAA UBS Total 100.00%

* In practice may include separate regional equity and bonds for rebalancing purposes.

37 Actual Reports Actuarial Report on Fund

1. Mercers Human Resource Consulting undertook a valuation of the Fund as at 31 March 2007 in compliance with Regulation 77 of the Local Government Pension Scheme Act 1997 (as amended) (“the Regulations”). The revised contribution arrangements which are effective from 1 April 2008 are set out in the Rates and Adjustments Certificate required by Regulation 77. It should be noted that contribution rates are subject to review under Regulation 78(3)(b) if the need arises and, in any case, rates for years from 2011–12 onwards will be reviewed at the next valuation. In the normal course of events, it would be expected that the funding level would increase by the time of the next valuation at 31 March 2010, largely because the rates of contribution to be paid contain an element to liquidate the deficiency found at this valuation. The residual deficiency would then be re‑spread at the next valuation. (Amortising early retirement costs as they arise means that future redundancies should have no great effect on the position of the Fund.) However, any increase in funding level is dependant on the assumptions made being borne out in practice, the main areas where variations might be expected being increases in pay and investment returns in excess of price inflation. 2. Mercers Human Resource Consulting are of the opinion that the rates of contribution in payment from 1 April 2008, together with the increases recommended to apply in future, and the existing assets of the Fund, will be sufficient, on the basis of the assumptions adopted for the actuarial valuation of the Fund as at 31 March 2007, to meet the liabilities of the on‑going Fund under the regulations associated with accrued and currently accruing pensionable service, increasing levels of pensionable remuneration and increases to pensions both in payment and in deferment.

38 Actuarial Position Statement (Most recent valuation)

1. An actuarial valuation of the Fund was carried out as at 31 March 2007. 2. The 31 March 2007 valuation position is calculated using a market value based approach, similar to that adopted for the FRS17 accounting for pension costs. 3. At the valuation date, the Fund showed a deficit of £341.1 million and a funding level of 76%, based on the assumptions made for calculating its funding target. The assets held at the valuation were sufficient to cover 76% of the accrued liabilities, a funding level increase of 5% compared to the level at the 2004 actuarial valuation. 4. This valuation also showed that the Common Contribution Rate, i.e. the average employer contribution rate payable in respect of future service only was 12.7% of Pensionable Pay (10% at the March 2004 valuation). Individual adjustments to the Common Contribution Rate payable by the respective authorities have been provided. 5. The deficit of £341.1 million is to be recovered over a maximum period of 17 years through additional employer contributions. Based on this the average employer contribution rate is 20.2% of Pensionable Pay per annum (17.8% at the 2004 valuation). This consists of 12.7% in respect of future service and 7.5% in respect of the deficit recovery contributions. 6. The revised contribution rates are effective from 1st April 2008. The increase in the contribution rate from 17.8% to 20.2% is due to a combination of increases to the cost of accruing benefits offset by a slight reduction to the contribution required to meet the past‑service shortfall. The existing contribution rates following the 31 March 2007 valuation for each participating body are shown in Appendix 4. 7. The market value of the Fund’s assets at the valuation date was £1107.9m. 8. The main actuarial assumptions used in the 31 March 2007 actuarial valuation were as follows: Rate of price inflation 3.1% per annum Rate of general pay increases 4.6% per annum Rate of increase of pensions 3.1% per annum [In excess of Guaranteed Minimum Pension (GMPs)]

39 Actuarial Investment Return Assumptions (Most recent valuation)

Investment returns assumptions: The Investment return assumptions applied in the most recent valuation (March 2007) are shown below: Return on long dated gilts 4.4% Assumed out performance relative to gilts, provided by Fund’s significant equity exposure: Pre Retirement (per annum) 2% Post Retirement (per annum) 1%

2007 Funding Target 2007 Normal Cost (past service assumptions) (future service assumptions) Pre‑retirement Investment Return 6.4% p.a. 6.5% p.a. Post‑retirement Investment Return 5.4% p.a. 6.5% p.a. Salary increases 4.6% p.a. 4.25% p.a. Pension increases 3.1% p.a. 2.75% p.a.

40 Governance Arrangements

Legal Framework The investment management of the Fund is governed by the provisions of the Local Government Pension Scheme – Management and Investment Regulations 1998. The main stipulations are: • An administering authority may appoint one or more investment manager to manage and invest fund monies on their behalf. • The investment manager must provide, at least once every three months, a report setting out his actions. • The investment manager must have regard to the need for diversification of investments of fund monies and to the suitability of investments which they propose to make.

Pensions Committee The investment activities of the Fund are controlled by the County Council’s Pensions Committee, supported by an Investment Advisory Panel. The Pensions Committee consists of: • five members nominated by the County Council; • one district council representative; • two employee representatives, nominated by the employees’ union UNISON • a University and Colleges Representative [Effective June 2010] Since April 2001 the Fund has been advised by independent adviser, Mr. P Meredith. The independent adviser is not formally a member of the Pensions Committee. The members of the Pensions Committee as at 31 March 2010 are listed on page 4. In respect of Investments the Pensions Committee seeks to ensure that all: • funds are suitably invested, • investments are diversified, • relevant investment limits are not exceeded, • Investments and investment arrangements are regularly monitored and reviewed.

Investment Asset Allocation and the role of Fund Managers Asset Allocation is the determination by the Pensions Committee informed by professional investment advisors of the categories of investment that the Fund should seek to invest in, being an assessment of the asset types that best serves the current and future demands on the Fund. Typical categories are Equities, Fixed Interest Instruments, Property and cash. Following determination of the categories of investment, external investment managers are appointed to implement the investment strategy. Operational “day to day” investment decisions are taken by external investment managers, appointed by the Pensions Committee to optimise returns, as determined within the Fund’s Asset Allocation.

41 With the exception of a Passive global Equities mandate all external investment managers have been given “active” briefs to outperform the benchmark, which means they must determine which stocks to hold and which not to hold, in order to out perform the investment benchmark they are instructed to trade in. External investment managers:‑ ❖❖ Are given specific briefs in a defined asset class, therefore have little or no flexibility between asset classes. ❖❖ Have limited sums to invest and are therefore less disruptive to replace should the need arise. ❖❖ Have competitive performance targets to reflect the intensity of their limited specialist investment brief. ❖❖ Are sometimes limited in which country they can invest, for example we have investment managers who can only invest in UK equities.

Performance Fund manager performance is undertaken by the Investment Advisory Panel of the County Council, where fund managers are required to report investment performance on a quarterly basis. They are subject to challenge in these meetings from the Panel members and the Panel’s well respected and informed independent investment adviser.

Custodian Services Northern Trust has been the Fund’s appointed Global Custodian since September 2000. The responsibilities of the Global Custodian are: • Arranging for the custody of the scheme’s assets in compliance with the custody agreement. • Ensuring that all holdings have been registered as assets of the Fund. • Manage the settlement of all deals entered into by the fund managers, collect all dividends and interest accruing to the Fund and to hold all cash. • Providing the administering authority with monthly valuations of the scheme’s assets and details of all transactions during the quarter. • Providing details in a timely manner to Russell Mellon Performance Services Limited and the WM Company.

Asset Liability Study The Fund is required to undertake a full actuarial valuation of its assets and liabilities every three years. The valuation which impacted on the financial period covered in the report came into effect from 1st April 2008 for a three year period ending on March 2011. The valuation process considers current and future liabilities and the degree to which these liabilities are provided for in the current value of assets, anticipated future investment return and the level of ongoing employer funding. It is best practice following a valuation to review the asset allocation of the Fund and consider changes to the Fund’s investment strategy. The Fund duly undertook an Asset Liability Study which informed changes in investment strategy throughout the period covered by the March 2004 valuation.

42 Administering Authority Discretions

1.1 Power of employer to increase total membership Employers may resolve to increase the total membership of an active member (Augmentation).

Decision; On the award of augmented service employers with an automatic right of admission to the fund (County, District/Borough Councils; Fire and Police authorities; Probation Service, Further and Higher Education establishments) will be required to repay the actuarially assessed costs of the augmentation over a period of up to three years. The costs to be repaid at the beginning of each financial year commencing from the financial year following that in which payment commences. This provision will also be applied to Housing Associations and Connexions. Other employers will be required to repay the actuarially assessed costs immediately unless otherwise agreed by the Assistant Chief Executive Finance and Commercial (Section 151 Officer), or his nominated officer in consultation with the Chairman of the Pensions Committee.

1.2 Statements of policy concerning abatement of retirement pensions in new employment Each administering authority must formulate and keep under review their policy concerning abatement of pensions for re‑employed pensioners. Abatement is the extent, if any, to which the amount of the retirement pension should be reduced or possible completely suspended.

Decision; When a Local Government Pension Scheme pensioner is re‑employed within the local government sector and combined earnings and pension exceeds final salary in the original employment when adjusted for inflation, the pension will be abated.

43 Legislation Report 2009–10

During the last year there have been four Statutory Instruments amending the Local Government Pension Scheme.

1.1 The Local Government Pension Scheme (Amendment) Regulations 2009 (SI 2009/1025) introduced the statutory requirements necessary for the next stages of cost sharing arrangements.

1.2 The Local Government Pension Scheme (Management and Investment of Funds) Regulations 2009 (SI 2009/3093) was a consolidation of the previous Management and Investment of Funds Regulations 1998. It also introduced the requirement for a separate bank account for the Pension Fund.

1.3 The Local Government Pension Scheme (Miscellaneous) Regulations 2009 (SI 2009/3150) are mostly technical and minor changes to the three sets of regulations comprising the 2008 regulations.

1.4 The Local Government Pension Scheme (Amendment) Regulations 2010 (SI 2010/528) amended the regulations in respect of the dissolution of the Learning and Skills Council for and the merger of local probation boards to form probation trusts. The third amendment also extended by one day, to 31 March 2010, the protection for those over 50 and under 55 to receive their pension benefits on Redundancy.

44 Fund Account for the year ending 31 March 2010 2009–10 2009–10 2009–10 2008–09 Note £000s £000s £000s £000 Contributions (3) Employers’ contributions 69,169 60,169 Employees’ contributions 19,883 18,825 Employees’ added years for additional benefit 345 360 Employers’ augmentation 205 519

Transfers in Individual transfers in 13,433 10,483 103,035 90,356 Benefits payable Death benefits (1,284) (1,933) Lump sums (14,514) (13,110) Pensions (47,361) (43,441)

Payments to and for leavers Return of contributions (19) (1) Individual transfers out (4) (10,792) (2,723)

Administration expenses (5) (2,875) (2,746) (76,845) (63,954) Net additions from dealing with Members 26,190 26,402

Returns on investments Net gain/(loss) on sales 52,485 (86,282) Net increase/(decrease) in unrealised gain/loss (6) 225,424 (170,260) Change in market value of investments 277,909 (256,542)

Investment Income Investment Income (7) 31,340 37,670 Investment Managers’ Fees (5) (3,824) (3,237) 27,516 34,433

Net returns on investments 305,425 (222,109) Net increase/(decrease) in the Fund 331,614 (195,707)

Net assets of the Fund at the start of the year 868,490 1,064,197 Net assets of the Fund at the end of the year 1,200,104 868,490

45 Net Asset Statement as at 31 March 2010 2009–10 2009–10 2008–09 Note £000s £000s £000 Investments at market value Fixed‑interest securities (11) 56,229 53,046 Index‑linked securities (11) 39,382 16,736 Equities (11) 625,832 545,987 Pooled Investment Vehicles (11) 431,458 222,810 Derivatives (11) (200) (11) Cash deposits (11) 60,071 16,584 Other Investment Balances (11) (20,935) (1,058) 1,191,837 854,094

Current assets Debtor Contribution due from employers (13) 9,047 4,142 Others 2,850 3,393 Cash with Northamptonshire County Council (12) 88 9,060 11,985 16,595

Current liabilities Creditors (13) Unpaid Benefit (2,818) (1,571) Others (900) (628) (3,718) (2,199)

Net current assets 8,267 14,396

Net assets 1,200,104 868,490 The accounts summarise the transactions of the Scheme and deal with the net assets at the disposal of the Pension Fund Committee members. The accounts do not take account of the obligation to pay future benefits which fall due after year end. The actuarial position of the Scheme which takes into account these obligations is available on Northamptonshire County Council’s website, http://www.northamptonshire.gov.uk/pensions

46 Notes To The Accounts

The Assistant Chief Executive Finance & Commercial Management (Section 151 Officer) is responsible for: • The preparation of the accounts for Northamptonshire Pension Fund to present fairly the financial position at the accounting date and its income and expenditure for the year. • Making reasonable and prudent judgements and estimates. • Complying in all material aspects with the Code of Practice on Local Authority Accounting in Great Britain Pension Fund and applying accounting policies consistently. • Keeping proper, up to date, accounting records. • Taking reasonable steps for the prevention and detection of fraud and other irregularities. • The administration of pension benefits. The new Pensions SORP (The Financial Reports of Pension Schemes – A Statement of Recommended Practice (2007)) has been incorporated into the 2008 edition of the Code of Practice on Local Authority Accounting. The Pension Fund financial statements have been prepared in accordance with the provisions of Chapter 2 Recommended Accounting Practice of the Pension SORP 2007. As a result amendments to disclosures and presentation have been made and where appropriate prior year comparatives have been amended.

1. Accounting Policies The accounts have been prepared in conjunction with all relevant sections of the Pensions SORP. (a) Contributions and benefits are included in the accounts on an accruals basis. (b) Transfer values have been recorded on the basis of amounts receivable or payable as at 31 March. (c) Interest and dividends are included in the accounts on an accruals basis. (d) Investments including listed securities, property and unit trusts are included in the accounts at market value (Bid price). These prices are determined by the custodian using several sources including Exshare, Telekurs, Reuters, FT Interactive Data and Bloomberg. (e) Unquoted securities are valued having due regard to the latest dealings, professional valuation, asset values and other appropriate financial information. (f) Fixed interest securities are stated at their clean prices. Accrued income is accounted for within investment income. (g) Pooled Investment Vehicles are stated at bid price for funds with bid/offer spreads, or single price where there are no bid/offer spreads, as advised by investment managers. (h) Additional Voluntary Contributions (AVC) investment valuations are provided by the AVC providers Prudential Assurance and Standard Life.

(i) Taxation The fund pays VAT collected on income in excess of VAT payable on expenditure to HM Customs and Excise. The accounts are shown exclusive of VAT.

47 The fund is exempt from tax on capital gains and from income tax on interest receipts. The fund is liable to tax at a rate of 20% on small pensions that have been compounded into a lump sum. The fund is exempt from US withholding tax. The Fund receives interest on its overseas bond gross, but a variety of arrangements apply for the taxation of dividends on overseas equities in the various markets. Where relief is available, it may be either in full at sources, or partial relief by claim. In some markets (Finland, Japan, Canada, Italy, Norway and Sweden) tax is deducted at the treaty rate so that no further adjustment is required, and there are also markets (Malaysia and Singapore) where no double taxation agreements exist and the full amount is payable.

(j) Invest Management Expenses The investment managers are paid quarterly fees in arrears based on the market value of the investments managed at the end of each quarter. Performance fees are payable to Majedie Asset Management, Fauchier and Partners based upon the performance of their mandate.

(k) Gains and Losses Gains and losses are reflected on an average calculation basis.

(l) Administrative Expenses There is a dedicated Pensions Admin team, whose costs are recharged to the Fund.

(m) Foreign Currency Translation Investments held in foreign currency are translated into sterling at the exchange rate as at the date of valuation.

(n) The Statement of Investment Principles is available on the Northamptonshire County Council’s website, http://www.northamptonshire.gov.uk/pensions.

2. Long Term Liabilities The accounts summarise the transactions of the scheme and deal with the net assets at the disposal of the trustees. The accounts do not take account of the liabilities to pay future benefits. They should therefore be read in conjunction with the Report of the Actuary which takes such liabilities into account, available on the Northamptonshire County Council’s website, http://www.northamptonshire.gov.uk/pensions.

3. Contributions All accruals for contributions owed by employers have subsequently been received. The 14.2% increase in employers’ contributions from 2008–09 to 2009–10, relates to a circa 4% increase in employers contributions, new employers into the Scheme during 2009–10 and pension strain costs. Employees’ additional contributions also include strike contributions and Additional Regular Contributions (£349k) as at 31st March 2010, unlike Additional Voluntary Contributions (AVC’s) which are disclosed separately in note 15.

48 Employers’ augmentation as at 31st March 2010 (£205k) has decreased over 31st March 2009 (£519k). This is due to the reducing trend of employers giving additional service due to changes in policy and legislation. The following tables show the breakdown of contributions and benefit payments by Administering Authority, Admitted Bodies and Scheduled bodies.

Analysis of Contributions – 2008–09

Employees Employers Employees additional contributions contributions contributions Total £’000s £’000s £’000s £’000s NCC 25,946 8,013 149 34,108 Admitted Bodies 2,863 1,245 14 4,122 Scheduled Bodies 31,360 9,567 197 41,124 Total 60,169 18,825 360 79,354

Analysis of Contributions – 2009–10

Employees Employers Employees additional contributions contributions contributions Total £’000s £’000s £’000s £’000s NCC 27,384 7,999 114 35,497 Admitted Bodies 3,399 1,180 17 4,596 Scheduled Bodies 38,386 10,704 214 49,304 Total 69,169 19,883 345 89,397

Analysis of Benefits – 2008–09 Death Grants Lump Sums Pensions Total £’000s £’000s £’000s £’000s NCC 1,028 7,351 20,347 28,726 Admitted Bodies 232 908 1,615 2,755 Scheduled Bodies 672 4,851 21,479 27,002 Total 1,932 13,110 43,441 58,483

Analysis of Benefits – 2009–10 Death Grants Lump Sums Pensions Total £’000s £’000s £’000s £’000s NCC 836 6,178 21,625 28,639 Admitted Bodies 103 811 1,376 2,290 Scheduled Bodies 345 7,525 24,360 32,230 Total 1,284 14,514 47,361 63,159

49 The increase in benefits payments from 2008–09 to 2009–10 reflects individuals taking the opportunity to retire before the new regulations come into force on 1st April 2010.

4. Individual Transfers Out New transfer factors supporting the new scheme effective from April 2008 were delayed resulting in the majority of transfers being stockpiled for most of 2008. Whilst some actuarial tables were provided, the process of identifying actual transfer amounts based on the new actuarial tables took some time to accurately calculate the liability. 2009–10 has returned to normal levels.

5. Administration Expenses and Investment Managers’ Fees 2009–10 2008–09 £000 £000 Administration expenses: Pensions administration 1,941 1,547 Actuarial services and investments 270 144 Investment expenses 488 923 Audit fees 141 0 Other Costs 35 132 2,875 2,746

Investment managers’ fees: 3,824 3,237 Total 6,699 5,983

Pension’s administration costs in 2009–10 reflect a full year of costs in respect of the increase in the Pensions Administration team, and include additional professional and developmental training. Investment Manager fees are dependant on the value of assets held and performance. In 2009–10, performance significantly improved compared to 2008–09, hence the increase in fees, which are anticipated to continue into 2010–11. 2009–10 includes audit fees for 2008–09 and 2009–10.

Fund Manager Fees Not Shown in the Accounts Fund managers that work through pooled arrangements take their fees at source from the pooled fund and therefore the fees don’t go through the Fund’s accounts. The nominal values of fees are:

£000s Partners Group 53 Fauchier 304 RREEF UK Core Property Fund 100 RREEF UK Ventures Property Fund No. 2 Exempt Unit Trust 5 462

50 6. Increase in value of unrealised gain £000 £000 Market value of investments at 31.3.10 1,191,837 Investments at cost at 31.3.10 1,119,300 Unrealised gain 72,537

Market value of investments at 31.3.09 854,094 Investments at cost at 31.3.09 1,006,979 Unrealised loss (152,885)

Increase in value of unrealised gain 225,422

The increase in value of unrealised gain of £225,422k represents the change in the unrealised gain between the opening and closing position of the market value of investments and the cost of these investments. Unrealised gain reflects assets held by the Fund, however gains are only realised when actually sold. This reflects the investment performance of the Fund in the 2009–10 financial year.

7. Analysis of investment Income Investment Income for the years ended 31st March was received from the following sectors.

2008–09 2009–10 Interest and Dividend Interest and Dividend £000s £000s 2,583 Interest from fixed‑interest securities 3,127 24,519 Dividend from equities 20,961 642 Income from Index‑linked securities 542 Income from Pooled Investment Vehicles 2,397 Unit Trust Fixed Interest 2,937 3,120 Property Unit Trusts 2,555 5,517 5,492 3,986 Interest from Cash deposits 929 342 Stock Lending 232 8 Commission Recapture 5 73 Venture Capital 52 37,670 31,340

8. Stock Lending Income of £232,120 was earned from stock lending activities, undertaken on behalf of the Fund by Northern Trust, the Fund’s global custodian. This income is the premium paid by third parties who borrow stock held by this Fund. Collateral stock is held to safeguard the Fund’s assets. Lending is limited to 35% of the stock held by the Fund, although actual activity in 2009/10 averaged 11.9%.

51 As at 31 March 2010 the value of stock loaned to third parties was £23.22m against collateral held of £24.50m, more information on this is shown below.

Analysis by Asset Class of securities on loan: 31‑Mar‑2009 31‑Mar 2010 £000 Investments at market value £000 12,009 Fixed‑interest securities 7,390 49,341 Equities 15,835 61,350 Total Securities on loan 23,225

Analysis of Collateral: 31‑Mar‑2009 31‑Mar 2010 £000 Investments at market value £000 0 Certificates of Deposit 0 4,919 Delivery‑By‑Value Gilts 2,248 17,324 Equities 2,035 43,071 Government Fixed 20,219 0 Letters of Credit 0 1,114 UK Gilt 1 66,428 Total value of Collateral 24,503

9. Commission Recapture Income of £5,473 was earned from Commission recapture activities, undertaken on behalf of the Fund by Lynch Jones and Ryan, specifically appointed by the Fund to undertake this role. This relates to “recapturing” commission regarding research and development costs paid to third party brokers, whose sole role is to buy and sell stock on behalf of the Fund manager.

10. Venture Capital Income The income of £51,903 reflects the fourth tranche of income from the Regional Capital Fund No1 LP. The Fund holds two Venture Capital investments both with Catapult Venture Managers, being:

£ East Midlands Regional Venture Capital Fund No1LP. 1,360,000 Catapult Growth Fund LP 730,263 Total 2,090,263

These funds are small private equity commitments with a total potential drawdown of £4m. Feedback from Catapult Venture Managers indicates an Internal Rate of Return (IRR) of 10%.

52 2,888 6,641 2,982 33,485 19,857 56,230 19,653 19,729 39,382 61,315 69,262 54,437 111,293 293,663 325,528 625,832 132,168 431,457 £’000 Bid Market Value as at Value 31 Mar 2010 90 406 275 - 612 4,711 1,185 6,302 3,630 3,720 2,088 6,794 7,278 3,300 70,045 16,052 35,787 110,504 179,937 £’000 Change in Gain/Loss Unrealised 0 0 0 85 85 12 268 283 551 477 499 - 113 - 490 6,147 6,532 17,290 26,780 44,070 £’000 Realised Gain/Loss 0 0 0 0 0 0 0 0 0 0 0 0 1,442 32,513 33,955 - 15,766 - 18,189 - 33,955 £’000 Security Book Cost Transfers at Transfers 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 - 904 8,790 7,886 £’000 Capital Action) Change (Corporate 0 0 0 - 12 - 5,597 - 5,176 - 1,435 - 50,690 - 69,022 - 69,416 - 69,416 - 14,680 - 22,653 - 49,553 - 119,712 - 246,840 - 266,916 - 513,756 £’000 receipts Sales and derivative 0 322 138 4,950 1,452 48,833 67,210 19,563 68,694 88,257 15,240 33,756 116,043 142,347 252,994 395,663 126,391 181,927 and £’000 derivative payments Purchases 0 1,703 6,931 2,191 34,668 16,675 53,046 16,736 16,736 49,697 10,402 13,563 95,957 50,999 277,338 261,718 545,987 222,809 £’000 Bid Market Value as at Value 31 Mar 2009 Investment transactions during the year Fixed Interest Securities Fixed Interest Govt – UK Fixed Interest Other – Overseas Fixed Interest Other – UK (Unlisted) Index Linked Securities Index Linked Bonds Public Sector – UK Index Linked Bonds – UK Equities Equities – UK Equities – UK (Unlisted) Equities – Overseas Managed Funds Managed Funds Property Managed Funds Equity – UK Managed Funds Equity – Overseas Managed Funds Fixed Income – UK Managed Funds Fixed Income – Overseas Managed Funds Hedge 11. Continued opposite 53 0 27 - 200 - 200 2,964 57,108 60,072 - 20,936 143,565 - 164,528 £’000 1,191,837 Bid Market Value as at Value 31 Mar 2010 0 0 0 0 16 42 - 189 - 189 - 193 - 135 225,422 £’000 Change in Gain/Loss Unrealised 0 0 0 57 66 66 - 50 - 50 - 72 - 15 51,239 £’000 Realised Gain/Loss 0 0 0 0 0 0 0 0 0 0 0 £’000 Security Book Cost Transfers at Transfers 0 0 0 0 0 0 0 0 0 0 7,886 £’000 Capital Action) Change (Corporate - 57 - 238 - 864 - 2,343 - 2,343 - 2,224 - 2,519 - 2,589 - 162,329 - 165,782 - 923,081 £’000 receipts Sales and derivative 0 758 798 2,393 2,393 5,093 45,263 46,021 140,082 145,973 976,277 and £’000 derivative payments Purchases 0 11 - 11 - 11 2,516 6,265 - 7,334 - 1,058 14,069 16,585 854,094 £’000 Bid Market Value as at Value 31 Mar 2009 Included within the above purchases and sales figures are transaction costs of £1.7m. Capital holdings. includes Venture ‘Equities – UK (Unlisted)’ Derivatives Traded Futures – Exchange Cash Deposits and Other Investments Deposits – UK Term Cash & Short Cash & Short Term Deposits – Overseas Term Cash & Short Mark‑to‑Markets Other Investment Balances Pending Spot FX contracts Pending Trade Purchases Trade Pending Pending Trade Sales Trade Pending Grand Total • • 54 12. Cash The cash balance forms part of the bank balances of Northamptonshire County Council, attributable to the Pension Fund, but does not represent a separate balance in the name of the Fund. The value of cash held at 31 March 2010 (£0.09m) has decreased over 2008–09 (£10.4m). This is due to surplus cash, being distributed to Fund Managers as part of a rebalancing exercise, following the appointment of two new Fund Managers (Wellington for Fixed Interest and UBS for Passive Overseas Equity).

13. Debtors and Creditors The 2009–10 debtors balance reflects accrued contributions and transfers in as at 31st March 2010. The 2009–10 creditors balance reflects accrued transfers out and investment manager fees as at 31st March 2010. Contributions due from employers at 31st March 2010 (£9.0m) has increased over 31st March 2009 (£4.1m), as CIPFA guidance has now determined that pension strain costs should be identified immediately and not spread over a longer duration.

14. Employer‑related investments and related party transactions There are no employer‑related investments. Northamptonshire County Council [NCC] is responsible for managing the Pension Fund’s finances, and therefore is a related party. NCC made payments of £33.8m to and recovered costs of £1.8m against the Pension Fund in the 2009–10 financial year. Payments relate to employer contributions into the Fund in respect of NCC and receipts relate to administration costs incurred by the NCC on behalf of the Pension Fund. On 31 March 2010 NCC held cash on behalf of the Pension Fund of £0.09m (see Note 12 to the accounts), which had not been distributed to Fund managers. In 2009–10 the NCC paid net interest of £72,980 to the Pension Fund, whilst in 2008–09 the NCC paid net interest of £347,140 to the Pension Fund on balances held. The decrease in interest was due to a fall in interest rates from 2–3% to 0.35%.

15. AVC Investments Additional voluntary contributions (AVC’s) are not included in the Pension Fund Accounts in accordance with regulation 5(2)(c) of the Pension Scheme (Management and Investment of Funds) Regulations 1998. AVC’s are assets invested separately from the main Fund in the form of individual building society accounts and insurance policies, securing additional benefits on a money purchase basis for those members electing to pay additional voluntary contributions. Members participating in this arrangement each receive an annual statement, confirming the amounts held to their account and the movements in the year. The movement during the year March 2009 to March 2010 reflects Investment performance, withdrawals and additional contributions.

55 The aggregate amounts of AVCs are as follows:

Change in Value at Market Value at 31/03/09 Purchases Sales Value 31/03/10 £’000 £’000 £’000 £’000 £’000 Prudential Assurance 1,989 219 (208) 56 2,056 Standard Life * 477 23 (14) 80 566 Total 2,466 242 (222) 136 2,622

* The Standard Life valuation is as at the 5th February 2009.

Top Ten Holdings as at 31 March 2010 Value of the Fund’s Top Ten Holdings £ % UBS GBL ASSET LIFE LIFE WORLD EX UK EQTYTRK A 104,960,010.86 8.67% ABERDEEN GBL V FXD INC ALPHA 20Y Z2 ACC 43,523,119.14 3.59% ABERDEEN INTER FD GLOBAL II GL STR CDT Z2 GBP 43,385,795.50 3.58% JUBILEE ABSOLUTE CLASS B 31,168,685.65 2.57% UBS GBL ASSET LIFE USA EQUITY TRACKER A 24,925,226.28 2.06% PARTNERS GR ALTERN .STR.-EQ.MKT NEU.GBP I 23,268,120.00 1.92% UBS GBL ASSET MGT GBL EMG MARKETS EQTY JACC 20,700,000.01 1.71% UBS GBL ASSET MGT CORP BD UK PLUS J GROSS ACC 19,856,556.85 1.64% UBS GBL ASSET MGT INFL LKD BD UK PLUS GRJ 19,728,591.63 1.63% UBS GBL ASSET LIFE 350 TRACKER FUND A 15,491,690.35 1.28%

56 57 58 Glossary of Terms Authorised Unit Trusts A unit trust which is approved by the Financial Services Authority (FSA) to be sold Terms used in this report and to members of the public. general terms used in financial markets. Bargain Another name for a trade or transaction of the Stock Exchange. Accruals Bear Income and expenditure which is due but will not be received or paid until after the end of Someone who believes prices will fall in the financial year. the future

Actuary Bearer An independent company which advises on Securities which are legally owned by the the assets and liabilities of the Fund with the Bearer of the document. No registration of aim to ensure that the payment of pensions ownership. and future benefits are met. Beneficial Owner Admitted Bodies The true owner of a security regardless Voluntary and charitable bodies whose of the name in which it is registered. staff can become members of the Local Government Pension Scheme subject to Bid Price certain terms and conditions and other The price at which securities are purchased organisations to whom Local Government by market makers. employees have been transferred under the outsourcing of Local Government services. Bond Security issued by a corporate or All Share Index government body borrowing in the capital Properly the FTSE All Share index which markets. Bonds promise to pay interest summarises the state of the UK equity (coupons) during the life of the bond plus the market. It covers some 900 of the major principal sum borrowed on the redemption UK industrial, commercial and financial date. Bonds may be secured over assets of the companies. firm or be unsecured. [See also Fixed Assets].

Arbitrage Bonus issue Buying and selling securities (usually in Bonds, scrip or free issue are equivalent in different markets) to take advantage of terms. Free shares are issued to existing small pricing anomalies. shareholders out of company reserves.

At Best Bull An instruction to deal at the best price ruling Someone who believes prices will rise in in the market at the time, i.e. The highest the future. price (selling) or lowest (buying). Certificate of Deposit Certificate evidencing deposit of cash with a commercial bank.

59 Clean Price Equities The price of a bond which is quoted without Shares representing the capital of a company accrued interest. issued to shareholders usually with voting rights on the way the company runs the Commercial paper business. Equity holders rank last in the Short term loan stock issued by corporates event of the winding up of a company. as part of a funding programme. Unsecured, Bearer securities. Exercise Price The price at which the holder of an option or Contract note warrant can buy/sell the underlying asset. The documentary record of a trade which is sent from the broker to the investor Expiry The date on which an option or warrant expires. Convertible Unsecured loan stock (bond) which converts Financial Services Authority (FSA) into equity of the issuing company. The UK The lead UK regulator. A designated agency Government also issues convertible gilts which is not a government department. which convert into other government stock. Fixed Interest Coupon Corporate Bond – A certificate of debt issued The regular payment made on bonds. by a company or institution in return for a fixed rate interest with a promise of redemption to Debenture repay the original sum. Fixed loan stock (bond) secured against the Gilt – Similar to Corporate Bonds by way of company’s fixed assets. First in the event of interest and redemption but these are issued the company going into liquidation. by Government and are a loan to the Government. Distribution dates The date when interest or dividends are FTSE‑100 Index distributed to investors. Also called Payment The main UK index used to represent the Date. approximate price movements of the top 100 shares. Dividend The distribution of profits by a company to its Futures shareholders. The dividend may be passed Instruments which give a buyer the right to or cut if profits fall. {See also Equities] purchase a commodity at a future date.

Deferred Pension Benefit Gearing A pension benefit which a member has The amount of borrowing versus debt on a accrued but is not yet entitled to receive. company’s Balance Sheet (Net debt/Ordinary shareholders’ funds). Warrants and options Earnings per share (Eps] also exhibit gearing, i.e. a small move in the The net (after tax) profits of a company price of the underlying asset can be magnified divided by the number of ordinary shares in in the move in the price of the option. issue. This is used as the ‘E’ term in the P/E ratio to value shares.

60 Hedge Nominee To protect a fund from a fall in prices. This is A firm which acts on behalf of the underlying usually accomplished by the selling of futures. beneficial owner of the securities and in whose name the securities are registered. Hedge Fund A limited partnership with very little restriction Offer Price on the scope of its investment. Usually The price at which market makers will quoted in Luxembourg or Dublin. Hedge sell stock. funds often use borrowing to gear up exposure to markets. Ordinary Shares ‘A’ Shares which confer full voting and IMRO dividend rights to the Owner. Investment Management Regulatory Organisation. Fund Manager Regulator. Rights Issue A new issue of shares offered to existing Index Linked shareholders in proportion to their existing Stock whose value is related directly to an holdings. Usually offered at a discount to index, usually the Retail price Index and entice take‑up, which causes the existing therefore provides a hedge against inflation. shares to fall in value to the theoretical ex‑rights price. Interest Yield The annual coupon on a bond divided by Scheduled Bodies the clean price. Local Authorities and similar bodies whose staff are entitled automatically to become Loan Stock members of the local Authority Pension Fund. Unsecured bonds, which may be convertible if they have a warrant attached. Scrip Issue Issue of free shares to current shareholders. Longs Often used instead of a cash dividend (scrip Long dated gilts with time frame to maturity dividend alternative). of more than 15 years. Short Market Capitalisation Selling more of an asset than the investor For an individual stock it is the value of all owns. shares held in the equity of the company. For a market or index it is the total of all the Spread market caps of the constituent companies. The difference between the bid and offer prices.

Mediums Stag Medium‑dated Gilts with time to maturity A person who applies for a new issue in the of 5–15 years. hope of selling quickly to make a profit.

61 Stock Shares (e.g. Common stock). However, UK Gilts are more correctly described as stock.

Transfer Values Sums which are paid either to or received from other pension schemes and relate to new and former members’ periods of pensionable employment with employers participating in the scheme.

Trust Investments are owned by trustees for the underlying beneficial owners. A unit trust is a trust, incorporated under a trust deed. An investment trust is a company, not a trust.

Underwriter A firm which agrees to underwrite a new issue, for a fee, thereby guaranteeing the securities will be sold.

Unit trust An open‑ended trust investing in a wide spread of stocks, shares and cash (subject to FSA limits). Investors buy units directly from the Fund manager to participate in a diversified portfolio. Unit trusts are subject to FSA investment and borrowing regulations.

Warrants Long dated options warrants give the holder the right to buy/sell a specified quantity of a particular stock, or any other asset, at a fixed price on or before a specified date.

Yield Gap Spread between gilt yields and yields on the stock market.

Zero coupon bond A bond which is issued at a discount to par and does not pay coupons but is redeemed at par.

62

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This information can be provided in other languages and formats upon request. Please call 01604 236521

For more information or to download a copy of the Statement of Accounts 2009-10 go to: www.northamptonshire.gov.uk

Contact Corporate Finance Northamptonshire County Council PO Box 136 County Hall, Northampton NN1 1AT

Published January 2011