Pension Fund Annual Report 2016/17
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North Yorkshire Pension Fund Annual Report and Accounts 2016/17 North Yorkshire County Council North Yorkshire Pension Fund Contents Part 1 Management and Financial Performance Part 2 Scheme Administration Part 3 Investment Policy and Performance Part 4 Pension Administration Activity Part 5 Membership Contributions and Scheme Benefits Part 6 Governance Documentation Part 7 Training Part 8 Glossary and Contact Details Appendices Appendix A Statement of Financial Accounts 2016/17 Appendix B Actuarial Rates and Adjustment Certificate Appendix C Auditors Report 2 Annual Report and Accounts 2016/17 North Yorkshire County Council 3 North Yorkshire County Council North Yorkshire Pension Fund During the year the PFC formally met on five occasions supported by its Investment Consultant and the Independent Professional Observer, as well as the Treasurer. The Committee meetings provide a forum for Part 1 – Management and discussion about economic and market trends, monitoring the performance of the investment managers and considering their individual investment strategies. Financial Performance 1.3 Fund Administrators, Advisers and Investment Managers 1.1 Introduction contribution rates being set every three years Treasurer Gary Fielding North Yorkshire County Council (NYCC, the Council) by the Fund’s Actuary. These contributions Investment Consultant Aon Hewitt is the statutory administering authority for the North are supplemented by earnings on the Fund’s Independent Professional Observer Peter Scales (AllenbridgeEpic) Yorkshire Pension Fund (NYPF, the Fund), which investments in order to pay retirement benefits. Actuary Aon Hewitt is part of the Local Government Pension Scheme The day to day running of the Fund is delegated Legal Services Ward Hadaway (LGPS). All aspects of the Fund’s management to the Treasurer who is the Corporate Director Head of Legal Services, NYCC and administration, including investment matters, – Strategic Resources of the Council and is Auditor KPMG are overseen by the Pension Fund Committee responsible for implementing the decisions made Banker Barclays Bank (PFC), which is a committee of the Council. by the PFC. Supporting him is a team of staff split Custodian Bank of New York Mellon Custodian Monitoring Thomas Murray The purpose of the Fund is to provide retirement into two sections. The Pensions Administration Shareholder Voting PIRC benefits specified by the LGPS regulations for team administers all aspects of member records, Performance Measurement BNY Mellon Asset Servicing staff working for local authority employers, and pension benefits etc. and the Integrated Finance Fund Managers Baillie Gifford Life other employers admitted by agreement, in team looks after the accounting and management Bluebay the North Yorkshire area. The regulations also information requirements of the Fund. All aspects Dodge & Cox specify the member contribution rates as a of the day to day management of investment funds ECM Asset Management percentage of pensionable pay, with employer are undertaken by external fund managers. FIL Pensions Management Hermes Investment Management Legal & General Investment Management 1.2 Pension Fund Committee M&G Investment Management PFC membership as at 31 March 2017 was as follows: Newton Investment Management Permira Members Position Voting Rights Standard Life Pension Funds John Weighell (Chairman) Councillor, NYCC Yes Threadneedle Pensions Roger Harrison-Topham Veritas Councillor, NYCC Yes (Vice-Chairman) AVC Provider Prudential Bernard Bateman MBE Councillor, NYCC Yes John Blackie Councillor, NYCC Yes Margaret-Ann deCourcey-Bayley Councillor, NYCC Yes Patrick Mulligan Councillor, NYCC Yes Helen Swiers Councillor, NYCC Yes Councillor, District Councils’ Jim Clark representative of Local Government Yes North Yorkshire and York David Carr Councillor, City of York Council Yes David Portlock Chairman of the Pension Board No 3 Unison representatives Union Officials No The powers delegated to the PFC are detailed in paragraph 2.1 of the Governance Compliance Statement (see Part 6). 4 Annual Report and Accounts 2016/17 North Yorkshire County Council 5 North Yorkshire County Council North Yorkshire Pension Fund 1.4 Risk Management 1.5 LGPS Pooling Arrangements Risk management is the process by which the On 15 July 2016 the Fund and the twelve other LGPS Fund identifies and addresses the risks associated funds in the Border to Coast Pensions Partnership with its activities. Risk management is a key part (BCPP) sent a proposal to Government’s Department of the North Yorkshire Pension Fund’s governance for Communications and Local Government arrangements, and the Pension Fund has its own (DCLG) describing in detail how investment pooling dedicated risk register. Risks are identified and arrangements could work. assessed, and controls are in place to mitigate This proposal can be found here https://www.nypf.org. risks. The Fund’s risk register is reviewed every uk/Documents/Pooling%20proposal.pdf year, and the latest review highlighted: This followed a summary proposal published by the (a) Pension Fund solvency remains a high risk BCPP on 19 February 2016. Both documents were due to the unpredictable and volatile nature of global responses to the Government’s requirement for pooling financial markets on which both investment returns described in guidance published on 25 November and certain market based actuarial assumptions 2015, which followed a consultation in 2014. used to value liabilities are based. The potential All LGPS funds are required to enter pooling consequence of the risk occurring is a significant arrangements. The PFC decided that NYPF should increase in contribution rates for the Fund’s employers join the BCPP as it represents a group of “like-minded” and/or an extension to the deficit recovery period. Funds where significant cost efficiencies are achievable. (b) Another key risk relates to the LGPS Pooling Arrangements (see paragraph 1.5). This is a major change to the way in which the Pension Fund will be managed so should be considered a significant risk. In addition, the approach to managing third party risk such as late payment of contributions is contained in the Pension Administration Strategy (see Part 6). Contributions received from employers are monitored, the date of receipt is recorded and appropriate action is taken for late payments. For persistent material breaches of this protocol, the employer may be reported to the Pensions Regulator. Further detail about how the Fund manages other risks can be found in Note 18 Nature and Extent of Risks Arising from Financial Instruments in the Statement of Accounts in Appendix A. 6 Annual Report and Accounts 2016/17 North Yorkshire County Council 7 North Yorkshire County Council North Yorkshire Pension Fund 2.4 Member Self-Service (MSS) 2.6 NYPF Website Part 2 – Scheme Administration This is a web-based self-service facility which All essential information and guides are held on allows members to update their details and perform the website at www.nypf.org.uk along with links to 2.1 Administering Authority Arrangements 2.3 Pensions Administration calculations. This facility has also been used to further national guidance. Employees and employers allow electronic communication with members for are able to use the website to refer questions to a The Scheme’s administration is the North Yorkshire Pension Fund covers the largest the retirement and estimates process. As at 31 generic pensions email address which is specifically responsibility of Gary Fielding, the Treasurer. geographical area in England and Wales. The March 2017 there were 15,402 registered users. resourced each day to provide a prompt response Fund’s varied methods of communication tackle Staff within the Pension Administration team are to queries. An ‘Employers Only’ area provides a the challenges when communicating with both A small number of staff from employers within the responsible for administering the Scheme, including central location to access forms and guides with Fund members and employers. Continued support Fund have direct upload access to the pensions the calculation and administration of benefit payments the facility to securely submit forms electronically. has been provided for employers to ensure they database (with access to their employees only). and transfer values, recording employee and are confident in carrying out their function under This allows them to carry out basic pensions employer contributions, the maintenance of pension the Scheme. Face to face bespoke training has administration processes (creating new starter 2.7 Data Quality records and communications with all stakeholders. records, updating hours and personal information) been provided to encourage employers to use the The Pensions Regulator guidelines on data collection and upload associated documents. Work is monitored Staff within the Integrated Finance team are dedicated employers’ area on the NYPF website. and security have been applied by the Pension Fund via a ‘task’ which is created on the member record responsible for maintaining the Fund’s accounts and validation checks are carried out across all areas of A streamlined year end guide and checklist by the employer detailing what they have done. and investment records, preparing quarterly reports activity. Periodic checks have been carried out across have been provided with emphasis on data All changes can be tracked through an audit to the PFC, producing the Annual Report and the database for the last seven