Annual Report 2015/2016
Total Page:16
File Type:pdf, Size:1020Kb
ANNUAL REPORT 2015/2016 NORTHERN IRELAND LOCAL GOVERNMENT OFFICERS’ SUPERANNUATION COMMITTEE If you have any views and comments on this report, or any questions on any of the services provided, please contact us in writing; by telephone; fax; email; or by visiting our office in person as follows: NILGOSC Templeton House 411 Holywood Road Belfast BT4 2LP Telephone: 0845 308 7345 Fax: 0845 308 7344 Email: [email protected] Typetalk: 18001 0845 308 7345 (for people using a textphone) Website: www.nilgosc.org.uk This annual report can be made available in a wide range of alternative formats. Requests for alternative formats should be made to the Finance Manager at the above address. In addition to the Annual Report, NILGOSC can provide documents and correspondence in alternative formats, including audio and large print versions for people with sight problems. Documents can also be provided in minority languages for those whose first language is not English. If you would prefer an alternative method of communication please let us know. ANNUAL REPORT 2015/2016 NILGOSC Annual Report and Accounts For the Year Ended 31 March 2016 Laid before the Northern Ireland Assembly under Regulation 63(8) of the Local Government Pension Scheme Regulations (Northern Ireland) 2014 by the Department for Communities on 6 September 2016 CONTENTS FOREWORD 01 PERFORMANCE REPORT 03 Overview 03 Statement from Chief Executive 04 Statement of Purpose and Activities of the Organisation 06 Key Issues and Risks 06 Performance Summary 08 Performance Analysis 09 Summary 10 Administration of the Pension Scheme 10 Investment of the Fund 26 ACCOUNTABILITY REPORT 35 Corporate Governance Report 35 Chief Executive’s Report 36 Statement of Accounting Officer’s Responsibilities 39 Governance Statement 39 Remuneration and Staff Report 45 Remuneration Report 46 Staff Report 49 Parliamentary Accountability Report 51 Audit Report 55 ACCOUNTS 59 Fund Account 60 Net Assets Statement 61 Statement of Cash Flows 62 Notes to the Accounts 63 Actuarial Statement 81 Appendices 83 Annual Equality Statement for the year ended 31 March 2016 84 Annual Report of the Audit and Risk Assurance Committee for the year ended 31 March 2016 85 Employing Authorities contributing to the Scheme at 31 March 2016 88 Glossary 91 FOREWORD 01 FOREWORD Statutory Background The financial statements shall give a true and fair view of the Fund Account for the The Northern Ireland Local Government financial year, and a Net Assets Statement Officers’ Superannuation Committee as at the end of the financial year. (NILGOSC) is a non-departmental public body sponsored by the Department for Audit Communities, established on 1 April 1950 The Local Government Pension Scheme by the Local Government (Superannuation) Regulations (Northern Ireland) 2014 Act 1950, to administer and maintain a fund provide for the accounts kept by the providing pension benefits for employees of Committee to be audited annually by local authorities and other admitted bodies. the Local Government Auditor. Her staff Prior to May 2016 NILGOSC’s sponsor are wholly independent of NILGOSC and department was the Department of the the audit fee is disclosed in note 7 to the Financial Statements. The auditors did not Environment. perform any non audit work this year. In accordance with Regulation 63(2) of Disclosure of Relevant Audit the Local Government Pension Scheme Information Regulations (Northern Ireland) 2014, as There is no relevant audit information amended, the Committee submits its of which the auditors are unaware; and annual report for the year ended 31 March the Accounting Officer has taken all the 2016 to the Department for Communities. necessary steps to ensure both he and the auditors are aware of all relevant audit The Committee information. The Committee is the corporate body Important Events Occurring After responsible for the administration of the the Year End Local Government Pension Scheme in Northern Ireland. Subsequent to the year end the United Kingdom voted to leave the European Union. The impact of this on the pension Committee’s Responsibilities scheme is unclear and NILGOSC will The Committee is required under the Local continue to review this situation going Government Pension Scheme Regulations forward. (Northern Ireland) 2014, as amended, to: Payment to Creditors • keep accounts of all financial In November 2008, under the Prompt transactions of the Fund; and Payment Initiative, former Prime Minister Gordon Brown announced that • prepare the financial statements for the all Government Bodies would pay all financial year ended 31 March. external suppliers who provided a correctly rendered invoice to the correct location The financial statements shall comprise: within 10 working days. Also in 2008, the Finance Minister announced that Northern a) a Foreword; Ireland Departments had set a target of b) a Statement of the Committee’s payment of invoices within 10 working days, Responsibilities; in order to help local businesses. c) an Accounting Officer’s Governance NILGOSC endeavours to meet the 10 day Statement; prompt payment target and aims to pay d) a Fund Account; suppliers within 10 working days of receipt e) a Net Assets Statement; of a valid, undisputed invoice. Therefore, f) a Statement of Cash Flows; and the default target for paying invoices is 10 g) Notes to the Accounts; working days. During the year ended 31 March 2016 NILGOSC paid 1,224 invoices and shall be prepared in accordance with totalling £16.02m on 10 day terms, of which guidance for the time being issued by the 110 undisputed invoices were late. 96% of invoices were paid within 30 calendar days Department of Finance. and no late payment interest was payable during the year. The average time to pay invoices during the year was 8 working days (2014/15: 8 working days). 02 PERFORMANCE REPORT OVERVIEW 03 PERFORMANCE REPORT - OVERVIEW (i) STATEMENT FROM CHIEF Investment Performance focus on identifying suitable alternative EXECUTIVE investment opportunities with the aim Despite the significant changes of reaching the initial target allocation in scheme administration in April for infrastructure of £150m by the end of 2015, NILGOSC’s focus on scheme 2016. sustainability and investment performance was a key priority over the Whilst the primary investment focus last twelve months. After several years remains on delivering stable and of growth markets and strong equity positive financial returns for scheme returns, global financial markets entered members and employers, NILGOSC a period of sustained volatility in 2015/16 continues to take its responsibilities with declining oil prices, a slowdown in as a global investor seriously. Details the Chinese economy and interest rates on NILGOSC’s responsible investment movements dominating the agenda. activities can be found in the Investment David Murphy The NILGOSC Fund hit a record high section of this Annual Report however Chief Executive and Secretary in May 2015, reaching £5.9bn, however it is worth mentioning that in October increasing investor uncertainty in the 2015 NILGOSC held its first Climate 2015/16 has seen yet another busy and latter half of 2015 and into 2016 saw Risk Workshop in conjunction with its challenging year for the pension industry the Fund end the year a little lower at investment managers and advisors. This in general and more specifically for the £5.820bn. During 2015/16 NILGOSC is an important issue for NILGOSC and Local Government Pension Scheme achieved an overall fund return of -0.4% one which we will continue to explore (LGPS) in Northern Ireland. The new (gross of investment manager fees). over the period ahead. Career Average Revalued Earnings (CARE) scheme came into operation on Markets posted mixed returns, with US Scheme Administration 1 April 2015 and brought with it arguably equities, bonds and property markets the biggest single change in the LGPS delivering positive returns. As a pension It is difficult to overstate the impact for the 65 years that NILGOSC has been scheme, NILGOSC’s investment horizon that the introduction of the new CARE in existence. The new LGPS scheme saw is much longer and as a result it is LGPS had on scheme administration fundamental changes to the final salary not unduly concerned with short term during 2015/16. Despite considerable benefit structure which meant that from events and volatility. On a three and five planning and preparation, the complexity 1 April 2015, scheme members accrue year basis the Fund has outperformed of the new scheme had a material pension benefits based on their average against its overall investment target impact on NILGOSC as the scheme earnings over their career, with the of Consumer Price Index +5%. Active administrator as well scheme members, final salary link remaining for periods management of the investment portfolio employers and third party providers. The of service up to and including 31 March remained at the top of our investment fundamental nature of the changes in 2015 only. The administration challenges agenda throughout the year with all benefit structure required substantial that accompany such a transition are 9 investment managers being held to bespoke software developments and referred to in more detail in the sections account over their stewardship of their changes for both NILGOSC and scheme below. respective funds. employers and the core scheme administration software was delivered Notwithstanding the headwinds faced In November 2015, NILGOSC decided in March 2015, a matter of days before by the pension industry as a whole, to withdraw its mandate with one of the effective date. Teething problems NILGOSC embraced this period of its global equity managers, Edinburgh with certain aspects of the software change and it is pleasing to be able to Partners, and a replacement mandate and the new Scheme Regulations have report on a number of key administration was identified in March 2016. Over unfortunately impacted on service and investment successes during the last 24 months, NILGOSC has delivery during 2015/16 and although 2015/16.