Contents

Introduction...... 1

Summary...... 2 Participating Employers Contributors Pension Panel Members Partners

Administration Report ...... 7 Introduction 2006 Changes Performance Statistics Membership Numbers Work Volume Key Service Standards Statistical Analysis

Investment Report ...... 15 Introduction Actuary’s Report...... 37 Investment Management Introduction Investment Performance Actuarial Position Fund Manager Performance Details of Fund Managers Communication Report ...... 41 Realised Profits/Losses on Sale of Investments Commentary Titles of Ownership Accessing Member Services Analysis of Investments Customer Survey Portfolio Distribution/Geographical Spread of the Fund Summary of Pension Scheme Benefits ...... 47 Largest Share Holdings Purchases and Sales Contributors Contact Information...... 48 Stock Lending Schedule of Investments Statement of Investment Principles Myners Compliance Statement

Accounts Report...... 29 Fund Account Net Asset Statement Notes to the Pension Fund Accounts Steve Merritt, C.P.F.A. Group Director Corporate Services

Introduction

With having well over 30,000 scheme members it is not lost on myself or my staff that we have a very important role to play in helping provide an adequate and well administered pension for the scheme members later life.

Everyone, I am sure is aware of today’s pressures upon pension funds which range from changes to legislation to the managing our investments in ever more volatile financial markets. Notwithstanding the difficulties and challenges, I know that my staff and I approach our work with commitment and a view to provide first rate outcomes for all our customers.

Moving on to the Annual Report, I hope that its contents are helpful and allow the reader to gauge the outcomes of this financial year. Should any reader wish further details or would like to comment on the content, please use the contact information provided later in the report.

Steve Merritt, C.P.F.A. Group Director Corporate Services

1 Summary

Participating Employers

Administering Authority Scheduled & Resolution Bodies

Rhondda Cynon Taf Council Amgen Cymru

Brackla Council

Admitted Bodies

Academi Bridgend County Borough Council

Care Council for Bridgend Town Council

Care Standards Inspectorate for Wales (CSIW)

Careers Wales Association Coychurch Crematorium Joint Committee

Careers Wales - Mid and Powys Limited ESIS

Finance Wales Investment Gelligaer Community Council

Local Government Data Unit Llanbradach Community Council (no active members at present) Maesteg Town Hall Community Council Institute for the Blind (no active members at present) Enterprise Partnership Community Council

SEWOCN Community Council

Valleys to Coast Housing Crematorium Joint Committee

Welsh Development Agency (WDA) Maesteg Town Council

Welsh Joint Education Committee (WJEC) Merthyr College

WJEC/CBAC Services Ltd Merthyr Tydfil County Borough Council

National Probation Service

Pontyclun Community Council Definition of Bodies Town Council

Scheduled Bodies Fire Authority These include County Councils, Police Authorities and Authority the Environment agency among many others. South Wales Sea Fisheries Resolution Bodies South Wales Valuation Tribunal Resolution bodies, such as Community Councils have the power to decide whom within their employment can Community Council belong to the scheme. Admitted Bodies Mynach College Admitted Bodies can participate in the scheme by means of an admission agreement. These Admitted Bodies may state whether all or some of their employees can join the Scheme.

2 Contributors page (Who’s Who)

Pension Manager - Jenny Gaughan Jenny has been the Pensions Manager for Pension Fund since its inception in April 1996, prior to that she worked as Deputy Pensions Manager for the former County Council Fund. Active in the national pension’s field, Jenny sits on a number of key committees.

Investments - Yvonne Keitch With twenty-four years experience within local government, Yvonne is responsible for the administration of the pension fund investments. Yvonne has been the fund’s Investment Manager since 1995.

Pension Fund Accountant - Ryan Emmett Ryan is responsible for assisting the Investment Officer in the maintenance and closure of the Pension Fund accounts, having gained a BSC in Mathematics from ; Ryan has ten years experience with Rhondda Cynon Taf County Borough Council and has been in his current post since January 2003.

Communications - David Williams David is a relatively new addition to the Pensions team, and joined us three years ago from Prudential where he worked as a Client Communications Presenter for many years, facilitating hundreds of seminars for the Public and Private sector. David sees his role as primarily education and simplification!

3 Pension Panel Members

Pension Panel Member & Leader of the Council - Councillor Russell Roberts Councillor Russell Roberts is the Leader of the Council and Chair of the Cabinet, with special responsibility for finance. Councillor Roberts has been a Rhondda Cynon Taf councillor since the authority’s inception in 1996, and is the Member for Tonyrefail East.

Pension Panel Member - Councillor Clayton Willis Councillor Clayton Willis is the Cabinet Member for Open Government. Councillor Willis has been a Rhondda Cynon Taf councillor since the authority’s inception in 1996, and is the member for Tynant.

Group Director of Corporate Services & Section 151 Officer - Steve Merritt C.P.F.A. Steve, previously an engineer, commenced his Local Government career with Rhondda Borough Council in 1979 as an accountancy assistant, by 1996 he had risen to the position of Assistant Borough Treasurer. At reorganisation he transferred to Rhondda Cynon Taf County Borough Council and since that time he has undertaken a number of roles including heading the Housing Division. He was appointed to his present position of Corporate Services Group Director and Section 151 officer in the early summer of 2005, this post has direct responsibility for the pension fund.

Director of Financial Services & Deputy Section 151 Officer - Christopher Lee C.P.F.A. Chris gained a BSC (Honours) degree from in 1990 and went on to qualify as a Public Sector Chartered Accountant (CIPFA) in 1995 whilst working as a Group Accountant at Merthyr Tydfil Borough Council. He joined Rhondda Cynon Taf in 1997 as a Finance Manager and was promoted in 1999 to the post of Chief Accountant for the Council. Chris also gained experience with the Audit Commission in 2001 before rejoining Rhondda Cynon Taf in 2002 as Divisional Director – Finance. He now has overall responsibility for all finance and performance management functions at the Authority.

4 Pension Manager - Jenny Gaughan Jenny has been the Pensions Manager for Rhondda Cynon Taf Pension Fund since its inception in April 1996, prior to that she worked as Deputy Pensions Manager for the former Mid Glamorgan County Council Fund. Active in the national pension’s field, Jenny sits on a number of key committees.

Investments - Yvonne Keitch With twenty-four years experience within local government, Yvonne is responsible for the administration of the pension fund investments. Yvonne has been the fund’s Investment Manager since 1995.

Service Director: Financial Management and Accounting - Barrie Davies C.P.F.A. Barrie is CIPFA/ACIS qualified. He joined Local Government with Mid Glamorgan County Council in 1985, moving to Rhondda Cynon Taf with reorganisation in 1996. An active member of the Investment & Administration Panel, Barrie reports to the panel on behalf of the Group Director, Corporate Services. Barrie is currently Head of Accounting Services for Rhondda Cynon Taf.

Pension Fund Accountant - Ryan Emmett Ryan is responsible for assisting the Investment Officer in the maintenance and closure of the Pension Fund accounts, having gained a BSC in Mathematics from Cardiff University; Ryan has ten years experience with Rhondda Cynon Taf County Borough Council and has been in his current post since January 2003.

5 Partners

Scheme Actuary – Hewitt Bacon & Woodrow The primary role of the actuary is to provide the fund with information about the fund’s liabilities and the best way of meeting these liabilities. A valuation of the fund takes place every three years that enables the actuary to calculate liabilities versus the fund’s assets. The actuary will then recommend appropriate contribution rates for employers to help prevent any future shortfalls.

Hewitt Bacon & Woodrow were appointed as the schemes actuary in October 2003 and conduct the fund’s triennial valuation.

Fund Managers The investment of the Pension Fund’s assets is the responsibility of external Fund Managers appointed by the Fund. These Fund Managers are given specific mandates and performance targets, which are monitored by the Rhondda Cynon Taf Investments Panel at quarterly meetings.

Baillie Gifford Asset Management Baillie Gifford was appointed as balanced equity managers during January 2005, replacing the Fund’s previous manager, Deutsche Asset Management. Catrina Henderson oversees the fund’s investments. The Fund’s Client Relationship Manager is Nigel Morecroft.

F & C Management Investment managers to the pension fund since 1994, F & C hold a balanced equity mandate, and a separate bond mandate. The Client Relationship Manager for the equity mandate is Michel Bernard and Malcolm Gordon oversees fixed interest.

For the bond mandate the Fund manager is Helen Roberts and the equity mandate is managed by Roger Jones.

AVC Provider – Prudential Prudential were appointed as the fund’s Additional Voluntary Contributions (AVC) provider in 2002, and as a leading Local Government AVC provider, they work closely with our Pensions Section in ensuring members are aware of their options in topping up their existing pension provision.

6 Jenny Gaughan Pensions Manager

Administration Report

7 Introduction 2006 changes (No. 2)

Pension legislation continues to develop at a rapid pace The 2006 changes also re-introduced the removal of the with some interesting changes on the horizon. It can rule of 85, with effect from 1 October 2006. The rule sometimes be difficult for administrators to keep up and of 85, which allows LGPS members with enough it is certainly a challenge to ensure that scheme members service to retire at age 60 without reductions to their remain well informed. The most recent changes are benefits, was removed from 1 April 2005. This change summarised below along with an indication of what is was subsequently revoked from 3 August 2005. Some to come. protection for existing scheme members was introduced in April 2006 and the (No. 2) regulations issued on 27 July 2006 extend that protection further. The current The 2006 changes position is as follows:

Significant changes affecting members of the Local G all existing active scheme members at 30 September Government Pension Scheme (LGPS) took place in 2006 will continue to accrue service under the rule April 2006. Modernisation of the tax rules removed all of 85 until 31 March 2008 the old contribution and benefit limits and introduced greater flexibility for pension scheme members generally. The LGPS was amended to take advantage of these tax reforms, notably with the introduction of flexible retirement provisions which scheme employers must now consider, and the option for most scheme members to take a tax free lump sum of up to 25% of the total value of their pension benefits.

8 G existing active scheme members at 30 September 2006 who will be 60 and would have satisfied the rule of 85 by 31 March 2016 are fully protected

G existing active scheme members at 30 September 2006 who will be 60 and would have satisfied the rule of 85 between 1 April 2016 and 31 March 2020 will have reductions applied to benefits accrued after 31 March 2008 on a tapered basis i.e. partial protection

G new joiners to the Scheme from 1 October 2006 will have no protection and will receive a reduction to their benefits if they retire before age 65.

Legislation in the Pipeline

Draft regulations to replace the Local Government (Early Termination of Employment) (Discretionary Compensation) (England and Wales) Regulations 2000 have been issued and regulations are imminent. Employers are required to review their early retirement policies as a consequence.

Three consultation exercises have been carried out recently and draft regulations are expected shortly:

Performance Statistics

Membership of the Fund Fund membership at 31st March is summarised below:

2004/05 2005/06 Employing Bodies 41 41 Contributors 21,110 22,110 Pensioners 12,087 12,174 Dependants 2,296 2,334 Deferred Beneficiaries 6,609 7,416

Number of Cases Actioned

Work Volume 2003/04 2004/05 2005/06 Total number of cases actioned 17,408 18,113 17,414 % completed within target 79% 75% 78% Number completed within target 13,778 13,671 13,503

9 Key Service Standards for Pensions Administration Service

Percentage within Percentage within Percentage within Target time target target target (working days) 2003/04 2004/05 2005/06

Letter detailing transfer in quote 10 88% 86% 81%

Letter detailing transfer out quote 10 75% 88% 79%

Process refund of contributions 5 75% 76% 78%

Despatch benefit estimates 10 90% 89% 88%

Payment of benefits 5 79% 74% 74%

Despatch a letter to acknowledge a death 5 97% 99% 98%

Notify dependant’s of entitlements 5 92% 91% 90%

Calculate and notify deferred benefit details 10 91% 88% 87%

Turnaround times are from the date all necessary information is received by the Pensions Section (from the employer or other external source).

10 Key Service Standards for Retirement Estimates

Working Number of cases % on target days

2003/04 2004/05 2005/06 2003/04 2004/05 2005/06

Age 60 456 419 301 14 58% 59% 40%

Age 65 173 246 94 14 60% 57% 44%

Early retirement 79 75 237 12/15 93% 84% 88%

Pensioner Deaths 417 465 514 40 94% 95% 95%

Added years 93 93 103 20 79% 76% 49%

Current value of preserved benefits 117 109 47 10 98% 99% 96%

Preserved benefit 73 60 19 14 57% 70% 68%

Pensioner change of details* 908 1171 1167 15 95% 94% 96%

Requests for scheme literature 178 131 233 3 98% 93% 95%

AVC enquiries 170 168 192 10 88% 63% 71%

* Pensioner change of details includes amendments to addresses and banking details.

Turnaround times are from the date all necessary information is received by the Pensions Section (from the employer or other external source).

Number of contributing members

25000 22110 21110

20000 18816

2004 15000 2005

10000 2006

5000

0

11 Number of Pensioners and Dependants

15000 14272 14383 14508

12000

2004 9000 2005

6000 2006

3000

0

Number of Deferred Beneficiaries

8000 7416

7000 6609 6100 6000

2004 5000

2005 4000

3000 2006

2000

1000

0

12 Number of Undecided Withdrawals

2500 2318 2234 2061 2000

2004 1500 2005

1000 2006

500

0

These are former members of the pension fund who have not made a decision regarding their pension rights.

Membership Analysis

Leavers from active status

Leavers from active status 2004 2005 2006

Refund of contributions 610 495 186

Transfers to other schemes 115 63 74

Death in Service 16 18 12

Ill Health retirements 128 137 122

Early / normal retirements 121 137 133

Redundancy / efficiency retirements 54 33 88

Preserved Benefits 571 674 1000

Other leavers 7 29 30

Total 1,622 1,586 1,645

13 Deferred Benefits - Exits

Deferred benefits - number of exits 2004 2005 2006

Refund of contributions 60 49 31

Transfer to other schemes 176 181 156

Deaths 3 9 15

Ill Health retirements 9 18 14

Early / normal retirements 82 126 105

Other benefits 10 5 8

Number of deferred members re-entering the scheme 42 37 31

Total 382 425 356

14 Yvonne Keitch Investment Officer

Investment Report

15 Introduction

During 2005/06, local authority pension funds achieved their best investment returns for 20 years, with an average return of almost 25%. Returns were dominated by the continued exceptional performance from world equity markets, supported by a combination of continuing economic growth, improved corporate earning and increased merger and acquisition activity.

At the beginning of the financial year, the market value of the Rhondda Cynon Taf Pension Fund was £937.5 million. At the 31st March 2006 the Fund had increased in value to £1,227.5 million.

At the 31st March, Rhondda Cynon Taf were concluding an investment alignment review exercise. The purpose of the review is to better match fund assets to fund liabilities, and to improve the long term performance of the fund by reducing the exposure to market risk. To support this process and the ongoing monitoring and management of the amended more diverse portfolio, the Panel has appointed two new independent advisors.

Investment Management

Investment strategy is considered by an Investment Panel consisting of two councillors, the Chief Finance Officer, the Deputy Chief Finance Officer, the Service Director - Financial Management Accounting, Group Accountant for Treasury Management, the Investment Manager, the Pensions Manager, the Pension Fund Accountant, and two independent advisors. The Panel meets quarterly to determine policy in the light of market movements and economic indicators / conditions. The appointed fund managers carry out the day-to-day management of the Fund.

Investment Performance

For the year ending 31st March 2006, the Fund obtained a return of 27.0% against a WM local authority benchmark of 24.9%. The Fund ranked in the 10th percentile of funds measured. The outperformance can be attributed to both asset allocation and stock selection. The Fund obtained an annualised three year return of 19.7%, marginally below the local authority average of 19.9%.

The following analysis provides returns by asset class for 2005/06 Benchmark 2005/06 RCT 2005/06 % % UK Equities 27.0 25.9 Overseas Equities US 24.4 27.2 Continental Europe 37.2 41.0 Japan 49.0 56.5 Pacific 36.8 39.2 Other Intl 53.8 71.1 UK Bonds 8.3 6.6 Overseas Bonds 6.2 7.9 UK Index Linked 8.0 3.6# Cash 11.1 4.1 UK Property 21.4 TOTAL ASSETS 24.9 27.0

# Not invested in this sector for the entire period

16 Fund Manager Performance

The table below shows the relative performance of each manager against their respective benchmarks for the year ending 31 March 2006.

WM Benchmark Managers Return % % Baillie Gifford Asset Management 29.6 33.9

F & C Management (Equities) 29.6 29.9

F & C Management (Bonds) 7.2 6.9

17 Details of Fund Managers

The Fund currently employs two balanced equity fund managers and one specialist bond manager. A small proportion of the fund is managed internally (for management of cashflow requirements). The companies are all UK registered. The proportion of assets managed by each are set out below:

Market Value as at Proportion of Fund Fund Manager 31/03/06 £M % Baillie Gifford Asset Management (Equities) 514.823 41.9

F & C Management (Equities) 512.747 41.8

F & C Management (Bonds) 177.196 14.4

Internally Managed 22.767 1.9

1,227.533 100.00

Realised Profits/Losses on Sale of Investments

A net profit of £58.901 million was made by the Fund on the sale of investments in 2005/06 (£35.297 million profit in 2004/05):

2004/05 2005/06 £’000 £’000 Profits on sales 53,457 86,267

Losses on sales (18,160) (27,366)

Net Profit / (Loss) on sales 35,297 58,901

Profits and losses are calculated on historic costs. When only part of a holding is sold, the average cost method is used. The figures shown include currency gains and losses. If currency gains and losses are excluded there was a net profit of £60.180 million.

Titles of Ownership

The Pension Fund’s custodian, State Street Bank and Trust, holds certificates covering registered holdings.

18 Analysis of Investments

2004/05 2005/06 £’000 £’000 £’000 £’000 UK Equities UK 422,794 526,185 Overseas 188,742 321,493 611,536 847,678 Fixed Interest UK 117,335 129,440 Overseas 41,014 43,126 158,349 172,566 Index-Linked UK 4,103 0 Overseas 0 0 0 4,103 0 Pooled Investments UK 27,302 25,134 All the investments Overseas 81,159 134,167 are ‘quoted’ UK Unit Trusts 0 0 investments i.e. they UK Property Unit Trusts 227 227 are traded on a 108,688 159,528 recognised Total Long-Term Investments 822,676 1,179,772 investment exchange.

Portfolio Distribution/Geographical Spread of the Fund

The portfolio distribution together with the value of the shares held as at 31st March 2006 was as follows:

Area £M % UK equities 551,319 44.9 Overseas Equities: Europe 147.200 12.0 US and Canada 129.182 10.5 Far East 112.011 9.1 Other Intl 67.266 5.5 Bonds 172.566 14.1 Property Unit Trusts 0.227 0.0 Cash & Short Term Investments 47.762 3.9 Total 1,227.533 100.00

19 Largest Share Holdings

The ten largest holdings of each equity Fund Manager as at 31st March 2006 are:

Baillie Gifford F & C Share Share £’000 £’000 Glaxosmithkline 18,471 HSBC 20,299 Royal Bank Of Scotland 17,244 BP 15,995 Barclays 15,354 GlaxoSmithkline 15,405 BG Group 14,527 Royal Dutch Shell A 15,401 BP 13,799 Vodafone 15,340 HSBC 13,336 Royal Dutch Shell B 11,053 Man Group 10,427 Anglo American 10,788 BHP Billiton 9,799 Royal Bank of Scotland 10,246 Wolseley 9,615 Barclays 8,068 Vodafone 8,602 Rolls Royce 7,472 Total 131,174 Total 130,067

Purchases and Sales

Rhondda Cynon Taf is obliged to make quarterly returns to the Office for National Statistics regarding transactions in financial assets undertaken by the Pension Fund. These are summarised in the following table:

Purchases Sales Quarter £’000 £’000 June 2005 134,382 103,769 September 2005 148,889 136,921 December 2005 147,980 124,656 March 2006 310,833 300,027 Total 742,084 665,373

The figures in the table above are shown at their historic value throughout the year, whereas the accounts show investments at their market value at 31st March 2006.

Stock Lending

The Pension Fund Investments Panel has decided that the Fund will not enter into any stock lending arrangements. The Panel will review this decision periodically.

20 Schedule of Investments at 31 March 2006

Details of Investment Market Value £ Details of Investment Market Value £ Fixed Interest UK Government Bonds 108,713 UK Index Linked 0 Other UK Bonds 20,727 Overseas Government Bonds 42,162 Other Overseas Bonds 964 Total Fixed Interest 172,566

UK Equities Mineral Extraction Services Oil and gas 91,885 Leisure & Hotels 21,697 Mining 16,606 Media 21,636 General Industrials Retailers - Food 753 Aerospace & Defence 7,562 Retailers - General 11,709 Industrial 38,609 Telecommunications 26,877 Construction & Building Material 21,182 Support Services 6,967 Electronic & Electrical 1,099 Information Technology Consumer Goods IT Hardware 131 Beverages 13,076 Software & Services 4,167 Household Goods & Textiles 5,626 Financial Food Producers 848 Banks 111,490 Pharmaceuticals / Healthcare 42,498 Insurance 2,094 Food and Drug Retailers 3,518 Life Assurance 13,774 Tobacco 13,013 General Financial 5,578 Utilities Real Estate 20,902 Electricity 7,233 Other Financial 10,427 Gas 5,229 Managed Unitised Funds 25,134 Total UK Equities 551,547

Property Unit Trusts 227,215

Overseas Equities US & Canada 129,182 Europe 147,200 Japan/Far East 112,011 International 67,266 Total Overseas Equities 455,659

Total Long-Term Investments 1,179,772 Cash/Short Term Investments 47,761 MARKET VALUE OF INVESTMENTS 1,227,533

21 Rhondda Cynon Taf County 3. Funding Objectives Borough Council Pension Fund Rhondda Cynon Taf should manage the Fund in such a Statement of Investment manner that, in normal market conditions, all accrued Principles benefits are fully covered by the actuarial value of the Fund's assets and that an appropriate level of contribution is agreed by the Authority to meet the cost 1. Overall Responsibility of future benefits arising. Rhondda Cynon Taf County Borough Council is the

designated statutory body responsible for administering The assumptions used for this test correspond with the the Rhondda Cynon Taf County Borough Council assumptions used in the latest Actuarial Valuation. This Pension Fund on behalf of the constituent Scheduled position will be reviewed at least at each triennial and Admitted Bodies. The Council is responsible for Actuarial Valuation. The Corporate Services Group setting investment policy, appointing suitable persons to Director and the Investment Advisory Panel will be implement that policy and carrying out regular reviews advised of any material changes to the Fund during the and monitoring of investments. inter-valuation period.

The Council has appointed the Group Director - Corporate Services (The Section 151 Officer) to be 4. Investment responsible for the Pension Fund. An Investment Objectives Advisory Panel has been formed to advise him in this The Fund's objective is to capacity. This is made up of: achieve a return on Fund assets, which is sufficient, G Two Councillors over the long-term, to meet G The Section 151 Officer the funding objectives on G (Section 151 Officer) Corporate Services an ongoing basis. Group Director G Service Director - Financial Management The Corporate Services Group Director and the and Accounting Investment Advisory Panel will ensure that one or more G The Group Accountant (Closing, Systems, investment managers are appointed who are authorised Treasury Management) under the Local Government Pension Scheme G The Investments Officer (Management and Investment of Funds) Regulations G The Pensions Manager 1998 to manage the assets of the Fund. Contracts / G The Pension Fund Accountant mandates are in place giving instructions to the G Advisor(s) Managers as to how the investment portfolio is to be managed. The Panel meets quarterly. The Council is not strictly a trustee (technically, this is the Department for The Corporate Services Group Director and the Communities and Local Government (DCLG)) but acts Investment Advisory Panel may give specific directions in a quasi - trustee role. as to the strategic asset allocations and will ensure the suitability of assets in relation to the needs of the Fund. 2. Primary Objective The investment managers (each of which will have a benchmark and target to reflect their mandate) will be The Fund’s objective is to provide for members' pension given full discretion over the choice of individual stocks and lump sum benefits on their retirement or for the and are expected to maintain a diversified portfolio. dependants benefits on death before or after retirement, on a defined basis.

22 5. Kinds Of Investments The appointment of more than one investment manager To Be Held introduces a meaningful level of diversification of manager risk. A management agreement is in place for each investment manager, which sets out the relevant Each manager is expected to maintain a diversified benchmark, performance target, asset allocation ranges, portfolio of investments and adhere to restrictions and any restrictions as determined by the Corporate imposed within their agreement. Services Group Director and the Investment Advisory Panel has agreed a benchmark, which provides an efficient balance between risk and return. 7. Expected Return On Investments Distribution of assets of equity managers must be maintained within the following ranges: The overall investment objective is to maximise investment returns and to minimise employer Range Asset Class (Percentage of Portfolio) contributions over the long term within agreed risk tolerances. UK Equities 45% - 60%

Cash 0 - 5% The requirement is to move towards 100% funding over a period of time. This is agreed with the Actuary as the average expected future working lifetime of the scheme membership. The funding level is computed triennially, following an actuarial review. The Pension Fund currently has a funding target ratio of 62%.

The Fund's assets are managed on an active basis and are expected to outperform their benchmarks over the long term. In this way the investment

Percentage ranges are broad so as not to restrict the performance achieved by the Fund is expected to fund managers’ diversification. exceed the rate of return assumed by the Actuary in funding the Fund on an ongoing basis.

The Corporate Services Group Director and the Investment Advisory Panel has agreed a benchmark The Fund's investment managers have been given which provides an efficient balance between risk and weighted average benchmarks and targets to reflect return. their mandates. Both asset allocation and stock selection is monitored.

The Corporate Services Group Director and the Investment Advisory Panel has agreed not to invest in Review of the investment managers is ongoing private equity. based on the quarterly and annual performance data supplied to the Panel by the WM Company.

6. Policy On Risk 8. Realisation Of Investments

The adoption of an asset allocation benchmark and the Fund Managers are required to hold only assets that are monitoring of performance relative to a performance readily realisable. Any investment within a pooled fund target constrains the investment managers from that is not readily tradeable requires specific approval. deviating significantly from the intended approach, while Property Unit Trusts, which are relatively illiquid, permitting flexibility to manage the Fund in such a way currently make up a small proportion of the Fund's to enhance returns. assets.

23 9. Socially Responsible 13. Actuary Investments Rhondda Cynon Taf has appointed an independent The Corporate Services Group Director and the actuary. The main purpose of the actuary is to ascertain Investment Advisory Panel has discussed Socially the Fund's financial position. Responsible Investment in the context of the investment strategy. It has been decided that the overriding principle of the Fund's investment policy is 14. Administration to obtain the best possible return using the full range of On behalf of Rhondda Cynon Taf County Borough investments authorised under the Local Government Council, the Group Director, Corporate Services Pension Scheme regulations. exercises continual monitoring of the managers' investment related actions and administration. This The Panel has adopted a critical engagement policy as a includes: means of being socially responsible. By adopting corporate governance principles the Fund will be G maintaining the investment ledger and suitable attempting to encourage corporate social responsibility. accounting procedures for the Fund's assets G preparing a quarterly report to the Investment Advisory Panel 10. Exercise Of Voting Rights G preparing an audited annual report and accounts The Corporate Services Group Director and the G maintaining an up to date record of in-house Investment Advisory Panel has agreed a voting template managed cash balances to ensure surplus cash is on how Fund Managers should base their voting actions. invested promptly or that resources are available to An independent voting agency has been employed to cover benefits payments. monitor the actions of the Managers.

Critical engagement is a means of being socially 15. Fees Of Advisors And responsible. Managers are required to use their voting Fund Managers rights as a way of being constructively critical of a Fund Managers fees are charged on a reducing scale company. basis based on the market value of the Fund. Fees are paid quarterly. 11. Custody Advisors fees are fixed and are paid quarterly. Rhondda Cynon Taf has appointed global custodians. All the investments are held by the custodians to the account of the Pension Fund. The Council holds a 16. Review Of Structure modest working cash balance. The Corporate Services Group Director and the Investment Advisory Panel reviews its structure and composition on a three - yearly basis. 12. Advisors

Rhondda Cynon Taf has appointed independent advisors. The Advisors are employed to give advice to 17. Annual Business Plan the Council on investment matters. Rhondda Cynon Taf produces an annual business plans for all areas of service including, at present, in separate plans, Pensions Administration (Exchequer Business Plan) and Fund Investment (Accountancy Business Plan).

24 Myners Investment Principles – Principle 2. Clear Objectives

Compliance Statement Trustees should set out an overall investment objective Principle 1. Effective Decision Making for the fund that:

Decisions should be taken only by persons or G Represents their best judgement of what is organisations with the skills, information and resources necessary to meet the fund’s liabilities given their necessary to take them effectively. Where trustees select understanding of the contributions likely to be to take investment decision they must have sufficient received from employer(s) and employees; and expertise and appropriate training to be able to evaluate G Takes account of their attitude to risk, specifically critically any advice they take. their willingness to accept underperformance due to Trustees should ensure that they have sufficient in- market conditions. house staff to support them in their investment responsibilities. Trustees should also be paid, unless Objectives for the overall fund should not be expressed there are specific reasons to the contrary. in terms, which have no relationship to the fund’s

It is good practice for trustee boards to have an liabilities, such as performance relative to other pension investment subcommittee to provide the appropriate funds, or to a market index. focus. « Full compliance

Trustees should assess whether they have the right set of skills, both individually and collectively, and the right structures and processes to carry out their role effectively. They should draw up a forward – looking business plan.

« Full Compliance Principle 3. Focus on asset allocation Trustees, or those, to whom they have delegated the task, should have a full understanding of the Strategic asset allocation decisions should receive a level transaction- related costs they incur, including of attention (and, where relevant, advisory or commissions. They should understand all the options management fees) that fully reflect the contribution they open to them in respect of these costs, and should have can make towards achieving the fund’s investment an active strategy – whether through direct financial objective. Decision – makers should consider a full incentives or otherwise – for ensuring that these costs range of investment opportunities, not excluding from are properly controlled without jeopardising the fund’s consideration any major asset class, including private other objectives. Trustees should not without good equity. Asset allocation should reflect the fund’s own reason permit soft commissions to be paid in respect of characteristics, not the average allocation of other funds. their fund’s transactions. « Full compliance « Full compliance

Principle 4. Expert advice Principle 6. Activism Contracts for actuarial services and investment advice The mandate and trust deed should incorporate the should be opened to separate competition. The fund principle of the US Department of Labour should be prepared to pay sufficient fees for each service to attract a broad range of kinds of potential providers.

« Full compliance

Principle 5. Explicit mandates

Trustees should agree with both internal and external investment managers an explicit written mandate Interpretative Bulletin on activism. Trustees should also covering agreement between trustees and managers on: ensure that managers have an explicit strategy, elucidating the circumstances in which they will G An objective, benchmark(s) and risk parameters that intervene in a company; the approach they will use in together with all the other mandates are coherent doing so; and how they measure the effectiveness of with the fund’s aggregate objective and risk this strategy. tolerances; G The manager’s approach in attempting to achieve « Full compliance the objective; and G Clear timescale(s) of measurement and evaluation, such that the mandate will not be terminated before the expiry of the evaluation timescale for under performance alone.

The mandate and trust deed and rules should not exclude the use of any financial instruments, without clear justification in the light of the specific circumstances of the fund.

26 Principle 7. Appropriate benchmarks Principle 8. Performance measurement

Trustees should: Trustees should arrange for measurement of the performance of the fund and make formal assessment G explicitly consider, in consultation with their of their own procedures and decisions as trustees. They investment manager(s), whether the index should also arrange for a formal assessment of benchmarks they have selected are appropriate; in performance and decision – making delegated to particular, whether the construction of the index advisers and managers. creates incentives to follow sub-optimal investment strategies; « Full compliance G if setting limits on divergence from an index, ensure that they reflect the approximations involved in index construction and selection; G consider explicitly for each asset class invested, whether active or passive management would be more appropriate given the efficiency, liquidity and level of transaction costs in the market concerned; and G where they believe active management has the potential to achieve higher returns, set both targets and risk controls that reflect this, giving the managers the freedom to pursue genuinely active strategies.

« Full compliance

27 Principle 9. Transparency Principle 10. Regular reporting

A strengthened Statement of Investment Principles Trustees should publish their Statement of Investment should be set out: Principles and the results of their monitoring of advisers and managers. They should send key G Who is taking which decisions and why this information from these annually to members of these structure has been selected; funds, including an explanation of why the fund has G The fund’s investment objective; chosen to depart from any of these principles. G The fund’s planned asset allocation strategy, including projected investment returns on each asset « Full compliance class; and how the strategy has been arrived at; G The mandates given to all advisers and managers; and G The nature of the fee structures in place for all advisers and managers, and why this set of structures has been selected.

« Full compliance

28 Ryan Emmett Pension Fund Accountant

Accounts Report

29 Fund Account

2004/05 2005/06 £’000 £’000 £’000 £’000 Dealings with Members, Employers and other directly involved in the scheme Contributions Receivable (59,126) From employers (68,117) (18,743) From members (20,135) (88,252) (11,656) Transfers In (8,788) (2,211) Other Income (2,859) (99,899) Benefits Payable 52,203 Pensions 54,473 5,219 Lump Sum Retirements Benefits 6,337 671 Lump Sum Death Benefits 1,124 61,934 Payments to and on account of leavers 257 Refunds of Contributions 126 144 State Scheme Premiums 89 6,134 Transfers out 9,125 9,340 1,472 Administrative Expenses 1,521 72,795 (25,636) Net (Additions) / Withdrawals from (27,104) dealings with members Returns On Investments (27,456) Investment Income (31,087) Change in Market Value of Investments (35,297) Realised Gains (58,901) (26,063) Unrealised Gains (168,273) (227,174) Investment Management Expenses 996 Fund Management Fees 1,710 258 Investment Administration Expenses 235 1,945 (87,562) Net Returns on Investments (256,316) (113,198) Net (Increase) / Decreases in Fund (283,420) during the year (840,283) Opening Net Assets (953,481) (953,481) Closing Net Assets (1,227.500)

30 Net Asset Statement

31/03/05 31/03/06 £’000 £’000 £’000 Investment Assets Fixed Interest Securities 145,531 Public Sector 150,875 12,818 Corporate Bonds 21,691 172,566 611,536 Equities 847,678 4,103 Index Linked Securities 0 Pooled Investment Vehicles 54,276 Open Ended Investment Companies 63,235 54,185 Managed Funds 96,066 0 Unit Trusts 0 227 Property Unit Trusts 227 159,528 882,676 1,179,772 50,283 Cash Deposits 42,810 Other Investment Balances 4,431 Investment Debtors 6,043 (2,403) Investment Creditors (3,573) 56 Tax Recoverable 79 2,549 935,043 1,225,131 Net Current Assets and Liabilities 4,211 Contributions Due from Employers 4,307 7,475 Cash Balances 7,279 6,429 Amounts Owed from RCT (65) 323 Other Current Assets and Liabilities 249 11,770 953,481 Total Assets 1,236,901

The market value of investment assets is quoted at 31st March of the appropriate year.

The market value of Investments (£1,227.5 million) differs from the net asset statement (£1,236.9 million). The net asset statement has other amounts included other than investments, for example, end of year reserves are included in the net asset statement but not included in the schedule.

31 S.Merritt C.P.F.A. Group Director Corporate Services

A full and comprehensive report of the Pension Fund Accounts can be obtained on request from Ryan Emmett on 01443 680734.

32 Notes to the Pension Fund Investment Valuation

Accounts Listed securities are valued at mid market prices as at 31st March 2006 supplied by FT Interactive Data Introduction and obtained by them from recognised Stock Exchanges. Unit Trust and Property Unit Trust These accounts have been prepared in accordance with valuations are based on the latest valuations supplied the requirements of Recommended Accounting Practice by the Unit Trust Management Companies. of the Pensions SORP, The Financial Reports of Pension Schemes. They do not take account of Future Liabilities liabilities to pay pensions and other benefits in the future. The actuarial position, which does take account The financial statements do not take into account of such liabilities, is set out in the latest Actuarial the Fund’s liabilities to pay pensions and other Report. benefits in future periods. These liabilities are reported separately by an actuarial valuation undertaken every three years. The result of the latest Accounting Policies valuation is set out in the Actuary’s Report.

The accounts have been prepared on an accruals basis except where stated otherwise below.

Contributions

Fund contributions from employers and employees are included in the accounts on an accruals basis.

Investment Income

Investment Income is accounted for on an accruals basis except for income from Venture Funds and Foreign Currency Property Unit Trusts, which is included in the accounts on a payments basis. Sterling valuations of securities denominated in foreign currencies are based on closing exchange Transfers rates as at 31st March 2006 supplied by FT Interactive Data. Transfers to and from other pension funds are included in the accounts on a payments basis. Additional Voluntary Contributions (AVC’s) Benefits Scheme members may elect to make additional Benefits paid to scheme members are included in voluntary pension contributions from their salaries. the accounts on an accruals basis. These AVC’s are paid directly to the AVC provider by the member’s employer and do not form part of Investment Management and the Rhondda Cynon Taf County Borough Council Administration Costs Pension Fund. Investment management fees and fund administration costs are accounted for on an accruals basis.

Fund Managers’ fees are charged on a reducing scale based upon the market value of the fund. Advisors’ fees are fixed and paid quarterly.

33 Contributions Employers’ Contributions

Employers’ contribution rates are determined by the Fund’s actuary so as to maintain the fund in a state of solvency, having regard to existing and prospective liabilities. Valuations of the Fund’s assets and liabilities for this purpose are carried out every three years, the last at 31st March 2004. Employers’ contribution rates were revised with effect from 1st April 2005.

Employees’ Contributions

Employee contribution rates are 5% for manual workers and 6% for other staff up to 31st March 1998. All staff joining the scheme after this date contribute at a rate of 6%.

Taxation UK Income and Capital Gains Taxes

From 1st July 1997, the Fund has been liable to income tax on interest and dividends. Investment income is therefore shown net with irrecoverable tax netted off against income. No Capital Gains Tax is chargeable.

There is a small liability to income tax on refunds of contributions and compounded pensions (small pensions converted into lump sums). The amount included in the creditors figure at the year end relating to this liability is £35k (£57k in 2004/05).

Value Added Tax

Since the County Borough Council is the administering authority, VAT is recoverable on all Fund activities. The accounts are shown exclusive of VAT.

Overseas Withholding Tax

The Fund is exempt from tax on US investment income. Most other overseas investment income suffers withholding tax in the country of origin. Any recoverable tax is shown as an investment balance in the Net Assets Statement.

34 Contributions Receivable and Benefits Payable

The Pension Fund is made up of a number of bodies, as identified in note 3.0 to these accounts. These bodies can be divided into three categories - administering authority, admitted bodies and scheduled bodies. The contributions received and benefits paid, analysed between each category in 2005/06 are shown in the following table:

Employee Employer Pensions, Lump Sums Contributions Contributions and Death Benefits 2004/05 2005/06 2004/05 2005/06 2004/05 2005/06 Type of Body £’000 £’000 £’000 £’000 £’000 £’000 Administering 6,750 7,387 23,957 27,018 7,754 8,959 Admitted 2,369 2,678 6,004 7,700 3,162 3,933 Scheduled 9,624 10,070 29,165 33,399 47,177 49,042 Total 18,743 20,135 59,126 68,117 58,093 61,934

Administration Costs

The administration costs borne by the Pension Fund in 2005/06 are set out below:

2004/05 2005/06 £’000 £’000 Fund Management Expenses 1,047 1,710 Investment Administration Expenses 207 235 Pension Administration Expenses 1,472 1,521 Total 2,726 3,466

This represents 0.28% (0.29% in 2004/05) of the value of the Pension Fund as at 31st March 2006.

35 Transactions with Related Parties

In the course of fulfilling its role as administering authority to the Fund, Rhondda Cynon Taf CBC provided services to the Fund for which it charged £1.3m (£1.2m in 2004/05). These costs are mainly in respect of those staff employed in ensuring that the pension service is delivered.

At the year end contributions outstanding from the Employing Bodies in the Fund amounted to £4.3m (£4.2m in 2004/05), of which £3.3m related to employer contributions and £1.0m to employee contributions.

Movement in Market Value of Investments

The market value of the pension fund’s investments (excluding cash) increased from £883m to £1,180m during 2005/06. This movement is summarised in the following table:

£’000 £’000 Opening Investments at Market Value 2005/06 882,676 Total Purchases 761,736 Total Sales (633,973) 127,763 Stock Dividends 611 Increase in reserve debtors (530) Increase in reserve creditors 979 Reverse unrecognised profit in previous year (49,427) Unrecognised profit this year 217,700 Cumulative unrecognised profit 168,273 Closing Investments at Market Value 2005/06 1,179,772

Contingencies

There is a contingent liability of £435k (£417k in 2004/05) in respect of potentially refundable contributions for leavers who have not yet claimed refunds.

36 By Hewitt Bacon & Woodrow

Actuary’s Report

37 Introduction These figures were based on the Regulations in force at the time of signing the valuation report, and in The Local Government Pension Scheme Regulations particular allowed for changes to the Fund benefits 1997 require that a full actuarial valuation is carried out effective from 1st April 2005. every third year. The purpose of this is to establish that the Rhondda Cynon Taf County Borough Council 4. The majority of Employers participating in the Pension Fund (the Fund) is able to meet its liabilities to Fund pay different rates of contributions depending past and present contributors and to review employer on their past experience, their current staff profile, contribution rates. The last full actuarial investigation and the recovery period agreed with the into the financial position of the Fund, in accordance Administering Authority. with Regulation 77(1) of the Scheme Regulations, was completed as at 31st March 2004. If the assumptions are borne out in practice, the rate of contribution for each Employer would increase at the Actuarial Position end of 3 years, due to the cessation of the assumed

1. Rates of contributions paid by the participating short term additional investment income. It would then Employers during 2005/06 were based on the continue at the resultant level for the balance of the actuarial valuation carried out as at 31st March relevant recovery period before reverting to the relevant 2004.

2. The valuation as at 31st March 2004 showed that the financial position of the Fund had deteriorated since the previous valuation with the market value of the Fund’s assets of £840.7M, after application of a smoothing adjustment, covering 62% of the liabilities allowing, in the case of current contributors to the Fund, for future increases in pensionable remuneration. long term rate. In practice, contribution rates will be reviewed at the next valuation due at 31st March 2007

3. The valuation also showed that the required level of and further assumptions may be made at that time contributions to be paid to the Fund by concerning short term additional investment returns. participating Employers (in aggregate) with effect from 1st April 2005 was as set out below: 5. The rates of contributions payable by each participating Employer over the period 1st April • 210% of members’ contributions to meet the 2005 to 31st March 2008 are set out in a certificate liabilities arising in respect of service after the dated 30th March 2005 which is appended to our valuation date. report of the same date on the actuarial valuation. Plus

• 175% of members’ contributions to restore the assets to 100% of the liabilities in respect of service prior to the valuation date, over a recovery period of 20 years.

Less

• 40% of members’ contributions in respect of higher assumed investment income over the short term.

38 6. The contribution rates certified in our valuation as 7. The vast majority of contribution rates were at 31st March 2004 were based on the benefit calculated using the projected unit actuarial method structure of the Fund as indicated by Regulations as and taking account of the Fund’s funding strategy as at the date of signing our certificate. New described in the Funding Strategy Statement. The Regulations (the 2005 Regulations), backdated to 1st main actuarial assumptions were as follows: April 2005, have since been issued which increased the theoretical cost of Fund benefits relative to those on which the certificate was based. No adjustment has been made to contribution rates in respect of that change as it was indicated by the Government that further changes would occur Discount rate Per Annum which would offset these additional costs. Further For members in Service 6.2% Regulations have recently been issued, effective at For member not in Service 6th April 2006 and 1st October 2006 which will, in Admitted Bodies 5.2% theory, reduce the cost of Fund benefits to below that on which our certificate was based and will also All other Employers 6.2% recoup the additional costs arising from the 2005 Rate of general pay increases 4.4% Regulations. However, discussions are still ongoing Rate of increases to pensions in payment 2.9% between Government, Employer and Union (in excess of GMPs) representatives about improvements to benefits for Short term return on equities / property 7.7% existing members and there may be further changes Short term return on other assets 5.2% to the Regulations. The impact of all of these Valuation of assets smoothed changes will be taken into account at the next Fund market value valuation.

39 8. The next actuarial valuation of the Fund will be This statement must not be considered without carried out as at 31st March 2007. reference to the formal valuation report which details fully the context and limitations of the actuarial valuation. 9. This statement has been prepared by the Actuary to

the Fund, Hewitt Bacon & Woodrow Limited, for Hewitt Bacon & Woodrow Limited does not accept inclusion in the accounts of Rhondda Cynon Taf any responsibility or liability to any party other than County Borough Council. It provides a summary of our client, Rhondda Cynon Taf County Borough the results of the actuarial valuation which was Council, in respect of this statement. carried out as at 31st March 2004. The valuation provides a snapshot of the funding position at the valuation date and is used to assess the future level of contributions required.

Hewitt Bacon & Woodrow Limited July 2006

40 David Williams Communications

“Our key role is to provide members with up to date pension details and keep them well informed about their entitlements and options, to ensure our customers long term financial position is as secure as possible.”

Communication Report

41 Commentary information and benefit calculators as well as presentations to members and a telephone helpline. We continue to see significant changes within the Pensions arena, and some of the key topics that we are To underpin some of these activities we have also put in currently addressing include adapting to the place service level agreements with our stakeholders and Government’s pension simplification (A Day) changes built in processes to our system administration that and the new regulations affecting the Local Government monitors the achievements of these benchmarks. It is Pension Scheme. In addition, we continue to identify also incumbent on us to ensure that information ongoing efficiencies by working in partnership with provided by stakeholders is timely and accurate. other Local Government Pension Schemes.

To help ensure this, we meet with our stakeholders on a We will continue to work hard to meet the new demands regular basis and keep them fully informed of being placed on our pension administration by changes developments that may affect them. We are currently in legislation. seeking to develop secure electronic interfaces between systems so that information on new starters, changes to In an environment of continuous change, the need to personal details and contribution information can be communicate effectively with members and stakeholders provided electronically. is paramount for any scheme and in order to do this, a variety of communication options need to be utilised so This would enable us to “smooth” our workflow so that all recipients can engage. that we can update records on an ongoing basis rather than facing peaks of activity during one part of the Over the last few years we have supported scheme year and so help with the earlier production of benefit members with the introduction of annual benefit statements. statements, a customer charter, online access to pension

42 43 Here are just some of the services that members can access

Helpdesk Presentations Our Helpdesk continues to assist with pension queries The Communications Team is happy to provide and calls can be made between the hours of seminars based on the following lifestyle changes: - 9.00 a.m. to 4.30 p.m. Monday to Thursday and • Induction 9.00 a.m. to 4.00 p.m. on Friday. • Mid Life Planning • Pre Retirement You can contact the Helpdesk on 01443 680 611

Should any employer wish to receive these presentations Internet Access please contact our Communications Manager on the In continuing to make our services as accessible as following help-line number: 01443 680646 possible we will continue to develop our Internet site, this site is solely devoted to our members needs and offers the following information: - • On-line Scheme Guide • Interactive Pensions Calculator • Latest News and Issues • A whole host of other information on The Local Government Pensions Scheme

Contact the web-site via www.rctpensions.org.uk

44 Additional Voluntary Customer Survey Contributions In April our annual “Pensions Connection” newsletter was distributed to over 20,000 retired members. We For those members of the Local Government consulted with 1,000 randomly selected members to Pension Scheme who may be considering “topping establish whether they found the service effective and up” their existing pension provision they can contact once again the results were very pleasing. our AVC provider Prudential, directly.

In addition to providing commission free, factual Typical comments included: information, Prudential can offer presentations and Face to Face consultations to all staff within the “Very Satisfied with all services.” Rhondda Cynon Taf Pension Fund. Contact the Pension Connection “I’ve no complaints about the Pensions Section at all – the service seems efficient and courteous.” Help-line on 0845 607 0077 “Staff are friendly and very helpful over the phone.”

Dates to remember “Everything has gone smoothly and efficiently April Publication of Pensioner newsletter since 1988.” June Publication of Scheme members newsletter October Begin distribution of annual benefit statement “Your staff and service are a joy to old age, may we both continue.” Publication of annual Pension Fund Report November Employers Annual General Meeting

45 The results are shown below: - Of the 1000 questionnaires distributed, 438 were returned. The results are as follows:

In the last 12 months, have you contacted the pension section: Frequently - 0.25% Occasionally - 5% Rarely - 16% Never - 78.75%

Was the last contact an enquiry or complaint? Enquiry - 100% Complaint - 0%

How did you last contact the pension section? In person - 5% In writing - 12% By telephone - 83% By Email - 0%

At the time of your last contact, how good or poor was the service provided in respect of: Very Good Good Poor Speed of service 73% 25% 2% Courtesy of staff 76% 23.5% 0.5% Fairness of treatment 72% 27% 1%

Overall, what is your view of the services provided by the Pension Section? Very Good - 74% Good - 25.75% Poor - 0.25%

46 Summary of Pension Benefits on leaving Service

Scheme Benefits The benefit entitlement on leaving service before Listed below are some of the main benefits available to retirement age is determined by length of scheme members of the Local Government Pension Scheme. membership. Leavers with 3 months membership are Contributors pay 6% of their pay into the scheme with awarded preserved retirement benefits. Leavers with under 3 months membership who have not brought in a the exception of certain manual workers who are transfer to the scheme or have not previously protected on 5%. transferred LGPS benefits to an overseas scheme can • to qualify for retirement benefits a member has to claim a refund”. In either situation a member can have accrued 3 months membership request a transfer of pension rights to another scheme. in the scheme.

Death in Service

Annual Pension Regardless of length of service, a lump sum death grant Normal retirement age is 65 although some members equal to 2 X final pay is payable. In addition a spouse’s pension and possibly children’s benefits will be payable. may be able to retire earlier with unreduced benefits depending on thier circumstances. Reduced benefits are payable to those members without 25 years accrued Death after Retirement service. The calculation of annual pension is based on Every retired member is guaranteed 5 years pension plus the following formula: Final years pay X 1/80 X a surviving spouse’s pension and pension for dependent membership period. children.

All pensions in payment are increased annually in line Lump Sum with the Retail Price Index.

In addition to an annual pension members also receive a tax free lump sum. This is based on: Additional Voluntary Final years pay X 3/80 X membership period. Contributions

The Additional Voluntary Contributions Scheme Ill Health Retirement (AVC’S) run in conjunction with the Prudential has assets that are invested separately from the main Fund. If permanent illness or disability prevents a member The Prudential, on behalf of the individual members from carrying out their duties, or the duties of a invests the contributions which provide for an additional comparable job, then an ill health pension and lump sum income at retirement. will be payable.

If the member has accrued at least 5 years service, extra years are awarded to compensate for premature retirement.

47 Contributors Contact Information

For information about the Local Government Pension Scheme and pension matters in general please contact:

The Pensions Helpdesk Tel: 01443 680611 Fax: 01443 680717 or write to:- Group Director Corporate Services, Pension Section, Rhondda Cynon Taf County Borough Council, Bronwydd, , CF39 9DL. Email: [email protected]

Pensions administration Policy Mrs. Jenny Gaughan - Pensions Manager Tel: 01443 680611 Email: [email protected]

Fund Investments Miss Yvonne Keitch - Investment Officer Tel: 01443 680563 Email: [email protected]

Pension Fund Accounts Mr Ryan Emmett - Pensions Fund Accountant Tel: 01443 680734 Email: [email protected]

Pensions Presentations or Training Sessions Mr David Williams - Communications Manager Tel: 01443 680646 Email: [email protected]

48