(Public Pack)Agenda Document for Superannuation Fund Committee

SUPERANNUATION FUND COMMITTEE

Friday, 7th September, 2018

10.00 am

Medway Room - Sessions House

AGENDA

SUPERANNUATION FUND COMMITTEE

Friday, 7th September, 2018 at 10.00 am Ask for: Theresa Grayell Medway Room - Sessions House Telephone: 03000 416172

Membership

Conservative (8): Mr C Simkins (Chairman), Mr N J D Chard (Vice-Chairman), Mr P V Barrington-King, Mr P Bartlett, Mr P C Cooper, Mr P J Homewood, Mr J P McInroy and Mr J Wright

Liberal Democrat (1) Mr D S Daley

District Council (3) Cllr J Burden, Cllr P Clokie and Cllr N Eden-Green

Medway Council (1) Cllr L Wicks

Kent Active Retirement Mrs M Wiggins and Mr D Coupland Fellowship (2)

UNISON (1) Mr J Parsons

Staff Representative (1) Vacancy

Please note: that the unrestricted part of this meeting may be filmed by any member of the public or press present.

By entering into this room you are consenting to being filmed. If you do not wish to have your image captured please let the Clerk know immediately.

UNRESTRICTED ITEMS (During these items the meeting is likely to be open to the public)

1 Substitutes

2 Declarations of Interests by Members in items on the Agenda for this meeting.

3 Minutes of the meeting held on 22 June 2018 (Pages 5 - 10)

4 Barnett Waddingham 5 Motion to Exclude the Press and Public That under Section 100A of the Local Government Act 1972 the press and public be excluded from the meeting for the following business on the grounds that it involves the likely disclosure of exempt information as defined in paragraph 3 of part 1 of Schedule 12A of the Act.

EXEMPT ITEMS

(During these items the meeting is likely NOT to be open to the press and public)

6 Schroders (Pages 11 - 12)

7 Fund Structure (Pages 13 - 82)

8 ACCESS Pooling Update (Pages 83 - 92)

UNRESTRICTED ITEMS (meeting open to the public)

9 Superannuation Fund Report and Accounts and External Audit (Pages 93 - 186)

10 Fund Position Statement (Pages 187 - 196)

11 Fund Employer Matters (Pages 197 - 202)

12 Date of next meeting The next meeting of the Committee will be held on Friday 16 November 2018 at 10.00am

Benjamin Watts General Counsel 03000 416814

Thursday, 30 August 2018

In accordance with the current arrangements for meetings, representatives of the Managers have been given notice of the meeting and will be in attendance for their items. Agenda Item 3

KENT COUNTY COUNCIL

SUPERANNUATION FUND COMMITTEE

MINUTES of a meeting of the Superannuation Fund Committee held in the Medway Room - Sessions House on Friday, 22 June 2018.

PRESENT: Mr C Simkins (Chairman), Mr P V Barrington-King, Mr P Bartlett, Cllr J Burden, Cllr P Clokie, OBE, Mr P C Cooper, Mr D Coupland, Mr D S Daley, Mr P J Homewood, Mr J P McInroy, Mr J Parsons, Cllr L Wicks and Mr J Wright.

IN ATTENDANCE: Mrs B Cheatle (Pensions Manager), Mrs A Mings (Treasury and Investments Manager), Mr N Vickers (Business Partner (Pension Fund)) and Mrs A Hunter (Principal Democratic Services Officer).

UNRESTRICTED ITEMS

62. Substitutes (Item A1)

(1) Apologies for absence were received from Mr Chard, Councillor Eden-Green and Mrs Wiggins.

(2) Apologies for absence were also received from Andy Wood (Corporate Director of Finance).

(3) Mr Simkins said that Andy Wood who had been a long-standing officer at Kent County Council was retiring with effect from the end of the month. He paid tribute to the humour, wisdom and wise counsel Mr Wood had brought to the Superannuation Fund Committee over many years.

63. Declarations of Interests by Members in items on the Agenda for this meeting. (Item A2)

Mr Bartlett said he was an employee of BNY Mellon Bank which was referred to in the papers for Item B1.

64. Minutes - 23 March 2018 (Item A3)

(1) Mr Simkins said it had been confirmed that Neil Woodford would attend the meeting of the Committee in November as set out in minute 56 (3)(a).

(2) Resolved that the minutes of the meeting held on 23 March are correctly recorded and that they be signed by the Chairman.

65. Motion to exclude the Press and Public (Item A4)

Resolved that under Section 100A of the Local Government Act 1972 the press and public be excluded from the meeting for the following business on the grounds that it involves the Page 5 likely disclosure of exempt information as defined in paragraph 3 of part 1 of Schedule 12A of the Act.

EXEMPT ITEMS (Open Access to minutes)

66. Baillie Gifford (Item B1)

Lynn Dewar and Lucy Haddow from Baillie Gifford were present for this item

(1) The Chairman welcomed Ms Dewar and Ms Haddow to the meeting and invited them to report on the performance of Kent Pension Fund’s investments managed by Baillie Gifford.

(2) Resolved that the presentation and the responses to the Committee’s questions be noted.

67. DTZ Investors (Item B2)

Peter O’Gorman and Jennifer Linneker from DTZ Investors were present for this item

(1) The Chairman welcomed Mr O’Gorman and Ms Linneker to the meeting and invited them to report on the performance of Kent Pension Fund’s investments managed by DTZ Investors.

(2) Resolved that the presentation and the responses to the Committee’s questions be noted.

68. Investment Strategy (Item B3)

(1) Mr Simkins introduced the report which made specific proposals covering a number of investment issues. The Committee considered each issue in turn.

(2) Resolved that:

(a) An additional 3.5% be allocated to both Harbourvest and Partners to be funded initially from passive UK Equities;

(b) An allocation of £70 million be made to Ruffer, and that the funding source be confirmed as Cash;

(d) An investment in the M&G Real estate UK Enhanced Value Fund be not made;

(e) The response from YFM be noted;

(f) Mr Woodford’s attendance at the 16 November meeting be noted.

Page 6 69. ACCESS Update (Item B4)

(1) Alison Mings (Treasury and Investments Manager) introduced the report which provided an update on progress on pooling. She also answered Members’ questions relating to items in the report.

(2) Resolved:

(a) That the report be noted;

(b) To agree that the Kent Fund adopts the ACCESS stock lending policy for investments in the ACS, and to delegate to officers to negotiate a similar arrangement for the Kent Fund’s stock lending programme; and

UNRESTRICTED ITEMS (meeting open to the public)

70. Fund Position Statement (Item C1)

(1) Nick Vickers (Business Partner (Pension Fund) introduced the report which provided a summary of the Fund Asset Allocation and performance.

(2) Following a suggestion by a Member, Mr Vickers agreed to include information about the fees charged and the total expense ratio for each manager in the next Fund Position Statement considered by the Committee.

(3) Resolved that the report be noted.

71. Euro Currency Balances (Item C2)

(1) Alison Mings (Treasury and Investments Manager) introduced the report which provided an update on the Fund’s cash position and sought approval to convert EUR29m to GBP.

(2) Resolved that:

(a) The report be noted;

(b) The decision to sell EUR29m when the GBP/Euro exchange rate is at or lower than 1.14 be delegated to the Director of Finance in consultation with the Chairman.

Page 7 72. Risk Register (Item C3)

(1) Alison Mings (Treasury and Investments Manager) introduced the report which provided an updated Pension Fund Risk Register.

(2) In response to a question about the risk to the Fund of reductions in staff, Mr Vickers said the risk was included within the risks identified in the register but that it could be mentioned separately.

(3) Resolved that the risk register be agreed.

73. Pensions Administration (Item C4)

(1) Barbara Cheatle (Pensions Manager) introduced the report which provided a comprehensive update of administration issues including: the workload position; achievements against Key Performance Indicators; a proposed write-off of a pension overpayment; monthly submission of employer data; staff resource; General Data Protection Regulations and Data Quality matters relating to the Pension Regulator.

(2) Resolved:

(a) That the report be noted;

(b) To agree the write-off of an over-payment of pension of £22,060.29.

74. Fund Employer Matters (Item C5)

(1) Alison Mings (Treasury and Investments Manager) introduced the report which provided an update on the employer related matters, applications to join the Fund and a change in the Local Government Pension Scheme (LGPS) regulations.

(2) Resolved to note the report and agree:

(a) To the admission to the Kent County Council Superannuation Fund of Churchill Contract Services Ltd;

(b) To the admission to the Kent County Council Superannuation Fund of Cater Link Ltd;

(c) To the admission to the Kent County Council Superannuation Fund of Compass Contract Services (UK) Ltd t/a Chartwells re Kent Catholic Schools Partnership Secondary Schools;

(d) To the admission to the Kent County Council Superannuation Fund of Compass Contract Services (UK) Ltd t/a Chartwells re Kent Catholic Schools Partnership Primary Schools;

Page 8 (e) That the Chairman may sign the minutes relating to recommendations (a) to (d) at the end of today’s meeting; and

(f) That once legal agreements have been prepared for these matters the Kent County Council seal can be affixed to the legal documents.

75. Date of next meeting (Item C6)

It was noted that the next meeting of the Committee would be held on Friday, 7 September 2018.

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By: Chairman Superannuation Fund Committee Acting Corporate Director of Finance To: Superannuation Fund Committee – 7 September 2018 Subject: SUPERANNUATION FUND REPORT & ACCOUNTS AND EXTERNAL AUDIT Classification: Unrestricted

To present the Report and Accounts of the Superannuation Summary: Fund for 2017/18 and the External Audit Findings Report.

FOR DECISION

INTRODUCTION

1. A draft copy of the Superannuation Fund Report and Accounts for the year ended 31 March 2018 is attached at appendix 1.

2. The Fund’s Accounts were approved by Governance and Audit Committee on 25 July.

3. The external auditor’s Audit Findings Report which wholly relates to the accounts is also attached at appendix 2. The audit of the accounts is complete and an audit opinion was issued on 26 July.

RECOMMENDATIONS

4. Members are asked to:

(1) Approve the Superannuation Fund Annual Report

(2) Note the content of the Accounts for 2017/18

(3) Confirm that the Report and Accounts can be published to the Kent Pension Fund website

(4) Note the external auditor’s Audit Findings Report, and

(5) Note the position with regard to Governance and Audit Committee.

Alison Mings Treasury and Investments Manager [email protected]

Page 93 This page is intentionally left blank Audit Findings Report Year ending 31 March 2018

Kent 95 Page Superannuation Fund 25 July 2018

Section Page 1. Headlines 3 2. Financial statements 4 3. Independence and ethics 12

Appendices Your key Grant Thornton A. Audit adjustments team members are: B. Fees Page 96 Page Paul Dossett C. Audit Opinion Engagement Lead T: 020 7728 3180 E: [email protected]

Matt Dean Engagement Manager T: 020 7728 3181 E: [email protected]

Onyi Aguma The contents of this report relate only to those matters which came to our attention during the conduct of our normal audit procedures which are designed for the purpose of expressing In-Charge Accountant our opinion on the financial statements. Our audit is not designed to test all internal controls or identify all areas of control weakness. However, where, as part of our testing, we identify E: [email protected] control weaknesses, we will report these to you. In consequence, our work cannot be relied upon to disclose all defalcations or other irregularities, or to include all possible improvements in internal control that a more extensive special examination might identify. This report has been prepared solely for your benefit and should not be quoted in whole or in part without our prior written consent. We do not accept any responsibility for any loss occasioned to any third party acting, or refraining from acting on the basis of the content of this report, as this report was not prepared for, nor intended for, any other purpose.

Grant Thornton UK LLP is a limited liability partnership registered in England and Wales: No.OC307742. Registered office: 30 Finsbury Square, London, EC2A 1AG. A list of members is available from our registered office. Grant Thornton UK LLP is authorised and regulated by the Financial Conduct Authority. Grant Thornton UK LLP is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. Services are delivered by the member firms. GTIL and its member firms are not agents of, and do not obligate, one another and are not liable for one another’s acts or omissions.

Introduction This table summarises the key issues arising from the statutory audit of Kent Superannuation Fund (‘the Pension Fund’) and the preparation of the Pension Fund's financial statements for the year ended 31 March 2018 for those charged with governance.

Financial Under the National Audit Office (NAO) Code of Audit Practice ('the Our audit work was completed on site during June 2018. Our findings are summarised Statements Code'), we are required to report whether, in our opinion: on pages 4 to 11. We have identified no adjustments affecting the Fund's reported net • the Pension Fund's financial statements give a true and fair assets position in the draft financial statements. However we identified several view of the financial position of the Pension Fund and its income presentation and disclosure adjustments, which are detailed in Appendix A. and expenditure for the year, and have been properly prepared Subject to outstanding queries being resolved, we anticipate issuing an unqualified audit in accordance with the CIPFA Code of Practice on Local opinion following the Governance and Audit Committee meeting on 25 July 2018, as Authority Accounting; detailed in Appendix C. These outstanding items include: - completion of our internal reviews - completion of our work on the Fund’s Annual Report; Page 97 Page - receipt of the management representation letter; and - review of the final set of financial statements.

Acknowledgements We would like to take this opportunity to record our appreciation for the assistance provided by the finance team and other staff during our audit.

Summary • An evaluation of the Pension Fund's internal controls environment, including its IT systems and controls; Overview of the scope of our audit • Controls testing of the Contributions, Benefits Payable and Member Data systems; and This Audit Findings presents the observations arising from the audit that are significant to the responsibility of those charged with governance to oversee the financial reporting • Substantive testing on significant transactions and material account balances, including process, as required by International Standard on Auditing (UK) 260 and the Code of Audit the procedures outlined in this report in relation to the key audit risks Practice (‘the Code’). Its contents have been discussed with management. Conclusion As auditor we are responsible for performing the audit, in accordance with International We have substantially completed our audit of your financial statements and subject to Standards on Auditing (UK), which is directed towards forming and expressing an opinion outstanding queries being resolved, we anticipate issuing an unqualified audit opinion on the financial statements that have been prepared by management with the oversight of following the Governance and Audit Committee meeting on 25 July 2018, as detailed in those charged with governance. The audit of the financial statements does not relieve Appendix C. These outstanding items include: management or those charged with governance of their responsibilities for the preparation - completion of our internal reviews of the financial statements. - completion of our work on the Fund’s Annual Report; Audit approach - receipt of management representation letter; and Our audit approach was based on a thorough understanding of the Pension Fund's business and is risk based, and in particular included: - review of the final set of financial statements. Page 98 Page

Our approach to materiality The concept of materiality is fundamental to the preparation of the financial statements and the audit process and applies not only to the monetary misstatements but also to disclosure requirements and adherence to acceptable accounting practice and applicable law. Our assessment of the value of all levels of materiality has been adjusted to reflect the change in the Fund’s Net Asset Value during the course of the year. We detail in the table below our assessment of materiality for Kent Superannuation Fund. Amount (£) – Planning Stage Amount (£) – Final Accounts Stage Qualitative factors considered

Materiality for the financial £50.087m £52.460m As mentioned above, the value of our overall Materiality threshold statements increased from the planning stage to the final Accounts stage due to the increase in the Fund’s Net Assets during the course of the year.

Performance materiality £37.565m £39.345m Performance Materiality is based on a percentage of the overall materiality, hence an increase in this value has increased Performance Materiality in line with this.

Trivial matters £2.504m £2.623m As above, Triviality is based on a percentage of the overall materiality, hence an increase in this value has increased Triviality in line with this.

Materiality for specific n/a n/a As at the Planning Stage, no specific materialities have been set for the transactions, balances or purposes of our work in 2017-18. disclosures

© 2018 Grant Thornton UK LLP | Audit Findings Report for Kent Superannuation Fund | 2017/18 4 Financial statements Going concern Our responsibility As auditors, we are required to “obtain sufficient appropriate audit evidence about the appropriateness of management's use of the going concern assumption in the preparation and presentation of the financial statements and to conclude whether there is a material uncertainty about the entity's ability to continue as a going concern” (ISA (UK) 570).

Going concern commentary Management's assessment process Auditor commentary • Management’s Assessment of the Going Concern of the Pension Fund is largely supported by the Triennial Valuations provided by the Fund’s independent Actuary, Barnett Waddingham. The most recent Triennial Valuation took place as at the 31 March 2016, and has provided Contribution Rates for the period to 31 March 2020. • Also the Fund monitors future demands in respect of its Cash balances, such as to pay a large bulk transfer. However the Fund can easily liquidate resource from its Investments to ensure it is able to make these payments as they fall due.

Work 99 Page performed Auditor commentary Detail audit work performed on management’s assessment • As mentioned above, the main support to the Fund’s assessment that it remains a Going Concern is the assurance provided by the Fund’s independent Actuary, Barnett Waddingham. On a triennial basis they are required to value to net asset/liability position of the Fund. On the back of this, they will then set a contribution rate that will enable the Fund to return to a fully funded position by a certain date in the future. • The most recent Triennial Valuation for the Fund was undertaken as at 31 March 2016, and details of this can be seen within the Accounts and Annual Report. The results of this Valuation confirmed that the Fund was 89% funded, which compared to 83% as at 31 March 2013. This shows that the Fund is in a relatively strong position, and contribution rates have been set for the next 17 years to return the Fund back to 100% funding. • This position is monitored by the Actuary in the intervening years as well, so that rates can be potentially altered in year if needed, although this hasn’t occurred since the 2016 Valuation. • Other items such as bulk transfers can impact on the Cash position of the Fund, although these are always reviewed by the Actuary to ensure sufficient cash flow is available to fund the transfer if needed. No bulk transfers occurred in 2017-18 and we are not aware of any planned for 2018-19 either. • Based on the audit work performed, we are satisfied that no additional disclosures relating to going concern are required within the Accounts.

Concluding comments Auditor commentary • Based on the work performed, we are proposing to issue an unmodified opinion relating to the going concern of the Kent Superannuation Fund.

Risks identified in our Audit Plan Commentary  Improper revenue recognition Auditor commentary Under ISA 240 (UK) there is a presumed risk that Having considered the risk factors set out in ISA240 and the nature of the revenue streams at the Kent Superannuation revenue may be misstated due to the improper Fund, we have determined that the risk of fraud arising from revenue recognition can be rebutted, because: recognition of revenue. This presumption can be • there is little incentive to manipulate revenue recognition rebutted if the auditor concludes that there is no risk of material misstatement due to fraud relating to • opportunities to manipulate revenue recognition are very limited revenue recognition. • The culture and ethical frameworks of local authorities, including Kent Superannuation Fund, mean that all forms of fraud are seen as unacceptable Therefore we do not consider this to be a significant risk for Kent Superannuation Fund.

Management override of controls Auditor commentary

 100 Page Under ISA (UK) 240 there is a non-rebuttable We have undertaken the following work in relation to this risk: presumed risk that the risk of management over-ride • gained an understanding of the accounting estimates, judgements applied and decisions made by management and of controls is present in all entities. consider their reasonableness We identified management override of controls as a • obtained a full listing of journal entries, identified and tested unusual journal entries for appropriateness risk requiring special audit consideration. • evaluated the rationale for any changes in accounting policies or significant unusual transactions. Our audit work has not identified any issues in respect of management override of controls.

Risks identified in our Audit Plan Commentary  The valuation of Level 3 investments is incorrect Auditor commentary Under ISA 315 significant risks often relate to We have undertaken the following work in relation to this risk: significant non-routine transactions and judgemental • gained an understanding of the Fund’s process for valuing level 3 investments and evaluated the design of the matters. Level 3 investments by their very nature associated controls require a significant degree of judgement to reach an appropriate valuation at year end. • reviewed the nature and basis of estimated values and considered what assurance management has over the year end valuations provided for these types of investments We identified the valuation of level 3 investments as a risk requiring special audit consideration. • consideration of the competence, expertise and objectivity of any management experts used • reviewed the qualifications of the Fund Managers to value Level 3 investments at year end and gained an understanding of how the valuation of these investments has been reached • for a sample of investments, tested the valuation by obtaining and reviewing the audited accounts, (where available)

Page 101 Page at the latest date for individual investments and agreeing these to the fund manager reports at that date. We also reconciled those values to the values at 31 March 2018 with reference to known movements in the intervening period Our audit work has not identified any issues in respect of this risk.

Risks identified in our Audit Plan Commentary  Contributions Auditor commentary Contributions from employers and employees’ represents a We have undertaken the following work in relation to this risk: significant percentage (64%) of the Fund’s revenue. • evaluate the Fund's accounting policy for recognition of contributions for appropriateness; We therefore identified occurrence and accuracy of • gain an understanding of the Fund's system for accounting for contribution income and evaluate the design of contributions as a risk requiring particular audit attention the associated controls; • test a sample of contributions to source data to gain assurance over their accuracy and occurrence; • rationalise contributions received with reference to changes in member body payrolls and the number of contributing pensioners to ensure that any unusual trends are satisfactorily explained. • test a sample of contributions payments to obtain assurance on timeliness of payments. Our audit work has not identified any issues in respect of this risk. Page 102 Page

 Pension Benefits Payable Auditor commentary Pension benefits payable represents a significant percentage We have undertaken the following work in relation to this risk: (85%) of the Fund’s expenditure. • evaluated the Fund's accounting policy for recognition of pension benefits expenditure for appropriateness; We identified completeness of pension benefits payable as a • gained an understanding of the Fund's system for accounting for pension benefits expenditure and evaluated risk requiring particular audit attention: the design of the associated controls; • tested a sample of individual pensions in payment by reference to member files; • rationalised pensions paid with reference to changes in pensioner numbers and increases applied in year to ensure that any unusual trends are satisfactorily explained. Our audit work has not identified any issues in respect of this risk.

Risks identified in our Audit Plan Commentary  The valuation of Level 2 investments is incorrect Auditor commentary While level 2 investments do not carry the same level of We have undertaken the following work in relation to this risk: inherent risks associated with level 3 investments, there is • gain an understanding of the Fund’s process for valuing Level 2 investments and evaluate the design of the still an element of judgement involved in their valuation as associated controls. their very nature is such that they cannot be valued directly. • review the nature and basis of estimated values and consider what assurance management has over the year We identified valuation of level 2 investments as a risk end valuations provided for these types of investments. requiring particular audit attention. • consider the competence, expertise and objectivity of any management experts used. • review the qualifications of the expert used to value the level 2 investments at year end and gain an understanding of how the valuation of these investment has been reached. • for a sample of investments, test the valuation by obtaining independent information from custodian/manager

Page 103 Page on units and unit prices. Our audit work has not identified any issues in respect of this risk.

Accounting area Summary of policy Comments Assessment Revenue The financial statements include Review of your policies for revenue recognition confirms they are in line with the requirements of recognition policies for recognition of the following: the CIPFA Code of Practice and cover all the expected areas in accordance with the Fund's  • Investment income activities. Green • Contribution income Our testing has confirmed that these policies have been correctly and consistently applied. • Transfers in to the scheme Revenue for the first two categories is recognised on an accruals basis, whilst for the third category it is recognised on a cash basis, with the exception of bulk transfers, which are accounted for on an accruals basis in accordance with the terms of the transfer agreement. Page 104 Page

Judgements and Key estimates and judgements include: Our review of your key judgements disclosed in the draft financial statements has confirmed they estimates • Valuation of private equity, property are complete in accordance with our understanding of the Fund. Our testing has confirmed that  and infrastructure investments the accounting policies in relation to these areas are in accordance with the CIPFA Code of Practice and have been correctly and consistently applied. Green • Present value of future retirement benefits The Fund has enhanced its narrative in respect of the estimates included within the Accounts to provide further detail over this area. We are comfortable with the revised disclosure provided by the Fund.

Other critical We have reviewed the Pension Fund's policies against the requirements of the CIPFA Code of policies Practice. The Pension Fund's accounting policies are appropriate and consistent with previous  years. Green

Assessment  - Red - Marginal accounting policy which could potentially be open to challenge by regulators  - Amber - Accounting policy appropriate but scope for improved disclosure  - Green - Accounting policy appropriate and disclosures sufficient

We set out below details of other matters which we, as auditors, are required by auditing standards and the Code to communicate to those charged with governance.

Issue Commentary Matters in relation to fraud  We have previously discussed the risk of fraud with the Governance and Audit Committee. We have not been made aware of any  other incidents in the period and no other issues have been identified during the course of our audit procedures.

Matters in relation to related  We have not identified any related party transactions which have not been disclosed.  parties

Matters in relation to laws and  You have not made us aware of any significant incidences of non-compliance with relevant laws and regulations and we have not  regulations identified any incidences from our audit work. Page 105 Page Written representations  A standard letter of representation has been requested from the Pension Fund, which is included within the Governance and Audit  Committee Papers as a separate item.

Confirmation requests from  We obtained direct confirmations from your fund managers and custodian for investment balances and from your bank for your cash  third parties balances (outside of the cash held by your fund managers). All of these requests have been returned with positive confirmation.

 Disclosures  Our work identified some minor presentation improvements, details of which can be seen within Appendix A

Matters on which we report by  We are required to give a separate opinion for the Pension Fund Annual Report on whether the financial statements included therein  exception are consistent with the audited financial statements. We propose to issue our ‘consistency’ opinion on the Pension Funds Annual Report on 26 July 2018, as part of issuing our Opinion on the main financial statements.

© 2018 Grant Thornton UK LLP | Audit Findings Report for Kent Superannuation Fund | 2017/18 11 Independence and ethics Independence and ethics Independence and ethics • We confirm that there are no significant facts or matters that impact on our independence as auditors that we are required or wish to draw to your attention. We have complied with the Financial Reporting Council's Ethical Standard and confirm that we, as a firm, and each covered person, are independent and are able to express an objective opinion on the financial statements We confirm that we have implemented policies and procedures to meet the requirements of the Financial Reporting Council's Ethical Standard and we as a firm, and each covered person, confirm that we are independent and are able to express an objective opinion on the financial statements. Further, we have complied with the requirements of the National Audit Office’s Auditor Guidance Note 01 issued in December 2017 which sets out supplementary guidance on ethical requirements for auditors of local public bodies. Details of fees charged are detailed in Appendix B

Audit and Non-audit services For the purposes of our audit we have made enquiries of all Grant Thornton UK LLP teams providing services to the Pension Fund. No non-audit services were identified. Page 106 Page

© 2018 Grant Thornton UK LLP | Audit Findings Report for Kent Superannuation Fund | 2017/18 12 Appendix A Audit Adjustments We are required to report all non trivial misstatements to those charged with governance, whether or not the accounts have been adjusted by management.

Impact of adjusted and unadjusted misstatements No adjusted or unadjusted misstatements have been identified from the work performed during the course of the audit.

Misclassification and disclosure changes The table below provides details of misclassification and disclosure changes identified during the audit which have been made in the final set of financial statements.

Disclosure omission Value (£000) Impact on the Accounts Adjusted? Note on Critical Judgements n/a The draft Accounts did not include a disclosure of the critical judgements included within the Accounts. A new note has now been added to provide this additional information. 

Note 15 – Disclosure of Various The draft Accounts included disclosures in line with the previous requirements of the CIPFA Code of

Investments 107 Page over 5% of Net Practice, which changed the disclosure requirements in this area for 2017-18. The revised disclosure  Assets now complies fully with the updated Code of Practice.

Note 18 – Valuation of Assets Various The Council has now enhanced its disclosure around Level 3 Assets to provide additional information and Liabilities carried at Fair on the valuation of the underlying assets and liabilities held within these Assets.  Value

Note 25 – Related Party Various Some of the details in relation to the Fund’s Related Party Transactions referred to the main Council’s Transactions Accounts, which meant the Pension Fund Accounts did not stand alone. This has now been included  to enable these Accounts to stand as their own document.

Various Notes within the Various A number of other minor presentational and disclosure amendments have been processed by the Fund Accounts to enhance the presentation of the final set of Accounts. 

We confirm below our final fees charged for the audit and confirm there were no fees for the provision of non audit services.

Audit Fees Proposed fee Final fee

Pension Fund Audit 30,568 30,568

Total audit fees (excluding VAT) £30,568 £30,568

The proposed fees for the year were in line with the scale fee set by Public Sector Audit Appointments Ltd (PSAA). Page 108 Page

Non Audit Fees

No non audit services have been provided in respect of the Kent Pension Fund during the course of the 2017-18 financial year.

We anticipate we will provide the Pension Fund with an unmodified audit report

Independent auditor’s report to the members of Kent County Council on the pension those matters we are required to state to them in an auditor's report and for no other purpose. fund financial statements To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Authority and the Authority's members as a body, for our audit work, for this Opinion report, or for the opinions we have formed. We have audited the pension fund financial statements of Kent County Council (the ‘Authority’) for the year ended 31 March 2018 which comprise the Fund Account, the Net Assets Statement Conclusions relating to going concern and notes to the pension fund financial statements, including a summary of significant accounting We have nothing to report in respect of the following matters in relation to which the ISAs (UK) policies. The financial reporting framework that has been applied in their preparation is applicable require us to report to you where: law and the CIPFA/LASAAC code of practice on local authority accounting in the United Kingdom the Corporate Director of Finance’s use of the going concern basis of accounting in the 2017/18. preparation of the pension fund financial statements is not appropriate; or the Corporate Director of Finance has not disclosed in the pension fund financial

In our 109 Page opinion the pension fund financial statements: statements any identified material uncertainties that may cast significant doubt about  give a true and fair view of the financial transactions of the pension fund during the year the Authority’s ability to continue to adopt the going concern basis of accounting for a ended 31 March 2018 and of the amount and disposition at that date of the fund’s assets period of at least twelve months from the date when the pension fund financial and liabilities; statements are authorised for issue.  have been prepared properly in accordance with the CIPFA/LASAAC code of practice on Other information local authority accounting in the United Kingdom 2017/18; and The Corporate Director of Finance is responsible for the other information. The other  have been prepared in accordance with the requirements of the Local Audit and information comprises the information included in the Statement of Accounts, other than the Accountability Act 2014. pension fund financial statements, our auditor’s report thereon and our auditor’s report on the Authority’s financial statements. Our opinion on the pension fund financial statements does Basis for opinion not cover the other information and, except to the extent otherwise explicitly stated in our We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) report, we do not express any form of assurance conclusion thereon. and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are In connection with our audit of the pension fund financial statements, our responsibility is to independent of the pension fund of the Authority in accordance with the ethical requirements read the other information and, in doing so, consider whether the other information is that are relevant to our audit of the pension fund financial statements in the UK, including the materially inconsistent with the pension fund financial statements or our knowledge of the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with pension fund of the Authority obtained in the course of our work or otherwise appears to be these requirements. We believe that the audit evidence we have obtained is sufficient and materially misstated. If we identify such material inconsistencies or apparent material appropriate to provide a basis for our opinion. misstatements, we are required to determine whether there is a material misstatement in the pension fund financial statements or a material misstatement of the other information. If, Who we are reporting to based on the work we have performed, we conclude that there is a material misstatement of This report is made solely to the members of the Authority, as a body, in accordance with Part 5 of this other information, we are required to report that fact. the Local Audit and Accountability Act 2014 and as set out in paragraph 43 of the Statement of Responsibilities of Auditors and Audited Bodies published by Public Sector Audit Appointments We have nothing to report in this regard. Limited. Our audit work has been undertaken so that we might state to the Authority’s members

We anticipate we will provide the Pension Fund with an unmodified audit report

Opinion on other matter required by the Code of Audit Practice published by the National been made that affect the services provided by the pension fund. Audit Office on behalf of the Comptroller and Auditor General (the Code of Audit Practice) In our opinion, based on the work undertaken in the course of the audit of the pension fund The Governance and Audit Committee is Those Charged with Governance. financial statements the other information published together with the pension fund financial statements in the Statement of Accounts, for the financial year for which the pension fund Auditor’s responsibilities for the audit of the financial statements financial statements are prepared is consistent with the pension fund financial statements. Our objectives are to obtain reasonable assurance about whether the pension fund financial statements as a whole are free from material misstatement, whether due to fraud or error, and Matters on which we are required to report by exception to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of Under the Code of Audit Practice we are required to report to you if: assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will we have reported a matter in the public interest under section 24 of the Local Audit and always detect a material misstatement when it exists. Misstatements can arise from fraud or Accountability Act 2014 in the course of, or at the conclusion of the audit; or error and are considered material if, individually or in the aggregate, they could reasonably be Page 110 Page we have made a written recommendation to the Authority under section 24 of the Local expected to influence the economic decisions of users taken on the basis of these pension fund Audit and Accountability Act 2014 in the course of, or at the conclusion of the audit; or financial statements. we have exercised any other special powers of the auditor under the Local Audit and Accountability Act 2014. A further description of our responsibilities for the audit of the pension fund financial statements is located on the Financial Reporting Council’s website at: We have nothing to report in respect of the above matters. www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

Responsibilities of the Authority, the Corporate Director of Finance and Those Charged with Governance for the financial statements Paul Dossett As explained more fully in the Statement of Responsibilities, the Authority is required to make for and on behalf of Grant Thornton UK LLP, Appointed Auditor arrangements for the proper administration of its financial affairs and to secure that one of its officers has the responsibility for the administration of those affairs. In this authority, that officer 30 Finsbury Square is the Corporate Director of Finance. The Corporate Director of Finance is responsible for the London preparation of the Statement of Accounts, which includes the pension fund financial statements, EC2A 1AG in accordance with proper practices as set out in the CIPFA/LASAAC code of practice on local authority accounting in the United Kingdom 2017/18, which give a true and fair view, and for such 25 July 2018 internal control as the Corporate Director of Finance determines is necessary to enable the preparation of pension fund financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the pension fund financial statements, the Corporate Director of Finance is responsible for assessing the pension fund’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the pension fund lacks funding for its continued existence or when policy decisions have

© 2018 Grant Thornton UK LLP. All rights reserved. ‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Grant Thornton UK LLP is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate, one another and are not liable for one another’s acts or omissions.

©grantthornton.co.uk 2018 Grant Thornton UK LLP | Audit Findings Report for Kent Superannuation Fund | 2017/18 This page is intentionally left blank Page 113 Page

Kent Pension Fund Report and Accounts For the year ended 31 March 2018 Introduction and overview Investments Administration

Administration management performance Chairman’s foreword 3 Investment strategy overview 15 22 2017-18 Value of Funds under management by Fund ACCESS Pooling Update 4 16 CIPFA Benchmark 22 Manager Governance arrangements 5 Investment performance 2017-18 18 Internal Dispute Procedure 22

Risk management and Fund overview 7 Voting by Equity Fund Managers 2017-18 21 Employers 23

Employers 10

Fund trends 10

Financial summary 11

Page 114 Page Actuary’s report Financial statements Independent Auditor’s report

Statement of responsibilities for the Introduction 38 40 Opinion 74 Statement of Accounts Asset value and funding level 38 Fund account for the year ending 31 March 41

Contribution rates 38 Notes to the pension fund account 42

Assumptions 38

Updated position since the 2016 valuation 39

If you have any comments on the annual report, • please call 03000 416 431 • email [email protected], or

• write to: Kent Pension Fund, Treasury and Investments, Kent County Council, Room 3.17, Sessions House, County Hall, Maidstone, Kent ME14 1XQ 3 - REPORT & ACCOUNTS 2017/2018 - INTRODUCTION & OVERVIEW members in the Fund. The number of employers in the Fund also Fund in the of employers number The the Fund. in members employers to new staff transferring of a result as 432, mainly to increased, academy to converting and schools as services been outsourced have status. the workload in an increased for has resulted in membership growth The support and accounting to the the administrative who provide staff KCC high in maintaining work all their hard them for to and I am grateful Fund of service levels members. to Committee thank the members of the Superannuation also like to I would during 2017-18. and commitment work their hard for Board and Pensions in terms the Fund period for being another challenging 2018-19 looks like pool, and further of the ACCESS strategy development of its investment Chairman I As membership. the needs of an increasing while managing looking workingam really to forward over the Members with and Officers next 12 months. SimkinsCharlie Chairman

Page 115 Individual membership of the Fund increased during the year and at and at during the year increased Individual membership of the Fund an increase members, 52,775 contributing were 2018 there 31 March 135,000 now are there 2017 and in total 31 March of some 2,000 from Investment pooling continues to be a significant piece of work for the work of piece be a significant to pooling continues Investment Members on the project and by represented are and we Fund Kent support Services secretarial Kent Democratic Officers. provides to also of the ACCESS made on the establishment Progress Committee. the Joint is summarised overleaf. Pool We are now in the process of reviewing the Fund’s strategic asset strategic the Fund’s of reviewing in the process now are We have reporting to we and I look forward allocation back on how next our arrangements year. changes to any implemented We regularly review the performance of the Fund’s investment managers investment performance the review of the Fund’s regularly We £200m transfer to decided we during and the year and asset allocation, banking fund, return gains a global equity an absolute manager to from ACCESS with other in collaboration Also, a long period of time. made over global manage our UK and UBS to appoint decided to we funds, LGPS existing the Fund some £615m from transferring strategies equity passive management on investment savings manager while achieving significant fees. We continue to work hard to ensure the Fund is best positioned to deliver deliver positioned to is best the Fund ensure to hard work to continue We report to and it is pleasing this that needed in the future the returns investment and while investments the Fund’s for year has been a good our long established and managers performance strategies varied across equity UK and direct propertyglobal equity, managers performed particularly well. 2017-18 was a busy and successful year for the Fund as it grew in value in value grew as it the Fund for year and successful a busy was 2017-18 individual of 4.7%, and return an investment achieved having £5.83bn, to increased. membership and employer Chairman’s foreword Chairman’s Pension the Kent introduce to pleasure Chairman it is my the Fund As report. annual Fund 4 - REPORT & ACCOUNTS 2017/2018 - INTRODUCTION & OVERVIEW with the Operator responsible for selecting with contracting and for responsible the Operator with participating Pool. in the of the Funds behalf on managers phase the implementation phase completed, procurement the With is preparing Link well. and progressing of the project in train is Authorised the FCA of an umbrella authorisation for documentation very first sub-fund and for submission Scheme (ACS) Contractual shortly. on the robust focuses arrangements of governance A key element ensure to and the Operator contract of the Operator management authorities the administering of each Fund by account it is held to is also ACCESS Committee. via the Joint participating in ACCESS Support will manage the which Unit (ASU) setting up the ACCESS and technical KPIs and provide against specified contract Operator supportsecretariat (JC) services Committee the Joint to and Officer in place. already are Interim arrangements (OWG). Group Working the ensure been set up to have arrangements Pooling The proper exercise may authoritiesadministering of each Fund meet fiduciary to and continue accountability democratic responsibilities. as the remains, in the longer term savings greater for potential The asset pools in as one of the largest applies its leverage Pool ACCESS further achieve with other pools to benefits the UK and collaborates of investing including new ways management of scale in investment in illiquid assets in particular infrastructure. due to fees management in investment In the savings addition to in mandate the reduction in manager numbers and an increase pooling including a benefits from other tangible are there size, manager risk due to reduced for dividend (potential governance for funds savings and tax at pool level), achieved diversification in the Pool’s mandates segregated pooled funds to from moving classes such as global equities some asset For ACS. tax transparent of additional costs to relative material are alone tax savings pooling. implementing • • • • • The July 2016 submission to DCLG indicated that ACCESS Funds could could Funds ACCESS that indicated DCLG July 2016 submission to The of £30m annually (excluding savings projected eventual benefit from remain savings of estimates These asset growth). assumptions on any evidence. with current consistent mandates manage its passive UBS to appointed have Funds ACCESS exceeds of £5.2m per annum saving indicative The £11bn). (approx. our July in projection stated of £4m per annum saving the estimated 2016 submission. Solutions (Link) as the Link Fund appointed have Funds ACCESS The The authorised Conduct Authority Operator. (FCA) Financial Pool’s arrangements shift means a significant in governance appointment Page 116 • • • The ACCESS Pool submitted their Spring Progress reportMinistry the to Spring their Progress submitted Pool ACCESS The on 4 May (MHCLG) Government and Local Communities of Housing, meet the to Funds the ACCESS made by 2018. It sets out the progress highlight like to would agenda and we reform investment Government’s the following: The Government is encouraging LGPS Funds to work together to put to together work to Funds LGPS is encouraging Government The while costs, reduce significantly to investments “pool to plans forward Funds like-minded Eleven LGPS performance.” investment maintaining working under the name are together Fund Pension including the Kent and Southern Eastern Shires). of Central, Collaboration (A of ACCESS performance a strong history have Individually the participating Funds like- of successful group for a benefits substantial for and potential and sharing expertise. collective their collaborating minded Funds assets of £43bn, scale with has significant Pool the ACCESS Collectively It and c900,000 members. is the managed on behalf of c3,000 employers for in order formed expectation are the asset pools that Government’s 1 April from Funds individual LGPS from being transferred begin assets to 2018. ACCESS Pooling Update ACCESS 5 - REPORT & ACCOUNTS 2017/2018 - INTRODUCTION & OVERVIEW Tan Dhesi Tan Council County Kent 07/09/2017) (until Les Wicks Les Council Medway Paul Cooper Paul Council County Kent Paul Bartlet Paul Council County Kent John Wright Council County Kent Alan MarshAlan Council County Kent 08/09/2017) (Until Paul Clokie Paul Council Borough Ashford Paul Barrington-King Paul Council County Kent Nick Eden-Green Canterbury City Council John Burden Borough Gravesham Council Dan Daley Council County Kent James McInroy Council County Kent Nick Chard Chairmain Vice Council County Kent Peter Homewood Peter Council County Kent 08/09/2017) (from Union Representative 2018 22 March - until Lysaght Sophy 2018 23 March - from Joe Parsons Page 117 Fellowship Retirement Active Kent Mary Wiggins Coupland David Committee members A new committee was constituted following the Council elections in May 2017. The membership of the Committee during 2017-18 is detailed below. An initial initial An during 2017-18 is detailed below. of the Committee membership The elections 2017. the Council in May following constituted was A new committee meetings during the year. 5 full Committee were There after elections the held immediately elect meeting was to the chair of the committee. committee Governance arrangements Committee Fund Superannuation The functions its to Administering as in relation (KCC) Council County duties of the Kent and powers all of the exercises Committee Fund Superannuation The managers and carrying fund professional appointing out regular strategy, investment setting for is responsible Committee The Fund. the Authority for employer to policy regard in Fund Scheme Pension and determines It Pension of the the administration also monitors of investments. and monitoring reviews arrangements. admission Charlie Simkins Chairmain Council County Kent 6 - REPORT & ACCOUNTS 2017/2018 - INTRODUCTION & OVERVIEW State Street Global Advisors (SSgA) Global Advisors Street State Team Management Treasury Council County Kent Management USB Asset Fund Managers Fund Kent County Council County Kent Council County Kent District Council Shepway and Fire Medway and Kent Rescue Service Unison Representative Unison Representative Staff Representative Fellowship Retirement Active Kent Representative Margaret Crabtree, Chairperson Crabtree, Margaret Board MembersBoard Rosalind Binks Monk David KilpatrickAlison Chairperson Vice Joe Parsons, Page Lysaght Sophy 2018) 22 March (until 118John Peden Coupland David The membership of the Board during below; 2017-18 is detailed of the Board membership The there meetings during the year. 2 full Board were Local Pensions Board Pensions Local in April established 2015 in was Kent for Board Pensions Local The Legislation. Government with the relevant accordance and Officers Others Council County Kent and of the Fund and management operations day to day The Committee Fund of the Superannuation the decisions implementing includes This Section and their staff. 151 officer the KCC to delegated are handling day to day and devolve advice seek professional to the power fund managers and advisers professional to investments of the Fund’s undertakes and the monitoring KCC of the regulations. within the scope the Fund. due to income of and the investments for accounting 7 - REPORT & ACCOUNTS 2017/2018 - INTRODUCTION & OVERVIEW Fund investment return below that assumed by the actuary assumed by that below return investment Fund sub-funds ACS in the ACCESS with the investment risks associated staff. the Administration for change of premises Risk Management Risk County the Kent Authority for the Administering as Council County Kent the for responsibility delegated has Fund Superannuation Council Committee. Fund the Superannuation risk of to management Risk register key risks and has identified Fund’s the reviews regularly Committee The the main risks as: • • • of these risks in the management for agreed been have Arrangements their impact mitigate Fund. on the to order risks and employer regulatory, demographic, Financial, demographic, financial, for in place measures Details of the counter Funding included in the Fund’s risks are and employer regulatory, annually. FSS is reviewed The (FSS). Statement Strategy risks Operational Section Internal Audit audits on conducts regular Council’s County Kent Fund. of riskthe management in the Pension is managed in the Fund party employers Third to risk relating such as that as as well of contributions the timeliness of receipts monitoring through bodies. Admitted by / bonds provided of guarantees the annual review risk management Investment risk management policy on investment details of the Fund’s Further The (ISS). Statement Strategy Investment disclosed in the Fund’s are risk at investment considers formally Committee Fund Superannuation year. planned meetings during the of its five four investment party by third is provided over operations Assurance annual AAF 01/06 reports and provide to required managers who are ISAE 3402 reports. Organisation NorthernCompany Trust Bank Westminster National Barnett Waddingham Assurance Life Equitable Company Assurance Prudential Assurance Life Standard Mercers Thornton Grant Invicta Law NorthernCompany Trust PIRC Limited Heywood Aquila Funding Strategy Statement Strategy Funding Statement Strategy Investment Statement Compliance Governance Statement. Policy Communications Custodian Bankers Actuary Fund Voluntary Additional Providers (AVC) Contributions Consultants Investment Auditors Advisors Legal Measurers Performance software provider Administration Service • • • • - http:// website Fund‘s on the Pension found can be documents These www.kentpensionfund.co.uk/local-government/fund-information/ policies The Kent Pension Fund maintains the following statutory and statements the following maintains Fund Pension Kent The regularly: and updated reviewed policies; these are Other Organisations providing services to the Kent Fund services the Kent to Other providing Organisations Further details of the Fund Manager mandates can be found in the be found can Manager mandates Fund of the details Further (ISS). Statement Strategy Investment Page 119 8 - REPORT & ACCOUNTS 2017/2018 - INTRODUCTION & OVERVIEW 86 n/a n/a £m n/a 104 (18) 2019-20 (6) 94 n/a n/a £m n/a 100 2018-19 96 11 94 (1) 95 £m 105 2017-18 94 16 85 70 £m (24) 101 2016-17 8 89 90 78 98 £m (11) 2015-16 Contributions net of pension payments Contributions Forecast Investment Income net of expenses Investment Net income Net Contributions net of pension payments Contributions PageActual 120 Income of expenses net Investment income Net The table below compares actual income and expenditure with that projected at the 2013 triennial the valuations. at projected with that actual and expenditure income compares below table The Forecast vs. actual income and expenditure analysis actual and expenditure income vs. Forecast Fund Overview Fund Performance Financial Details of the Actuary’s assumptions used are included in the Barnett Waddingham report on page 37. Waddingham included in the Barnett assumptions used are Details the Actuary’s of The increase in the funding level would normally result in lower employer contributions being required going forward however the lower expected long lower the however going forward required being contributions employer in lower normally result would in the funding level increase The shorter with a as coupled period of 17 years recovery This, pension liabilities. long term in higher has resulted rate) (discount investments on return term in higher has resulted in Payroll increase and a general employers for rates higher contribution in slightly has resulted previously, years 20 to compared in number of members retiring. increase a marginal go up in line with CPI and to projected are payments Pension overall. contributions The funding level as a percentage has increased due to good investment returns and employer contributions although it has been partly contributions to due and employer offset returns good investment due to has increased as a percentage funding level The used. changes in the financial assumptions The Triennial valuation as at 31 March 2016 calculated a funding level of 89%. (2013 - 83%). a funding level 2016 calculated 31 March as at valuation Triennial The 2016 Triennial Valuation 2016 Triennial 9 - REPORT & ACCOUNTS 2017/2018 - INTRODUCTION & OVERVIEW 0 50 18 14 32 31 373 283 283 475 -236 2,370 2,743 £000’s Budget 4 4 78 32 17 31 393 271 288 478 -247 2,274 2,667 £000’s Actual Investments and Accounting Investments Fund Administration Fund expenses Administration Actuarial Fees directly recovered Actuarial fees employers from pooling costs ACCESS consultants Tax Consultants Investment FRC Levy Fees Measurement Performance fee Audit and Oversight Governance Expenses Pensions Administration Pensions Management Expenses Management and Governance actual Administration, compares table following The 2017-18. budget for against the costs Oversight Amounts due from Employers due from Amounts the Fund by received contributions and employee Of employer the total and during 2017-18 we employers by the majority paid monthly are the due by income contribution collected in 2016-17) of total 98%, (99% on levy option to interest The following. of the 19th of the month date 2018 contributions 31 March At not exercised. was contributions overdue 2017 £16m) (31 March £16.6m salariesin respect of the March totalling 19 April not been received. had due by In 2017-18 management costs, including investment management management investment including In costs, management 2017-18 The (£22.7m). on 2016-17 £23.3m, a modest increase were expenses, value reflecting the increased fees management in investment increase and administration by lower offset was of assets under management other costs. Contributions from Employers and Members increased by £3.8m from from £3.8m by and Members increased Employers from Contributions rates contribution Employer of higher mainly as the result 2016-17 1 effect from which came into valuation Triennial the 2016 following members and increase in contributing as the increase April 2017 as well by £6m mainly due in 2017-18 also increased Payable Benefits in salaries. the of in value and increase higher number of pensioner members the to pensions paid. 2017-18 performance2017-18 result as the (4.7%) £264m by in value increased DuringFund the 2017-18 respect in of inflow £253m, and net of on investments of a net return of £11m. taking of transfers-out, with members, dealings account Page 121 10 - REPORT & ACCOUNTS 2017/2018 - INTRODUCTION & OVERVIEW 52,775 39,813 232,037 220,876 2017/18 5,828,846 50,834 38,648 228,285 214,895 2016/17 5,565,175 126 308 432 Total 49,816 37,260 220,961 210,281 2015/16 4,597,540 55 58 113 48,668 35,917 217,714 207,356 Ceased 2014/15 4,539,037 71 250 321 Active 44,917 34,841 209,749 195,377 2013/14 4,137,259 Total Scheduled Body Body Admitted Net Assets @ 31 March (£000’s) @ 31 March Assets Net No of Contributors No Contributions (£000’s) Contributions Number of Pensioners Benefits Paid (£000’s) Benefits Number of employers The following table shows a summary of the number of employers in the Fund analysed by scheduled bodies and admitted bodies which are active (i.e. with active (i.e. which are bodies and admitted scheduled bodies by analysed a summary the Fund in table shows the number of employers of following The with no active liabilities). outstanding but with some members (i.e. ceased members) and contributing Employers the following bodies as admitted Fund the joined of organisations a number During the year Fund. in the 432 Employers were there 2018 31 March At authorities local the bodies joined and other public trusts, multi academy and to academies, converted schools existing employers, of staff from transfer as their last active left member or retired. the Fund exiting trusts and employers of academy also a consolidation was There Fund. Page Trends Fund below: is shown key trends A summary of the Fund’s 122 11 - REPORT & ACCOUNTS 2017/2018 - INTRODUCTION & OVERVIEW 93,503 £000’s 243,299 159,242 104,429 -232,373 263,671 2017/18 5,565,175 5,828,846 84,792 £000’s 238,851 866,941 100,694 -222,949 967,635 2016/17 4,597,540 5,565,175 90,449 £000’s 98,501 58,503 -39,998 224,366 -216,314 2015/16 4,539,037 4,597,540 74,113 £000’s 18,932 222,177 382,846 -277,358 401,778 2014/15 4,137,259 4,539,037 72,853 £000’s 85,995 216,637 238,566 -203,495 324,561 2013/14 3,812,698 4,137,259 net of expenditure Value of Fund at start at of year of Fund Value - Contributions and transfers in and transfers - Contributions Revenue account for year for account Revenue - Investment (net) and other income income (net) and other - Investment - Benefits and transfers out - Benefits and transfers Net Revenue Net Increase (Decrease) in market of value Increase (Decrease) in year investments Increase (decrease) in Fund during in Fund (decrease) Increase year Value of Fund at end of year end at of Fund Value A brief summary for the last 5 years is shown below:A brief summaryshown is 5 years the last for Financial Summary Financial Page 123 12 - REPORT & ACCOUNTS 2017/2018 - INTRODUCTION & OVERVIEW 630 Total Total 3,391 1,164 £000’s £000’s 73,864 15,235 17,107 13,717 148,514 731,442 134,488 600,083 121,717 4,173,012 5,790,930 1,164 10,765 £000’s £000’s Global Global 11,929 106,040 1,331,382 1,437,422

1,722 5,593 1,001 24,302 14,190 13,078 £000’s £000’s 16,363 51,570 328,877 Non-UK Non-UK 1,267,432 1,620,988

UK UK 639 630 1,669 1,045 22,855 38,797 17,107 £000’s £000’s 58,218 132,151 271,206 730,441 1,574,198 2,732,520 Other investment balances Other investment Alternatives and cash equivalents Cash Total Equities Bonds Property Equities Bonds Property (direct holdings) Alternatives Cash and cash equivalents Cash Lending Stock Total Fund Assets as at 31 March 2018 31 March as at Assets Fund Page Income Investment as follows: during 2017-18 is analysed accrued income Investment 124 13 - REPORT & ACCOUNTS 2017/2018 - INTRODUCTION & OVERVIEW 52,775 39,813 42,376 134,964 31 March 2018 31 March 50,834 38,648 42,352 131,834 31 March 17 31 March 49,816 37,260 42,476 129,552 31 March 16 31 March 48,668 35,917 41,534 126,119 31 March 15 31 March 44,917 34,841 39,777 119,535 558 600 148 31 March 14 31 March 3,792 4,051 4,473 5,622 6,754 8,663 8,472 6,348 3,294 Members Type of Members Type Contributors Pensioners Deferred Pensioners Deferred Total Age Under 20 20 – 25 26 – 30 31 – 35 36 – 40 41 – 45 46 – 50 51 – 55 56 – 60 61 – 65 66 – 70 Over 70 Five year analysis of the Fund’s membership the Fund’s of analysis year Five membership the Fund’s of analysis year Five The following table shows that at 31 March 2018 the age profile of the contributing membership was: contributing membership of the 2018 the age profile 31 March at that table shows following The Member Age Profile Member Age Page 125 14 - REPORT & ACCOUNTS 2017/2018 - INTRODUCTION & OVERVIEW £ 3,154 2,975 3,947 8,135 Value 53,946* 15 10 15 36 39 No of casesNo 2013-14 2014-15 2015-16 2016-17 2017-18 Year * £49,441 of this amount refers to historic overpayments that occurred occurred that overpayments historic to refers amount * £49,441 of this been exhausted. have of recovery and all possibilities Pension overpayments write-offs overpayments Pension Details write-offs of the years: 5 the last made in Action Recovered put therefore No response off write for forward - write-offNo response Seeking recovery £ 2,906 2,040 Value 17,692 537.83 22,638 537.83 2 1 1 1 4 1 No 2015 Total 2017 Total Year

Page 126 as a mortality the number of cases has decreased Note: service screening deaths. registered identify basis to used on a monthly is now The overpayments identified over the last 5 years as the result of the result as the years last 5 the over identified overpayments The are: Initiative participation Fraud National in the Fund’s Overpayments Five year analysis of pension overpayments, recoveries and and recoveries pension of overpayments, analysis year Five write-offs 15 - REPORT & ACCOUNTS 2017/2018 - INVESTMENTS Index Share All FTSE IndexNDR World MSCI Market GBP Broad BAML Index Properties IPD All LIBID GBP 7 Day RPI +5% LIBID GBP 7 Day 2 5 1 % 32 32 15 13 100 Allocation Allocation Total Asset Class Asset UK Equities Overseas Equities Income Fixed Property Equity & Infrastructure Private Return Absolute Cash

Page 127 31 March Distribution at Portfolio actual portfolio distribution the Fund’s shows opposite graph The the main asset-classes 2018 between 2017 and 31 March 31 March as at the benchmark.vs The Fund’s strategic asset allocation at 31 March 2018 was as follows: 2018 was 31 March at asset allocation strategic Fund’s The At its regular meetings during 2017-18 the Committee reviewed the reviewed meetings during the Committee 2017-18 its regular At the benchmark, to actual and where compared asset allocation Fund’s any 2%, agreed of +/- level tolerance of the excess in was the variance action be taken. to Investment Strategy Overview Overview Strategy Investment the Fund’s against made reportThis the progress details of out sets during the year. strategy investment 16 - REPORT & ACCOUNTS 2017/2018 - INVESTMENTS 1 3 Cash 2 2017 2018 Benchmark 5 7 4 Absolute Return 1 1 1 Infrastructure 1 1 1 Private Equity Baillie Gifford Baillie UBS Schroders DTZ Goldman Sachs M&G Woodford Pyrford Sarasin Others 13 12 Property 13 Asset Allocation as at 31 March 15 25% 10 11 Fixed Interest 8% Manager 32 4% 20% 38 by Fund by 39 7% Overseas Equities Overseas Assets 5% 32 28 6% 10% UK Equities 29 6% 9% 5 0 10 20 15 25 35 30 40 45 % The following graph shows the proportion of the Fund under management by fund manager as at 31 March 2018 and the table lists the Fund’s 10 largest 10 largest 2018 and the table lists the Fund’s 31 March as at fund manager by under management the proportion shows of the Fund graph following The equity date. that holdings at Page 128 Manager Fund by of funds under management Value 17 - REPORT & ACCOUNTS 2017/2018 - INVESTMENTS 0.5% 0.5% 0.6% 0.7% 0.7% 0.7% 0.7% 0.7% 0.8% 1.3% 7.2% Net Assets Net % of the Fund’s Fund’s % of the 29 32 34 39 40 40 41 42 45 76 418 Market Value £m Value Market Total Vodafone Prudential Lloyds BankingLloyds Group HSBC Amazon Glaxo Smith Kline Glaxo Rio Tinto BP British American Tobacco Royal Dutch Shell Dutch Royal NB. Based on total assets in fund £5,829m. Based on total NB.

Page 129 Property direct 5 largest the Fund’s details of table provides whilst the second invests details of the type of property provides opposite in which the Fund graph The properties 2018. March 31 held as at Equity 2018 at 31 March Fund as in the Holdings Equity 10 Largest 18 - REPORT & ACCOUNTS 2017/2018 - INVESTMENTS Industrial Office - Trusts Overseas Unit Property Retail Property UK - Trusts Unit 113.85 1.00 £m 28.30 28.80 36.40 51.50 41.60 128.34 Market Market Valuation Retail Retail Retail Office Industrial Property Type Property by Sector (£m) Sector by Property 242.05 246.20 3-5, Charing Cross Road, London WC2 London Road, 3-5, Charing Cross Colingdale Retail Park, London Retail Park, Colingdale Property Battersea Park, London SW8 London Park, Battersea Drury London House, Lakeside Village, Doncaster The performance of the Fund’s investment managers is reported on a quarterly basis to the Superannuation Fund Committee. The managers submit reportsThe Committee. managers is reported on a quarterly Fund the Superannuation investment basis to performanceThe of the Fund’s Investment performance 2017-18

Page 130 held by the Fund Largest 5 properties 19 - REPORT & ACCOUNTS 2017/2018 - INVESTMENTS 4.8 2018 4.7 18.1 2017 Fund Benchmark 21.1 0.5 2016 1.2 11.6 2015 11.2 7.5 2014 8.5 13.6 2013 14.7 3.4 2012 2.7 Annual Investment Returns Annual Investment 8.1 2011 8.9 36.4 2010 36.8 19.8 - 2009 19.8 - 0 10 30 20 40 -20 -30 -10

Page 131 For comparison the PIRC Local Authority Universe average fund return for 2017-18 was 4.5%. was 2017-18 for fund return average Authority Universe the PIRC comparison Local For Total Fund Performance Total 2017-18 for investments on the Fund return overall The last 10 years. the over investments performance Fund of the Kent the relative shows below graph The benchmark of 4.8%. Strategic customised the to compared 4.7% was Managers are required to provide valuation information to Northern Trust which assesses the rate of return achieved and provides performance reports provides and achieved that of return rate which assesses the Trust Northern to information valuation provide to required Managers are the Committee. by consideration for are and valuations for this purpose and managers of the larger mandates meet at least annually with the Committee and / or its officers to make presentations presentations to make officers / or its and the Committee with annually least at meet mandates purpose this the larger of and managers for valuations and questions. answer to and 20 - REPORT & ACCOUNTS 2017/2018 - INVESTMENTS 1.3 Fund Benchmark Woodford 13.4 8.3 - Fund Manager Benchmark 8.6 Pyford (Absolute Return) 2.9 M&G 0.7 - 3.7 2.6 Equities Equities - Fidelity (Property) 2.4 Other Mandates Other Impax - 3.5 3.8 11.3 DTZ (Property) 2.4 1.4 - Schroders GAV 3.7 2.4 5.4 Sarasin Kames (Property) Kames 6.7 0.6 Performance Returns by Fund Manager 3.5 5.5 14.3 Schroders (Bond) Baillie Gifford Peformance Returns by Fund Manager 3.5 1.2 1.6 8.8 Schroders UK Goldman Sachs (Bond) 0 5 -5

20 15 10

0 8 6 4 2 -10 -15

% 12 10 % Environmental Social and Governance Investments Policy Environmental policies and environmental, investment responsible Details of the Fund’s Strategy included in the Investment issues are social and governance (ISS). Statement Asset Class Benchmark 0.2 7.6 Fund Benchmark 10.3 Infrastructure 10 Year 8.1 0.2 7.2 Private Equity 11.0 8.4 Property 11.9 5 Year 9.2 2.2 18 18 by Class Returns Asset - Bonds 3.1 2017 Long Term Performance Summary Performance Long Term 2.4 7.6 7.8 O/S Equities 3 Year 8.7 1.3 0.3 UK Equities - 0 2 1 5 4 3 8 7 6 9

0 4 2 8 6

10 -2 12 10 14 %

% Page 132 Performance Manager by Fund the performance show of the Equity graphs and other following The ended 31 March the year their benchmarks for to compared Mandates 2018. The analysis set out below shows the returns by asset class for 2017-18: asset class for by the returns shows below set out analysis The Returns by Asset Class The graph below shows the long term performance of the Fund’s performance term the long Fund’s of the shows below graph The benchmark. Strategic its against compared investments 21 - REPORT & ACCOUNTS 2017/2018 - INVESTMENTS 0 16 47 Abstain 45 154 180 Against Number of Resolutions For 987 514 1,745

Baillie Gifford Schroders Sarasin Page 133 Voting by Equity Fund Managers 2017/18 Fund Managers by Equity Voting The Fund complies with the UK Stewardship Code through the the through Code UK Stewardship the with complies Fund The for responsibility managers external its to investment outsourcing Fund Superannuation The activity. and voting engagement, governance, quarterly reports monitoring the managers. receives from Committee The Fund is a member of The Pensions and Lifetime Savings Association Association Savings and Lifetime Pensions The of is a member Fund The Change (IIGCC), on Climate Group InstitutionalThe Investors and (PLSA) Responsible Investments for the UN Principles up to and has signed (UNPRI). 22 -REPORT & ACCOUNTS 2017/2018 - ADMINISTRATION 2017 19,757 22,595 42,352 31 Mar Deferred Deferred pensioners 2018 20,019 22,357 42,376 31 Mar 3 2017 18,286 20,362 38,648 31 Mar 2017/18 Appeals upheld 2017/18 Appeals Pensioners 2018 18,948 20,865 39,813 31 Mar 2017 28,037 22,797 50,834 31 Mar 2018 Contributors 29,633 23,142 52,775 31 Mar 16 2017/18 Disputes considered 2017/18 Disputes Total Other employers Kent County County Kent Council Internal Dispute Procedure Dispute Internal to Procedure Internal Dispute has a formal Fund Pension Kent The a scheme either by a decision made over a member dispute consider Authority. acting Council as the Administering County Kent or employer an consider to employer each by person is appointed independent An a scheme member. appeal made by The results place Kent 13th of 30 authorities (1st being the lowest) in of 30 authorities 13th lowest) the (1st being Kent place results The per member. administration of the cost of terms the profile and actively participating employers 312 in the Fund are There below: is as detailed of members £ 98% 99% 72% 99% 1.34 8.81 0.87 20.08 average Processed Processed All scheme All within target £ 1.52 9.02 0.72 Kent 377 18.08 2,008 3,025 5,339 Number processed Target time Target 20 days from from 20 days of receipt paperwork within reply Full 15 working days 20 days from from 20 days of receipt paperwork from 15 days of receipt paperwork Type of case Type Calculation Calculation and payment of retirement award Calculation and payment of dependants benefit of Provision estimates Correspondence Total cost of administration per of administration cost Total scheme member per pensioner costs Payroll (including staff) costs per Scheme member Staff Payroll) (excluding per member costs Communication

Administration management performance management Administration 2017-18 Scheme members for service standards Key Page 134 CIPFA Benchmark Survey CIPFA section administration participatesthe annual in Fund Pension Kent The with Benchmark of administration the cost survey which compares CIPFA table The 30 other local authority the UK. bodies across administering 2017, which is the most 31 March ending is in respect year of the below survey be conducted. to recent 23 -REPORT & ACCOUNTS 2017/2018 - ADMINISTRATION 276,119 120,227 812,522 867,336 463,723 621,401 744,665 831,175 701,583 612,281 542,582 659,605 463,256 612,064 188,282 3,884,606 3,931,549 20,350,250 Employee Employee Contributions £ Contributions 772,622 301,778 435,245 3,250,327 3,876,403 2,560,716 3,264,579 2,949,431 3,193,471 3,124,673 2,843,876 2,518,693 3,715,548 2,397,707 2,356,383 7,320,667 Employer Employer 68,217,589 11,167,805 Contributions £ Contributions Employers Invicta Limited Law Commercial ServicesCommercial Limited Kent Gen2 Property Limited Kent County Council including Schools Council County Kent Local Authorities and Other and Bodies Public Authorities Local Council Borough Ashford Canterbury City Council Council Dartford Borough DistrictDover Council Council Borough Gravesham Page Council Maidstone Borough Council Medway 135 DistrictSevenoaks Council District Council Shepway Council Borough Swale DistrictThanet Council & Malling Council Borough Tonbridge Council Borough Wells Tunbridge of Kent Chief Constable The The following table lists contributing employers during 2017-18: employers lists contributing table following The 24 -REPORT & ACCOUNTS 2017/2018 - ADMINISTRATION - - 740 431 545 3,562 1,762 3,136 8,044 13,799 97,554 12,922 13,205 42,446 44,573 27,077 377,734 261,543 635,029 635,029 Employee Employee Contributions £ Contributions 1,722 5,936 9,100 1,858 1,891 13,973 14,973 23,827 37,287 55,993 67,041 66,059 85,581 94,717 190,176 780,879 616,223 1,881,000 1,120,394 1,120,394 Employer Employer Contributions £ Contributions Cranbrook Parish Council Parish Cranbrook Chiddingstone Parish Council Parish Chiddingstone Chestfield Parish Council Parish Chestfield Broadstairs & St Peters Town Council Town Peters & St Broadstairs Borough Green Parish Council Parish Green Borough Barham Parish Council Barham Parish Ash Parish Council Parish Ash Parish and Town Councils Town and Parish Romney Marsh Level IDB Romney Marsh Level River Stour IDB River Stour Ebbsfleet Development Corporation Ebbsfleet Development EK Services (Thanet) East Kent Housing Arms Length Management Organisation (ALMO) Management Organisation Housing Arms Length East Kent Medway (Upper) IDB Medway Medway (Lower) IDB (Lower) Medway The Police and Crime Commissioner for Kent for and Crime Commissioner Police The Medway Commercial Group Limited Group Commercial Medway Kent Magistrates Courts Committee Magistrates Kent Kent and Medway Fire and Rescue Authority Fire and Medway Kent Employers Kent & Essex Sea Fisheries Committee Sea & Essex Fisheries Kent Page 136 25 -REPORT & ACCOUNTS 2017/2018 - ADMINISTRATION 620 199 664 917 587 609 7,120 1,009 2,304 5,006 3,370 2,063 1,603 4,797 1,534 7,465 9,470 2,213 18,309 12,947 17,138 Employee Employee Contributions £ Contributions 706 3,926 1,736 8,214 5,644 2,960 3,709 2,134 2,586 2,081 2,635 25,187 10,562 16,451 44,139 15,525 41,762 52,274 22,791 21,389 12,125 Employer Employer Contributions £ Contributions Hythe Town Council Hythe Town Higham Parish Council Higham Parish Hever Parish Council Parish Hever Herne & Broomfield Parish Council Parish Herne & Broomfield Hawkinge Parish Council Hawkinge Parish Hartley Council Parish Harrietsham Parish Council Harrietsham Parish Great Mongeham Parish Council Mongeham Parish Great Great Chart with Singleton Parish Council ChartGreat Parish with Singleton Folkestone Town Council Town Folkestone Faversham Town Council Town Faversham Farningham Parish Council Parish Farningham Eythorne Parish Council Parish Eythorne Eynsford Parish Council Parish Eynsford Edenbridge Town Council Edenbridge Town Eastry Council Parish Downswood Parish Council Parish Downswood Dover Town Council Town Dover Ditton Parish Council Parish Ditton Deal Town Council Deal Town Employers Darenth Parish Council Parish Darenth Page 137 26 -REPORT & ACCOUNTS 2017/2018 - ADMINISTRATION 970 737 966 645 277 798 5,180 9,438 8,532 5,629 1,906 3,628 3,762 1,645 2,677 2,640 4,600 29,810 11,288 13,212 12,076 Employee Employee Contributions £ Contributions 3,496 3,552 4,044 2,509 1,176 7,243 7,842 6,030 8,533 9,646 2,690 75,350 42,003 55,580 17,243 34,134 26,368 15,585 18,057 11,139 164,094 Employer Employer Contributions £ Contributions Swanley Town Council Town Swanley Stone Parish Council Parish Stone Southborough Town Council Town Southborough Snodland Town Council Snodland Town Smeeth Parish Council Smeeth Parish Sholden Parish Council Sholden Parish Sevenoaks Town Council Town Sevenoaks Seal Parish Council Seal Parish Sandwich Town Council Sandwich Town Ramsgate Charter Trustees Platt Parish Council Parish Platt Pembury Parish Council Pembury Parish Otham Parish Council Otham Parish Otford Parish Council Parish Otford New Romney Town Council Town New Romney Minster-on-sea Parish Council Minster-on-sea Parish Meopham Parish Council Meopham Parish Margate Margate Charter Trustees Lydd Town Council Town Lydd Leigh Parish Council Parish Leigh Employers Kings Hill Parish Council Kings Hill Parish Page 138 27 -REPORT & ACCOUNTS 2017/2018 - ADMINISTRATION 209 356 600 471 1,079 4,418 1,562 2,100 9,737 6,914 68,712 13,327 219,478 243,539 391,340 282,823 485,270 321,053 Employee Employee Contributions £ Contributions 743 4,000 1,288 3,964 6,477 2,259 1,720 33,376 14,986 27,439 15,489 212,476 550,479 590,224 950,579 621,706 785,748 1,175,998 Employer Employer Contributions £ Contributions Active Life Limited Life Active Voluntary and Charitable Entities, and Private Contractors Private and Entities, and Charitable Voluntary West Kent & Ashford College & Ashford Kent West North College Kent Mid College Kent Hilderstone College Hadlow College Hadlow East Kent College (Thanet College East Kent College) Canterbury College Further Education Colleges Education Further Wrotham Parish Council Parish Wrotham Woodnesborough Parish Council Parish Woodnesborough Westerham Parish Council Parish Westerham Westbere Parish Council Parish Westbere West Kingsdown Parish Council Kingsdown Parish West Walmer Parish Council Parish Walmer Tenterden Town Council Town Tenterden Temple Ewell Parish Council Parish Ewell Temple Swingfield Parish Council Parish Swingfield Employers Swanscombe & Greenhithe Town Council Town & Greenhithe Swanscombe Page 139 28 -REPORT & ACCOUNTS 2017/2018 - ADMINISTRATION 9,779 1,405 6,032 1,932 2,750 1,583 4,675 1,637 8,764 2,388 24,185 50,274 27,193 35,236 11,132 23,214 28,666 36,419 62,351 163,100 1,495,835 Employee Employee Contributions £ Contributions 5,722 8,112 8,492 5,162 5,149 5,653 26,300 73,646 18,434 23,375 99,160 38,200 64,581 65,550 352,590 148,719 123,163 282,175 125,620 125,620 142,060 142,060 3,953,034 Employer Employer Contributions £ Contributions Golding Homes Fusion Lifestyle Fusion Enterprise (AOL) Limited (AOL) Enterprise Compass Contract Service Contract Compass (UK Ltd) Civica UK Limited UK Civica Circle 33 Housing Trust Limited (Russet Homes) Limited Trust 33 Housing Circle Circle 33 Housing Trust Limited (Epic Trust) (Epic Limited Trust 33 Housing Circle Churchill Contract Services Contract Churchill Limited Cater Link Limited Cater Capita Managed IT SolutionsCapita Limited Canterbury College University Christ Church Canterbury Trust Archaeological Caldecott Community Caldecott Birkin Services Cleaning Limited Biffa Municipal Limited (Mid Kent Joint Waste) (MidBiffa Municipal Limited Joint Kent Avante Partnership Avante Ashford Trust Ashford Leisure APCOA Parking UK Limited UK Limited Parking APCOA Amicus Horizon Amicus Amey Community Limited Community Amey Employers Agilisys Limited Agilisys Page 140 29 -REPORT & ACCOUNTS 2017/2018 - ADMINISTRATION - - 5,643 4,611 4,260 3,286 2,037 3,859 1,183 9,192 1,683 23,058 17,881 11,452 10,323 10,529 82,986 14,015 21,994 36,888 102,252 Employee Employee Contributions £ Contributions 7,967 4,169 6,302 7,757 75,738 33,128 22,534 21,176 29,030 13,681 27,246 12,632 27,837 49,427 32,736 11,000 65,850 363,256 237,093 100,000 100,000 112,996 112,996 Employer Employer Contributions £ Contributions Rochester Rochester Bridge Trust Project Salus Project Principal Catering Consultants Ltd Ltd Consultants Catering Principal Pathways to Independence Limited to Pathways Orchard Theatre Dartford Limited Theatre Orchard Orbit South NSL Limited Norwest Holst Limited Mytime Active Mitie Security Limited Mitie PFI Limited MHS Homes Medway Norse Limited Medway Medway Community Healthcare CIC Healthcare Community Medway Kier Limited Kier Facilities Services Limited Kier Facilities Kent Music SchoolKent Kent College, Canterbury College, Kent Invicta Telecare Limited Invicta Telecare Hyde Housing Association Housing Hyde Employers Gravesham Community Leisure Community Gravesham Page 141 30 -REPORT & ACCOUNTS 2017/2018 - ADMINISTRATION 405 568 626 9,158 3,358 1,038 5,524 2,068 5,913 1,920 64,974 14,842 22,674 17,036 10,691 96,462 289,199 120,655 104,569 Employee Employee Contributions £ Contributions 2,426 1,575 5,577 2,077 1,997 32,826 13,377 21,049 29,639 51,102 30,823 96,492 42,999 36,682 230,974 269,744 314,383 213,144 213,144 1,092,847 Employer Employer Contributions £ Contributions Academy Trusts Academy Academy) James the Great (St Trust Enterprise Academies YBC Cleaning ServicesYBC Limited Westgate Trust Community Westgate West Kent Housing Association Kent West Veolia Limited Veolia Town & Country Group Town Tourism South East Tourism Tonbridge & Malling Leisure Trust & Malling Leisure Tonbridge Thanet Leisure Force Leisure Thanet TCS (Independent) Limited TCS Tascor Services Limited Tascor Strode Park Foundation for People with Disabilities with People for Foundation Park Strode Sopra Steria Limited Sopra Steria Sodexo Catering Sodexo Skanska Construction UK Limited Shaw Healthcare (FM Services) (FM Healthcare Shaw Sevenoaks SchoolSevenoaks Sevenoaks Leisure Limited Leisure Sevenoaks Employers Rochester Care Home Ltd Home Ltd Care Rochester Page 142 31 -REPORT & ACCOUNTS 2017/2018 - ADMINISTRATION 9,105 61,424 61,436 95,535 14,406 23,679 14,268 10,029 58,236 31,054 94,912 38,067 49,089 74,658 25,619 73,139 55,840 21,364 51,249 158,309 156,723 156,723 Employee Employee Contributions £ Contributions 50,081 78,950 50,413 31,839 33,626 86,890 71,508 204,531 213,649 311,141 524,261 191,927 101,571 300,928 117,074 165,085 247,500 238,150 197,594 375,420 375,420 179,028 179,028 Employer Employer Contributions £ Contributions Dartford Grammar School Trust SchoolDartford Grammar Cygnus Trust Cygnus Academies Cranbrook Cranbrook School Trust Coastal Coastal Trust Academies Cliffe Woods Primary School Trust PrimaryWoods School Cliffe Christ Church CEP Academy (Folkestone) (Folkestone) CEP Academy Christ Church Christ Church CE Junior SchoolChrist Ramsgate Church Chiddingstone Church of England School Trust of England School Church Chiddingstone Chatham Grammar School for Girls Trust Girls School Grammar for Chatham Chatham & Clarendon Grammar School Trust School Grammar & Clarendon Chatham Castle Trust (Delce Junior Academy) (Delce Trust Castle Brook Brook Trust Learning Brompton Brompton Trust Academy Brockhill Park Performing Arts College Trust Arts Performing Brockhill College Park Bradfields Academy Trust Bradfields Academy Borden Grammar School Trust School Grammar Borden Barton Court Academy Trust Barton Court Academy Barnsole Primary Trust Amherst Amherst SchoolTrust Aletheia Anglican Academies Trust Academies Anglican Aletheia Employers ACE ACE Trust Learning Page 143 32 -REPORT & ACCOUNTS 2017/2018 - ADMINISTRATION 4,279 9,054 6,694 16,636 53,218 39,122 20,966 94,039 38,431 32,185 44,860 96,468 19,805 73,523 12,405 51,617 100,967 134,738 101,130 193,101 114,830 114,830 Employee Employee Contributions £ Contributions 57,808 15,364 68,085 31,758 23,314 69,422 41,921 166,452 129,827 309,977 133,848 114,717 155,241 347,981 326,041 453,215 354,688 642,436 242,895 355,684 355,684 163,307 163,307 Employer Employer Contributions £ Contributions Joydens Wood Infant School Trust Infant School Wood Joydens Inspire Partnership Academy Trust Academy Inspire Partnership Hillview School for Girls Academy Trust Hillview Girls Academy School for Highworth Grammar School Trust Highworth School Grammar Highsted Trust Academy Herne Bay High School Trust HighHerne Bay School Hampton Primary School Academy Trust PrimaryHampton School Academy Hadlow Rural Community School Community Limited Rural Hadlow Grove Park Academies Trust Academies Park Grove Griffin Trust Schools Greenacre Trust Greenacre Academy Gravesend Grammar School Academies Trust School Grammar Academies Gravesend Graveney Primary School Trust Primary School Graveney Godinton Godinton Trust Academy Future SchoolsFuture Trust Fulston Manor Academies Trust Manor Academies Fulston Fort Pitt Thomas Aveling Academies Trust Academies Aveling Thomas Pitt Fort Endeavour MAT Endeavour Education for the 21st Century the 21st (E21C) for Education DYRMS - An Academy with Military Traditions Trust Traditions with Military Academy - An DYRMS Employers Dover Christ Church Academy Trust Academy Christ Church Dover Page 144 33 -REPORT & ACCOUNTS 2017/2018 - ADMINISTRATION 9,248 35,605 42,031 12,107 46,113 18,752 32,292 39,709 18,558 10,655 45,722 30,021 20,813 11,667 45,954 11,890 101,255 102,650 146,426 653,371 494,070 Employee Employee Contributions £ Contributions 40,595 59,022 63,957 34,913 70,865 41,452 33,780 42,443 354,237 351,167 113,643 148,830 144,971 115,502 484,881 119,442 155,774 103,615 154,072 2,176,435 1,641,159 Employer Employer Contributions £ Contributions REAch2 REAch2 Trust Academy Rainham Mark Education Trust Rainham Mark Education Queen Elizabeth's Grammar School Trust (Faversham) Trust School Grammar Queen Elizabeth's Potential in Everyone Academy Trust Academy in Everyone Potential Peninsula Gateway Academy Trust (Chattenden Primary School) (Chattenden Trust Academy Gateway Peninsula Pathway Trust Academy Pathway Parallel Parallel Trust Learning Orchard Trust Orchard Academy Oasis Community Learning Oasis Community Oakwood Park Grammar School Trust School Grammar Oakwood Park Meopham Community Academies Trust Meopham Academies Community Medway UTC (University Technology College) Technology (University UTC Medway Medway Anglican School Trust School Anglican Medway Mayfield Grammar School Trust Grammar School Mayfield Maritime Trust Academy Luddenham Luddenham School Trust Leigh Leigh Trust Academies Knole Trust Academy Kent Catholic School's Partnership Catholic Kent Jubilee Primary School Trust Jubilee Primary School Employers Joydens Wood Junior School Trust Junior School Wood Joydens Page 145 34 -REPORT & ACCOUNTS 2017/2018 - ADMINISTRATION 6,154 27,491 54,266 30,626 55,336 54,845 16,637 40,418 28,513 16,505 20,436 11,685 12,528 34,142 36,723 15,520 69,056 52,585 138,701 348,266 Employee Employee Contributions £ Contributions 96,593 57,714 99,216 57,147 73,039 41,034 44,378 53,383 22,019 189,094 100,141 192,145 188,311 453,361 115,440 112,311 120,413 224,337 180,119 180,119 1,183,220 Employer Employer Contributions £ Contributions The Brent Primary School Trust Primary School Brent The The Argent Trust (Danecourt School Academy) Trust Argent The The The Trust Areté The Academy of Woodlands Trust Woodlands of Academy The The Abbey School Trust School Abbey The Tenterden School Trust Tenterden Temple Grove Academy Trust Academy Grove Temple Swale Swale Trust Academies St. Stephen's Academy Trust Academy Stephen's St. St. Marys COE Primary Academy (Folkestone) Marys PrimarySt. Academy COE St. Laurence-in-Thanet Church of England Junior Academy of England Junior Church Laurence-in-Thanet St. St. John's Church of England Primary School Maidstone Trust of England Primary Church School John's Maidstone St. St. James' Church of England Primary James' Church Academy St. St. Eanswythe's St. CE Primary School Spires Spires Trust Academy Sir Roger Manwood's School Trust School Sir Roger Manwood's Sheldwich Primary School Trust Sheldwich Primary School Schools Trust Company Sandwich Technology School Trust Sandwich Technology Employers Rochester Diocesan Multi-Academy Education Trust Limited Limited Trust Education Multi-Academy Diocesan Rochester (Rosherville of England Academy) Church Page 146 35 -REPORT & ACCOUNTS 2017/2018 - ADMINISTRATION 8,003 32,932 61,471 99,629 49,885 25,992 41,235 76,606 48,127 87,974 74,353 15,229 31,887 80,632 45,474 90,985 94,962 349,182 120,684 188,402 188,402 127,807 127,807 Employee Employee Contributions £ Contributions 99,513 90,718 50,836 28,778 187,978 348,095 181,756 128,541 243,186 160,016 290,961 263,231 419,196 100,642 294,086 155,255 311,814 321,299 649,792 649,792 417,996 417,996 1,161,410 Employer Employer Contributions £ Contributions The Skinners' School Academy Trust Skinners'The School Academy The Skinners' Kent Academy Trust Skinners'The Academy Kent The Rivermead Inclusive Trust Rivermead Inclusive The The Primary First Trust PrimaryThe First The Pilgrim Multi Academy Trust Multi Academy Pilgrim The The Norton Knatchbull School Academy Trust NortonThe Knatchbull School Academy The Marsh Academy Trust Marsh Academy The The Maplesden Noakes School Trust Maplesden Noakes SchoolThe The Kemnal Academies Trust Kemnal Academies The The John Wallis Church of England Academy, Ashford Trust Ashford of England Academy, Church Wallis John The The Island Learning Trust Island Learning The The Inspiring Change Multi-Academy Trust InspiringThe Change Multi-Academy The Howard Academy Trust Academy Howard The The Harvey Academy Trust HarveyThe Academy The Gateway Primary Academy Trust Primary Academy Gateway The The The Galaxy Trust The Folkestone School for Girls Academy Trust Girls Academy School for Folkestone The The Folkestone Academy Trust Academy Folkestone The The Dover Federation for the Arts for Federation Dover The The Diocese of Canterbury Academies Trust of Canterbury Diocese Academies The Employers The Canterbury Academy Trust CanterburyThe Academy Page 147 36 -REPORT & ACCOUNTS 2017/2018 - ADMINISTRATION 6,468 22,289 46,979 28,337 37,980 45,917 66,888 14,294 89,253 27,328 57,636 44,316 38,484 21,385 80,240 90,430 189,171 178,533 114,699 231,690 100,235 100,235 Employee Employee Contributions £ Contributions 78,374 99,416 47,999 85,789 75,811 24,128 153,104 128,445 162,045 613,678 208,025 292,531 187,428 137,405 138,589 590,556 164,966 287,400 783,082 299,492 299,492 353,215 353,215 Employer Employer Contributions £ Contributions Wentworth Primary School Trust Primary SchoolWentworth Weald of Kent Grammar School Academy Trust School Grammar Academy of Kent Weald Warden House Primary School Trust House Primary School Warden Walderslade Girls' School Trust Girls' School Walderslade Viking Trust Academy Valley Invicta Academies Trust Invicta Academies Valley University of Kent Academies Trust (UKAT) Trust Academies of Kent University United Learning Trust (Wye School) Free Trust Learning United Turner Schools Turner Trinity School and College Trinity Towers School Academy Trust School Academy Towers Tonbridge Grammar School Trust School Grammar Tonbridge TIMU Trust Academy The Woodland Trust Woodland The Academy The Williamson Trust Williamson The The Westbrook Trust Westbrook The The Wells Free School Trust School Free Wells The The Village Trust Village The Academy The ThinkingThe Schools Trust The Tenax Schools Trust Tenax The Employers The Stour Academy Trust Academy Stour The Page 148 37 -REPORT & ACCOUNTS 2017/2018 - ADMINISTRATION 5,824 6,016 29,425 44,054 49,727 Employee Employee Contributions £ Contributions 96,407 20,508 21,861 144,668 176,618 176,618 Employer Employer Contributions £ Contributions Wrotham Wrotham School Trust Woodard Academies Trust (St Augustine Academy) Augustine (St Trust Academies Woodard Wilmington Primary School Academy Wilmington Whinless Down Academy Trust Academy Down Whinless Employers West Malling CEP Academy Trust MallingCEP Academy West Page 149 38 -REPORT & ACCOUNTS 2017/2018 - ACTUARY’S REPORT For members, the S2PA series with a the S2PA members, For for multiplier of 95%, making allowance and a improvements CMI 2015 projected of 1.5% of improvement rate long-term p.a. S2PMA 115% of the dependants, For and 110% of male dependants tables for dependants, female tables for the S2DFA CMI 2015 projected making for allowance of rate and a long-term improvements of 1.5% p.a. improvement 31 March 16 31 March 5.4% p.a. 2.4% p.a. In 2020 and 3.9% 31 March with CPI until line thereafter p.a. members for increases limited will pay Funds 6 Aprilwith 2016, by SPA reached have that of the remainder providing the Government members that For the inflationary increase. assumed have we after this date, SPA reach the entire pay to will be required Funds that inflationary increases. mortality post retirement The assumptions as follows: are adopted • • Assumption Discount rate Discount (CPI) increases Pension Salary increases on increases Pension GMP Mortality valuation report dated 31 March 2017. report 31 March valuation dated Assumptions 2016 are 31 March at the liabilities value used to assumptions The summarised below: The annual accrual of benefits allowing for future pay increases and increases pay future for benefits allowing of annual accrual The these fall due (the primary when pensions in payment to increases rate) notional reflect each participating to plus an amount employer’s in with 100% of their liabilities assets compared of the Fund’s share (the secondary in respect of service date the valuation to the Fund, rate). Details of each employer’s primary and secondary rates contribution Details each employer’s of Certificate in the triennial in the Rates and Adjustment contained are The primary rate of contribution at a whole Fund level was 14.9% of was level primary a whole Fund The at of contribution rate p.a. payroll Each employer body participating in the Fund has to pay a contribution a contribution pay has to body participatingEach employer in the Fund individual primary and a secondary rate of the employer’s consisting rate particular and funding circumstances reflecting the employer’s rate under secondaryThe is as required contribution position within the Fund. Regulation 62(7). • • Contribution rates Contribution of the the members those paid by in addition to rates, contribution The to meet: be sufficient set to are Fund, Asset value and funding level Asset value and was £4,556m which assets was of the smoothed value 2016, 31 March At a to corresponded This basis. on an ongoing valued 89% of the liabilities deficit of £547m. Introduction Pension Council County Kent of the full triennial last valuation The Regulation under 2016 as required carried March 31 was as at out Fund Scheme 2013 (the Regulations Pension Government Local 62 of the of Statement Strategy with the Funding and in accordance Regulations) report in the triennial published valuation were results The the Fund. 2017. 31 March dated Page 150 39 -REPORT & ACCOUNTS 2017/2018 - ACTUARY’S REPORT 31 March 16 31 March a single age, at retires Each member part on when each based weighted of their unreduced. is payable pension Members of the maximum 50% will convert cash. of pension into amount possible Assumption Retirement Commutation Graeme Muir FFA Muir FFA Graeme LLP Waddingham Barnett Partner, The next The actuarial 2019 and the resulting 31 March is due as at valuation April 1 will take effect from the employers by required rates contribution 2020. Updated position since the 2016 Valuation Updated position assumed been higher than have returns 2016, investment 31 March Since on the liabilities will, placed value The triennial the 2016 valuation. at well of new benefits as the accrual due to also increased have however, funding underlying the valuation rate discount in the real as a decrease should be slightly expect the funding level we that Overall, model. have is likely to 2016 although the ongoing cost 31 March higher than at rates. discount real lower due to increased Further details of these assumptions can be found in the relevant in the relevant be found of these assumptions can details Further actuarial report. valuation Page 151 40 -REPORT & ACCOUNTS 2017/2018 - FINANCIAL STATEMENTS selected suitable accounting policies and then applied them policies and then selected accounting suitable consistently and prudent reasonable were that and estimates made judgements with the Code. complied and date; up to which were records accounting kept proper and detection and of fraud the prevention for steps taken reasonable other irregularities. Corporate Director of Finance’s Responsibilities of Finance’s Director Corporate preparation the for is responsible of Finance Director Corporate The accordance in of Accounts Statement Fund’s of the Superannuation of Practice Code LASAAC / practices set out in the CIPFA as with proper Kingdomin the United Code); (the Authority Accounting on Local of financial position and fair view of the a true give to and is required and income and its date accounting the at Fund the Superannuation 2018. March ended 31 the year for expenditure of Director the Corporate of Accounts In this Statement preparing has: Finance • • • has also: of Finance Director Corporate The • • view of the financial a true and fair give these accounts that I confirm the reporting at and its date Fund position of the Superannuation 2018. ended 31 March the year for and expenditure income of Finance Certificate of the Corporate Director Head Cath / Director of Finance Corporate Interim (Operations) of Finance Head 25 July 2018 to make arrangements for the proper administration of the administration proper the for arrangements make to one of its that to ensure affairs and financial Fund’s Superannuation of those affairs. administration for the responsibility has the officers Finance. of Director Corporate is the officer that In authority, this and efficient economic, to secure affairs the Fund’s manage to its assets. and safeguard resources use of effective of accounts. the statement approve to Councillor Nick Chard Councillor Committee and Audit of the Governance Chairman 25 July 2018 I confirm that these Accounts were approved by the Governance and by the Governance approved were Accounts these that I confirm County 2018 on behalf of Kent its meeting on 25 July at Committee Audit Council. • • • The Council is required: Council The Statement of responsibilities for the Statement of Statement for the of responsibilities Statement Accounts responsibilities Council’s Kent County Page 152 41 -REPORT & ACCOUNTS 2017/2018 - FINANCIAL STATEMENTS 37,755 £000’s -12,905 -14,358 2016-17 5,554,683 5,541,778 5,565,175 56,409 £000’s -16,857 -18,493 2017-18 2017-18 5,807,787 5,790,930 5,828,846 24 25 15 Notes Investment assets Investment liabilities Investment assets investment Net assets Current liabilities Current at fund benefits to available assets Net the period end Net assets statement as at 31 March as at statement assets Net -8,054 -4,044 10,566 -6,836 £000’s 15,902 -22,738 228,285 238,851 111,574 866,941 974,471 967,635 -222,949 -214,895 2016-17 -4,929 11,262 £000’s 10,926 -11,497 -23,285 232,037 243,299 121,717 159,242 -12,359 276,030 263,671 -232,373 -220,876 2017-18 2017-18 7 8 9 10 11 12 15a Notes Net additions from dealings with from additions Net members Contributions income Investment Dealings with members, employers and others directly involved in and others directly involved employers with members, Dealings the Fund other pension in from Transfers funds Benefits of on account and to Payments leavers Management expenses including additions/withdrawals Net expenses fund management Returns on investments Taxes on income Taxes and losses on disposal of Profits in the and changes investments market of investments value Net return on investments return Net Page 153 in the net assets increase Net benefits during the for available year Fund Account for the year ended 31 March ended year for the Account Fund 42 -REPORT & ACCOUNTS 2017/2018 - FINANCIAL STATEMENTS 2017 42,352 19,757 22,595 31 Mar Deferred Deferred pensioners 2018 42,376 20,019 22,357 31 Mar 2017 38,648 18,286 20,362 31 Mar Pensioners 2018 39,813 18,948 20,865 31 Mar 2017 50,834 28,037 22,797 31 Mar 2018 Contributors 52,775 29,633 23,142 31 Mar Total Other employers Kent County County Kent Council Funding of 20.9% of certifiedrate contribution 2016 valuation common The a participating each employer in the Kent be paid by to pensionable pay an individual pay to has each employer In this, addition to Fund. Pension own particular reflect its and funding to adjustment circumstances rate contribution Details of each employer’s position within the Fund. Certificate the Rates and Adjustment to in the Statement contained are April 1 effect from came into rates These report.in the triennial valuation 2017. and Admitted Bodies which participate in the Fund by virtue by an of Bodies participate which Fund in the Admitted and Authority the relevant and the between made agreement admission charitable similar entities and voluntary, bodies include Admitted body. undertaking contractors or private a local authority a function following sector. to the private business transfer specific the profile and actively participating employers 321 in the Fund are There detailed below:of members is as the Local Government Pension Scheme Regulations 2013 (as Pension Government the Local amended) Scheme Provisions, (Transitional Pension Government the Local Regulations 2014 (as amended) and Amendments) Savings Scheme (Management and Pension Government the Local Regulations 2016. of Funds) Investment Membership to free are is voluntary and employees Membershipof the LGPS in the Scheme make personal or to join or remain choose whether to include in the Fund Employers outside the Scheme. arrangements and similar entities Authorities Scheduled Local Bodies which are to be members of the Scheme; entitled automatically whose staff are The Fund is overseen by the Kent County Council Superannuation Fund Fund Superannuation Council County the Kent by is overseen Fund The was which Board Pension Local The (the Scheme manager). Committee the effective ensure established in 2015 assists the Scheme manager to of the Scheme. administration and governance and efficient • • • The Scheme is governed by the Public Service Act 2013. the Public by Pensions Scheme is governed The secondary with the following in accordance is administered Fund The legislation: Notes to the Pension Fund Account Fund Pension to the Notes of the Fund 1. Description Fund) Pension (Kent Fund Superannuation Council County Kent The and is Scheme (LGPS) Pension is part Government Local of the the purpose of providing for (KCC) Council County Kent by administered KCC, of employees for the pensionable and other benefits pensions and a the district in Kent councils and borough Council, Medway Fund Pension The area. within the county employers number of other Authority is required as the Administering is a reporting entity and KCC in its Report as a note accounts and Accounts. the Fund’s include to come are not included as they firefighters and officers police Teachers, a contributory is LGPS The pension schemes. within other national pension scheme. defined benefit Page 154 43 -REPORT & ACCOUNTS 2017/2018 - FINANCIAL STATEMENTS 2. Basispreparation of the transactions for summarises the Fund’s Accounts of Statement The 2018. 31 at year and its position March financial 2017-18 Code CIPFA with the accordance in been prepared have accounts The Kingdom in the United 2017- AuthorityAccounting on Local of Practice Reporting as Financial is based upon International 18 which Standards, on a going prepared are accounts The the UK public sector. amended for basis. concern and report on the summarise the transactions of the Fund accounts The do not take The accounts pension benefits. pay to net assets available and benefits which fall due after pensions pay to of obligations account value of promised The actuarial present year. the end of the financial Standard Accounting valued on an International benefits, retirement 23 of these accounts. note at (IAS)19 basis is disclosed policies 3. Summary accounting of significant recognition - revenue account Fund income a) Contribution the employers, the members and from both from Normal contributions, rate the percentage at basis on an accruals for accounted are the fund actuary by which they periodrecommended to in the payroll for on the accounted contributions are Deficit funding Employers relate. under the schedule of contributions payable on which they are due dates the scheme actuaryset by if earlier than the due date. or on receipt strain and pensions contributions augmentation Employers’ the period in in which the liability arises. for accounted are contributions financial but unpaid will be classed as a current due in year amount Any classed as long-term are years future not due until Amounts asset. financial assets. other schemes and from to Transfers b) and paid during the year received the amounts represent values Transfer during the financial either joined or left the Fund members who have for Government with the Local in accordance calculated and are year

up. from annual Part of the Part lump sum. if opted for for if opted A lump sum 1/49 (or 1/98 1 April 2014 1 April of £12 is paid Membership for each £1 of for No automatic No automatic pension given pension given cash payment. cash payment. career average average career revalued salaryrevalued pension can be one-off tax-free 50/50 section) x exchanged for a for exchanged up. salary annual 2008 – Part of the Part lump sum. 1/60 x final A lump sum pensionable from 1 April April 1 from of £12 is paid Membership for each £1 of for No automatic No automatic pension given pension given cash payment. cash payment. pension can be one-off tax-free 31 March 2014 31 March exchanged for a for exchanged up . salary salary. Automatic Automatic 3/80 x final 1/80 x final Service pre A lump sum pensionable pensionable lump sum of 1 April 2008 1 April of £12 is paid of the annual for each £1 of for pension given pension given cash payment. cash payment. pension can be In addition part one-off tax-free exchanged for a for exchanged Pension Lump Sum Lump Benefits following: on the based are LGPS the under benefits Pension Page 155 under the Scheme including other benefits provided of is a range There details, For more benefits. and death ill health pensions early retirement, website: Fund Pension the Kent to please refer www.kentpensionfund.co.uk 44 -REPORT & ACCOUNTS 2017/2018 - FINANCIAL STATEMENTS Quoted investments are stated at market value based on the closing market at value stated are investments Quoted is included in accrued investment income. investment accrued in is included VAT By virtue authority, administering being the Council County of Kent and activities investment including on all Fund is recoverable input tax property expenses. and governance f) administrative, management, Investment expenses oversight to relating Costs basis. on an accruals for accounted are expenses All and governance in the administration, staff involved Council County Kent Council the County by incurred are and overheads of the Fund, oversight of the external Fees the end of the year. at the Fund to and recharged in the respective agreed are managers and custodian investment based on the these are Broadly their appointments. governing mandates therefore and their management under investments market of the value change. of these investments value as the or reduce increase Statement Assets Net and non financial assets g) Financial on a fair value Statement included in the Net Assets assets are Financial in the Net recognised A financial asset is the reportingbasis as at date. party becomes the contractual to the Fund on the date Statement Assets or sale of securities is recognised purchase Any of the asset. acquisition recorded transactions unsettled the year-end are at and any upon trade From purchases. for payable amounts sales and for receivable as amounts in the fair value changes gains or losses arising from any date the trade as of investments values The the Fund. by recognised of the asset are in fair value at been determined have in the net assets statement shown and IFRS 13 and IFRS 9. of the Code with the requirements accordance the fund has hierarchy, of fair value the purposes levels of disclosing For Practical Guidance in recommended guidelines the classification adopted 2016). Association, (PRAG/Investment Disclosures on Investment have Statement in the Net Assets as shown of investments values The as follows: been determined • e) Taxation as and Customs the HM Revenue by has been accepted Fund The 1(1) of with paragraph in accordance pension scheme a registered exemption for as such, qualifies Act 2004 and, Schedule the Finance 36 to of tax on proceeds capital gains and from received tax on interest from dividend income only applicable to is therefore Tax sold. investments is investments overseas Income arising from equity investments. from subject is permitted deduction to exemption of withholding tax unless is shown income the country and obtained from Investment of origin. by the end of the year tax at recoverable tax, and any net of non-recoverable d) Benefitspayable and lump-sum include all amounts to benefits payable known Pensions disclosed in due but unpaid are amounts Any end. the year be due as at liabilities. as current Statement the Net Assets Fund account - expense items - expense account Fund c) Investment income c) Investment been on securities have lending income and stock interest, Dividends, the from appropriate basis and where accruals on an for accounted ex-dividend as quoted (XD). Changes in the net marketdate value all realised and comprise income as recognised are of investments number of the A large year. during the profits/losses and unrealised do not funds that accumulating held in income are investments Fund’s is on such investments income accumulated The income. distribute year and is included end of the at the in the unit market reflected price Property gains and losses during the year. and unrealised in the realised is recognised which income rental of mainly comprises income related due. when it becomes Pension Scheme Regulations. Individual transfers in/out are accounted accounted in/out are Individual Scheme transfers Regulations. Pension is normally which liability member the when received/paid, when for use wishing to members in from Transfers or discharged. is accepted purchase voluntary of their additional to contributions the proceeds included and are basis receipts a for on accounted benefits are scheme basis in on an accruals for accounted are transfers Bulk in’. ‘transfers in agreement. of the transfer with the terms accordance Page 156 45 -REPORT & ACCOUNTS 2017/2018 - FINANCIAL STATEMENTS h) Derivatives specific to its exposure manage to instruments uses derivative Fund The hold does not Fund The activities. investment its risks arising from reporting the the Fund At date purposes. speculative for derivatives forward of the value future The currency forward only held contracts. the at rates currency market is based on exchange contracts forward arise if the would gain or loss that as the and determined year-end date the year-end an equal and with at matched were outstanding contract Market Infrastructure Under the European Regulations contract. opposite by be covered to required currency forward are contracts the Fund’s cash or cash equivalents included in are amounts These cash. margin cash liability margin corresponding in a reflected and the Fund held by liabilities. under investment currency transactions i) Foreign at sterling into currency translated are and liabilities in foreign Assets currency foreign All year-end. the ruling at rates spot market exchange spot market at sterling into translated transactions are including income currency realised All the transaction ruling at date. rates exchange in change in market of included value are gains or losses exchange assets. and cash equivalents j) Cash equivalents Cash bank and demand deposits. cash at comprises Cash to convertible readily are that short-term,are highly liquid investments subject minimal riskknown are of changes to of cash and that amounts fund managers and managed by and cash equivalents Cash in value. included in are Council County Kent managed by cash equivalents Assets. is included in Current other cash All investments. liabilities k) Financial reporting at the value as at fair financial liabilities recognises Fund The on the Statement Assets in the Net recognised liability A financial is date. gains or any this date From party the fund becomes date the liability. to recognised of the liability in the fair value changes are losses arising from the Fund. by bid price quoted on the relevant stock exchange on the final day of final day on the exchange stock the relevant on quoted bid price period. the accounting based on net market value at recorded securities are interest Fixed yields. their current property in unquoted pooled funds and infrastructure Investments the fund by advised price or a single net asset value the at valued are manager. partnerships equity listed funds and unquoted in private Investments in the of the net assets share the Fund’s based on valued are equity partnership fund or limited private financial using the latest The fund managers. the respective by published statements accordance in are the managers by followed standards valuation with the industry management and the constituent guidelines based be valued not always may Such investments agreements. and be available, not may as information end valuation on year the by provided valuation the latest based on will be valued therefore end. the year to cash movements for managers adjusted if both bid price closing bid at valued are vehicles investment Pooled at the closing single published; or if single priced, are prices and offer accumulation are that vehicles In investment the case of pooled price. which is the change in market also includes income value funds, in the fund. reinvested open market at valued properties and Leasehold were Freehold The the by laid down standards with the valuation in accordance prices was last valuation The InstitutionRoyal of Chartered Surveyors. The 2017. 31 December as at undertaken International, Colliers by primarily was use value and existing opinion of market value valuer’s length market transactions on arm’s recent using comparable derived in line then been indexed have of the valuation results The terms. to Property Monthly Index Databank movement with the Investment 2018. 31 March with no stated being short receivables / receivables Debtors duration amount. invoice original at measured are rate interest

• • • Page• 157 • • 46 -REPORT & ACCOUNTS 2017/2018 - FINANCIAL STATEMENTS market value in net assets on the basis that they will be returned to the to be returned will they that the basis on in net assets market value securities lending from income Net term. of the loan the end at Fund in the investments from as income shown is the custodian from received Account. Fund policy accounting in applying judgements 4. Critical the by every years fund liability net pension three The is recalculated The in the intervening years. with annual updates actuary, appointed guidelines. is in line with accepted methodology used to the changes based on variances is subject significant estimate to This with the actuary agreed underlying are assumptions which and have 22. been summarised in Note rates contribution set future used to are actuarialThese revaluations management investment most significant and underpin the fund’s longer term struck between of the balance terms in example for policies, and short-term yield/return. growth investment o) Stock lending Stock o) by lending operated of stock has a conservative programme Fund The lends directly held global equities and programme The its custodian. and of Government against a collateral borrowers approved bonds to which countries, securities of developed interest fixed Supranational Securities included at marketis marked on loan are on a daily basis. to n) Pooling expenses n) Pooling Administering LGPS of 11 a group is part of ACCESS, Fund The to agreed have as part initiative, of a Government who, Authorities costs Pooling and scale benefits. cost achieve to pool their investments proportioncost of the Fund’s reflect the accounts included in the Fund’s and the initial the Pool of arrangements of setting up the governance hold the to Scheme (ACS) Contractual of establishing an Authorised costs expected and are initial project costs these are Currently pooled assets. the once costs ongoing governance by supplemented and be replaced to the ACS. into migrated are investments m) Contingent assets and liabilities and contractual commitments and contractual assets and liabilities m) Contingent that has taken place asset/liability event an arises where A contingent will only be whose existence right/obligation a possible the Fund gives or otherwise the occurrence by uncertain of confirmed events future assets/liabilities Contingent of the Fund. the control not wholly within otherwise would be made a provision where also arise in circumstances will be resources of inflow/outflow an that but either it is not probable cannot be measured of the right/obligation or the amount required in the balance not recognised assets/liabilities are Contingent reliably. the accounts. to sheet but disclosed in a note l) Actuarial present value of promised retirement benefits retirement of promised value l) Actuarial present is assessed benefits retirement of promised actuarial value The present actuary the scheme by every years three is used and the methodology assess To IAS 19. with in accordance guidelines and accepted in line with the actuary 2018 31 March liabilities as at has Fund’s of the the value the funding for calculated liabilities of the Fund’s the value forward rolled has 26, the Fund under IAS permitted 2016. As 31 March as at valuation retirement of promised disclose the actuarial value to opted present 23). (Note Statement Assets the Net to of a note way by benefits Page 158 47 -REPORT & ACCOUNTS 2017/2018 - FINANCIAL STATEMENTS 51,682 £000’s 176,603 228,285 2016-17 52,872 £000’s 179,165 232,037 2017-18 Effect if actualresults assumption from differ The effect of variations variations of effect The in the factors supporting be would the valuation in or decrease an increase of directly held the value property a fair of £48m on £484m. of value Uncertainties are techniques Valuation the determine used to of directly held fair values property pooled and property Where funds. possible these valuation based are techniques on observable but data, this is not possible where uses the best management Changes in data. available assumptions the valuation with together used, changes in significant vacancy growth, rental rate or the discount levels value affect the fair could of property. Item and Freehold Leasehold Property and Pooled Property Funds Members By Category By Employers 6. Events after the balance sheet date after the balance 6. Events when the date 2018, up to 31 March since been no events have There these to adjustment any require that authorised, were these accounts accounts. receivable 7. Contributions Effect if actualresults assumption from differ The effects on the net effects The pension liability of changes in individual assumptions For can be measured. a 0.1% increase instance, rate in the discount in result assumption would in the pension a decrease liability of £168m. A in assumed 0.1% increase would earning inflation of the value increase £16m, approx. liabilities by increase and a one year expectancy the life to assumptions would the liability by increase £339m. approx. The total private equity private total The including infrastructure on the investments are financial statements is a risk There £129m. may this investment that be under-or-over stated Potential in the accounts. due to change in valuation change in these factors is 20. in Note estimated Uncertainties Estimation of the net of the Estimation pensions liability pay to depends on a number judgements of complex the discount to relating which at the rate used, rate projected salaries are in changes increase, to mortality ages, retirement and expected returns rates A assets. Fund on Pension consulting actuariesfirm of the provide is engaged to with expert advice Fund be about assumptions to applied. Valuation of unquoted of unquoted Valuation equity including private investments infrastructure is highly subjective based and inherently lookingon forward and judgements estimates factors. many involving the by valued are They managers investment using guidelines set out in Capital Venture the British Association. Actuarial value present of promised retirement benefits Item Page 159 Equity Private 5. Assumptions made about future and other major sources of of sources major and other about made future 5. Assumptions uncertaintyestimation 48 -REPORT & ACCOUNTS 2017/2018 - FINANCIAL STATEMENTS 0 31 92 378 273 2,752 4,636 6,568 1,213 8,054 19,485 11,813 34,194 £000’s £000’s £000’s 22,738 101,253 101,829 214,895 214,895 2016-17 2016-17 2016-17 31 78 369 0 73 2,667 20,140 £000’s 23,285 4,152 1,155 2017-18 12,764 32,003 10,269 £000’s £000’s 11,497 104,529 103,583 220,876 220,876 2017-18 2017-18 14 Notes Administration costs Administration costs and oversight Governance Investment management expenses management Investment Audit Fees Audit Pooling expenses Pooling Admitted Bodies Admitted Scheduled Bodies By authority By Council County Kent Retirement commutation and lump and commutation Retirement sum benefits Death benefits transfers Group members joining state for Payments scheme Individual transfers Refunds of contributions 10. Payments to and on account of leavers and on account to 10. Payments 11. Management expenses 11. Management 0 5,813 10,566 61,226 51,682 13,847 91,649 £000’s £000’s £000’s 10,566 176,065 109,564 122,789 228,285 228,285 2016-17 2016-17 2016-17 0 5,283 11,262 50,546 52,872 12,817 92,591 £000’s £000’s £000’s 11,262 184,721 123,336 126,629 232,037 232,037 2017-18 2017-18 2017-18 Pensions By Category By Individual Group Employers Employers contributions recovery - deficit Employers contributions - augmentation Employees Employees - normal contributions By type By Employers - normal contributions Admitted Bodies Admitted By authority By Council County Kent Scheduled Bodies Page 160 9. Benefits payable 8. Transfers in from other pension funds in from Transfers 8. 49 -REPORT & ACCOUNTS 2017/2018 - FINANCIAL STATEMENTS 83 1,232 18,170 £000’s 19,485 2016-17 76 1,491 18,573 £000’s 20,140 2017-18 Investment Managers fees Investment Transaction costs Transaction Custody fees Custody Total 14. Investment management expenses management 14. Investment The management fees disclosed above include all investment include all investment above disclosed fees management The the fund including those charged by directly incurred fees management on pooled fund investments. are indirect costs In the transaction disclosed above, to addition costs within pooled on investments the bid-offer spread through incurred is not separately of indirect costs amount The vehicles. investment Fund. the Pension to provided % 9.3 5.4 6.7 0.3 0.9 14.1 51.2 12.1 100.0 -7,446 20,995 £000’s 13,549 2016-17 2016-17 315 5,976 7,480 1,045 15,694 57,164 10,351 13,549 £000’s 111,574 % 9.7 6.1 5.2 0.5 1.0 12.5 50.9 14.1 100.0 -4,312 21,419 £000’s 17,107 2017-18 2017-18 630 7,444 6,273 1,164 15,235 61,986 11,878 17,107 £000’s 121,717 Notes 13 Total Rental income from investment investment from Rental income properties Bonds expenses Direct operating Equities Net operating income from from income operating Net property Pooled Investments Pooled Private Equity / Private Infrastructure Property Pooled Property Pooled Investments Cash and cash Cash equivalents Page Lending Stock 161 12. Summary of income from Investments 12. Summary from of income 13. Property and expenditure income 50 -REPORT & ACCOUNTS 2017/2018 - FINANCIAL STATEMENTS 0 as at as at 2,905 16,948 14,103 £000’s -12,905 339,752 137,717 468,827 230,129 121,323 -12,905 2,192,637 2,030,342 5,554,683 5,541,778 31 March 17 31 March Market Value Value Market as at as at 5,593 2,253 -8,864 -7,993 17,995 £000’s 353,090 128,895 484,241 247,201 148,514 -16,857 2,195,389 2,224,616 5,790,930 5,807,787 31 March 18 31 March Market Value Value Market Pooled Investments Pooled Equity/Infrastructure Private Liabilities Investment Total Assets Investment Net Bonds Currency contracts - Forward Investment Assets Investment Equities Property Property Investments Pooled contracts Derivative and cash Cash Investment equivalents Incomedue Investment sales for receivable Amounts Assets Investment Total Liabilities Investment purchases for payable Amounts cash liabilityMargin

15. Investments Page 162 51 -REPORT & ACCOUNTS 2017/2018 - FINANCIAL STATEMENTS 5,593 2,253 -8,864 -7,993 17,995 £000’s 353,090 128,895 484,241 247,201 148,514 2,224,616 2,195,389 5,633,432 5,639,025 5,790,930 at 31 Mar 18 at Market value as value Market -838 35,142 11,250 18,993 29,913 £000’s -31,910 -42,255 138,947 130,167 160,080 159,242 Change in Change market value market £000’s -51,109 -19,728 -33,963 -16,157 -569,918 -615,671 -1,306,546 -7,567,732 -8,874,278 Sales proceeds 0 96,357 13,891 14,236 £000’s 462,950 822,973 1,410,407 7,540,507 8,950,914 Purchases at cost at Purchases 0 2,905 14,103 16,948 £000’s -12,905 339,752 137,717 468,827 230,129 121,323 2,192,637 5,399,404 2,030,342 5,402,309 5,541,778 at 31 Mar 17 at Market Value as Value Market Bonds Equities - Forward Currency contracts - Forward cash and cash equivalents - Investment Pooled Investments Pooled Equity/Infrastructure Private Property Property Investments Pooled contracts Derivative Other balances Investment sales for receivable - Amounts purchases for payable - Amounts cash liability- Margin - Investment Income due - Investment Page 163 Assets Investment Net 15a. Reconciliation of movements in investments and derivatives in investments of movements Reconciliation 15a. 52 -REPORT & ACCOUNTS 2017/2018 - FINANCIAL STATEMENTS 0 2,905 14,103 16,948 £000’s -12,905 339,752 137,717 468,827 230,129 121,323 2,192,637 2,030,342 5,399,404 5,402,309 5,541,778 at 31 Mar 17 at Market value as value Market 839 3,701 52,988 17,963 30,408 £000’s -41,481 436,975 365,548 907,583 866,102 866,941 Change in Change market value market 0 -269 £000’s -75,882 -67,189 -12,677 -312,898 -468,915 -7,112,846 -7,581,761 Sales proceeds 0 314 51,750 67,233 17,732 £000’s 335,891 472,920 7,149,625 7,622,545 Purchases at cost at Purchases 0 7,607 4,214 -5,300 70,117 12,702 £000’s 310,896 114,699 438,105 226,697 1,732,669 1,664,750 4,487,816 4,495,423 4,577,156 at 31 Mar 16 at Market Value as Value Market Bonds Equities Pooled Investments Pooled - Forward Currency contracts - Forward Private Equity/Infrastructure Private Property Property Investments Pooled contracts Derivative and cash equivalents Cash - Investment Other balances Investment sales for receivable - Amounts purchases for payable - Amounts - Margin cash liability- Margin Income due - Investment Page 164 Assets Investment Net 53 -REPORT & ACCOUNTS 2017/2018 - FINANCIAL STATEMENTS 0 at 2,905 16,948 14,103 £000’s -12,905 Market Market 468,827 230,129 137,717 121,323 -12,905 836,673 155,279 Value as as Value 31 Mar17 5,554,683 5,541,778 at 5,593 2,253 -8,864 -7,993 17,995 £000’s Market Market 484,241 247,201 128,895 148,514 -16,857 860,337 174,355 Value as as Value 31 Mar 18 5,807,787 5,790,930 Derivatives Property Unit Trusts Equity Funds/Infrastructure Private Property Investment income due income Investment Cash and cash equivalents Cash Amounts receivable for sales for receivable Amounts Assets Investment Total Investment Liabilities Investment purchases for payable Amounts Margin cash liabilityMargin Total Investment Liabilities Investment Total Net investment assets investment Net at 17,301 40,223 £000’s Market Market 651,716 241,654 957,638 282,228 339,752 Value as Value 1,136,972 1,234,999 31 Mar17 2,030,342 2,192,637 at 24,213 42,724 £000’s Market Market 617,014 246,993 957,184 286,153 353,090 Value as Value 1,331,382 1,267,432 31 Mar 18 2,195,389 2,224,616 Quoted Corporate UK Bonds Public Sector Quoted Public Overseas Unit Trusts Overseas Unit Trusts Trusts Income Unit Fixed UK Funds Pooled Quoted Overseas Quoted UK Equities Quoted Corporate Page 165 16. Analysis of Investments 16. Analysis 54 -REPORT & ACCOUNTS 2017/2018 - FINANCIAL STATEMENTS -7 -3 -6 -13 -16 -19 £000’s Liability value 0 2 3 1 2 1 26 258 287 £000’s Asset value Asset 690 508 975 742 359 278 552 1,000 1,360 2,033 1,497 1,606 14,973 £000’s 145,012 144,983 Local value Local CHF GBP GBP GBP GBP GBP GBP GBP GBP GBP GBP GBP USD USD USD Currency sold Currency 958 359 689 745 508 392 777 1,433 1,000 1,890 2,102 2,226 17,106 £000’s 203,803 203,803 Local value Local EUR CHF GBP GBP GBP GBP USD USD USD USD USD USD USD USD USD Currency bought Currency Settlement one month Up to one month Up to one month Up to one month Up to one month Up to one month Up to one month Up to one month Up to Page 166 one month Up to one month Up to one month Up to one month Up to one month Up to one month Up to one month Up to In order to maintain appropriate diversification and to take advantage of overseas investment returns, a significant portion of the Fund’s fixed income fixed Fund’s portiona significant returns, of the investment overseas of to take advantage and diversification appropriate maintain In to order with fluctuating currency associated volatility the reduce To securities. in overseas portfolio Goldman Management is invested Sachs managed by Asset 75% of the portfolio is approximately This of the portfolio. exposure markets, emerging excluding overseas, manager fully hedges the the investment rates, Goldman Sachs. managed by Open currency contracts forward Most of the holding in derivatives is to hedge liabilities or hedge exposures to reduce risk in the Fund. Derivatives may be used to gain exposure to an asset an asset to gain exposure to be used may Derivatives risk in the Fund. reduce to exposures liabilities or hedge hedge is to Most derivatives of the holding in between agreed agreement management investment in line with the is managed The use of derivatives the underlying than holding asset. efficiently more manager. the investment and the Fund 16a. Analysis of Derivative Contracts of Derivative Analysis 16a. Objectives policy and derivatives holding for 55 -REPORT & ACCOUNTS 2017/2018 - FINANCIAL STATEMENTS -2 -26 -68 -287 -255 -634 5,593 2,905 £000’s Liability value 5 4 2 6 19 14 18 183 2,719 2,677 6,227 2,973 £000’s Asset value Asset 696 539 875 1,674 1,886 1,886 1,398 1,000 17,128 17,106 £000’s 202,275 202,275 203,803 203,803 Local value Local EUR EUR CHF USD USD USD USD USD USD USD USD USD USD USD Currency sold Currency 500 386 630 743 1,363 1,198 1,358 1,015 15,201 14,984 £000’s 146,901 146,859 144,811 144,843 Local value Local GBP GBP GBP GBP GBP GBP GBP GBP GBP GBP GBP GBP GBP GBP Currency bought Currency Settlement one month Up to one month Up to one month Up to one month Up to one month Up to one month Up to Six months One to Six months One to Six months One to Six months One to Six months One to Six months One to Six months One to Six months One to Open forward currency 2017 Open forward 31 March at contracts Page 167 2018 31 March at currency contracts forward Net comparative year Prior 2017 31 March at currency contracts forward Net 56 -REPORT & ACCOUNTS 2017/2018 - FINANCIAL STATEMENTS % 5.7 0.6 0.3 0.0 3.9 3.9 1.0 6.0 1.1 0.8 1.2 6.4 2.0 9.4 100 10.6 25.4 21.7 0 34,939 15,056 57,191 60,596 42,993 65,469 £000’s 316,607 589,586 215,589 218,498 330,157 354,877 109,577 520,265 31 March 2017 31 March 1,408,560 1,201,818 5,541,778 Market value as at as at value Market % 4.7 1.5 0.4 0.0 4.0 7.1 0.7 5.9 0.9 0.8 1.1 6.4 2.1 9.3 100 10.4 24.6 20.1 0 86,799 22,855 38,173 52,615 44,550 67,867 £000’s 274,305 602,911 230,105 409,629 338,730 368,217 121,047 539,450 31 March 2018 31 March 1,423,802 1,169,875 5,790,930 Market value as at as at value Market Woodford Kent County Council Council County Kent Team Investment UBS YFM State Street State Schroders Sarasin BMO (Pyrford) Partners Group Partners M&G Kames Impax HarbourVest Goldman Sachs Fidelity DTZ Baillie Gifford All the external fund managers above are registered in the United in the United registered are the externalAll above fund managers with equity investments passive Kingdom. the Fund’s During year the Pooling UBS as part to of the ACCESS transferred were Street State to Pyrford. Baillie Gifford from also transferred project. £200m was 17. Investments analysed by Fund Manager Fund by analysed 17. Investments 0 314 20,547 63,622 88,650 30,408 £000’s £000’s 438,105 172,819 468,827 Year ending ending Year ending Year 31 March 17 31 March 17 31 March 0 19,928 58,943 65,086 35,142 £000’s £000’s -19,728 468,827 143,957 484,241 Year ending Year Year ending ending Year 31 March 18 31 March 31 March 18 31 March Additions Opening Balance Within one year Within years Between one and five years than five Later Disposals in market value Net increase Balance Closing 16b. Property Holdings 16b. The future minimum lease payments receivable by the Fund are as are the Fund by receivable lease payments minimum future The follows: There are no restrictions of the property on the realisability are There or the under is not on disposal and the Fund or proceeds income of remittance these construct or develop purchase, to obligation contractual any contracts had exchanged 2018, the Fund 31 March at properties. As Page was which Park Manchester, Trafford of a property the purchase for at of £11.5m. price a purchase on 3 April 2018 at completed 168 57 -REPORT & ACCOUNTS 2017/2018 - FINANCIAL STATEMENTS Treasury Notes and other and Notes Treasury debt Government other and Notes Treasury debt Government Collateral type Collateral Treasury Notes and other Notes Treasury debt Government and other Notes Treasury debt Government Collateral type Collateral 13,187 19,062 165,118 226,963 178,305 246,025 Collateral Collateral Collateral Collateral value £000’s value value £000’s value 12,460 18,042 £000’s £000’s 31 March 2017 31 March 31 March 2018 31 March 156,014 214,815 168,474 232,857 Market value value Market Market value value Market Bonds Loan type Loan Equities Bonds Equities Loan type Loan 18. Stock lending 18. Stock lending undertake stock of Custodians a conservative programme The UK counterparties mainly against non-cash approved collateral to Bonds. Treasury and of Sovereigns comprising asset class and by analysed end, year of securitieson loan at amount The in the table below. is set out a description collateral of the 7 5 5.4 5.4 5.6 5.7 5.7 assets) assets) % (of net % (of net % (of net £000’s £000’s 31 March 2018 31 March 31 March 2017 31 March 315,980 315,095 409,629 311,495 316,607 316,673 280,716 Investments M&G Global Dividend Fund M&G Global Dividend Total Global Ireland (Plc) BMO Investments Return Fund UBS Life UK Equity Tracker Fund Tracker UK Equity UBS Life Investments Page 169 MPF UK Equity Index Sub-Fund Equity Income Fund Woodford CF M&G Global Dividend Fund Trust Unit GAV Schroder 17a. Single investments exceeding 5% of net assets available for for available net assets 5% of exceeding investments Single 17a. benefits 58 -REPORT & ACCOUNTS 2017/2018 - FINANCIAL STATEMENTS 0 £000’s -12,905 -14,358 -27,263 -27,263 Financial Financial liabilities at liabilities at amortised cost 0 31,051 26,975 £000’s 132,102 190,128 190,128 Loans and Loans receivables 31 March 2017 31 March 0 2,905 £000’s 230,129 137,717 339,752 and loss 2,192,637 2,030,342 4,933,482 4,933,482 Designated Designated as fair value as fair value through profit profit through 0 £000’s -16,857 -18,493 -35,350 -35,350 Financial Financial liabilities at liabilities at amortised cost 0 20,248 28,692 £000’s 176,232 225,172 225,172 Loans and Loans receivables 31 March 2018 31 March 0 5,593 £000’s 128,895 247,201 353,090 and loss 2,224,616 2,195,389 5,154,784 5,154,784 Designated Designated as fair value as fair value through profit profit through Total Other balances Investment Financial Liabilities Financial Creditors Private Equity/Infrastructure Private contracts Derivative equivalents & Cash Cash Other Balances Investment Receivables Debtors/ Pooled Investments Pooled Investments Property Pooled Bonds Financial Assets Financial Equities 19a. Classification of Fianncial Fianncial Instruments of 19a. Classification carrying the table analyses heading. by categoryStatement liabilities assets and of financial following Assets amounts and Net The 19. Financial Instruments 19. Financial Page 170 59 -REPORT & ACCOUNTS 2017/2018 - FINANCIAL STATEMENTS Key sensitivities sensitivities Key valuation affecting the provided Not required Not required Not required Not required Estimation techniques used techniques Estimation changes in in valuations, industrymarket conditions, conditions specific Not required Not required 839 Observable unobservable and inputs Not required Not required Net Asset Values Net Values Asset Net Asset Values Net Values Asset Valuation of underlying investment/ Valuation multiples assets/ companies/EBITDA Market of similar properties, values rental estimated terms lease existing vacancies estimated growth, Exchange rate risk rate Exchange £000’s 835,694 836,533 31 March 17 31 March (838) £000’s 124,938 124,100 31 March 18 31 March Basis Valuation of Bid Market of on last day price period accounting Market value on last day of accounting of accounting Marketon last day value period Net Asset Value/Bid prices on last day on last day prices Value/Bid Net Asset period of accounting Net Asset Value/Bid prices on last day on last day prices Value/Bid Net Asset period of accounting Fair values as per International Private as per International Private values Fair capital guidelines equity and venture (2012) Independent valuation by Colliers Colliers by Independentvaluation standards using RICS valuation Market forward exchange rates on the rates Market exchange forward period of accounting last day 1 1 1 2 3 2 2 Valuation Valuation Hierarchy Loans and Receivables Loans Total Description of Asset Fair value through profit and loss profit through value Fair Financial assets Financial Quoted Equities Quoted Quoted BondsQuoted Quoted Pooled Pooled Quoted Investments Unquoted Pooled Pooled Unquoted Investments Private Equity and Private Infrastructure Funds Property Page 171 exchange Forward contracts 19b. Net Gains and Losses on Financial Instruments on Financial Gains Net and Losses 19b. 20. Valuation of assets and liabilities carried at Fair Value Fair carried of assets and liabilities at Valuation 20. All used during the year. techniques been no change in the valuation has There asset is set out below. class of investment of each basis of the valuation The the reporting at date. available price the highest and best which represent techniques value using fair been valued assets have 60 -REPORT & ACCOUNTS 2017/2018 - FINANCIAL STATEMENTS 75,602 31,811 64,420 47,659 £000’s Value on decrease Value 45,808 96,630 68,629 £000’s 108,866 Value on increase Value 90,722 38,173 80,526 57,191 £000’s Value as at as at Value 31 March 2018 31 March 20% 20% 20% 20% (+/-) range Assessed valuation valuation Assessed Private Equity Private Infrastructure Private Equity Private PageInfrastructure 172 Having analysed historical data and current market trends, and consulted with independent investment advisors, the Fund has determined that the valuation the valuation that has determined the Fund advisors, investment with independent and consulted market trends, and current data historical analysed Having impact potential on the closing the consequent has set out overleaf and ranges, within the following to be accurate likely to are describedmethods above, 2018. 31 March held at of investments value Sensitivity of assets valued at level 3 level Sensitivity at assets valued of These valuations are prepared by the fund managers in accordance with generally accepted accounting principles and the requirements of the law where where of the law principles and the requirements accounting accepted with generally the fund managers in accordance by prepared are valuations These of the valuations a detailed breakdown usually undertaken are who provide the fund managers, periodically by Valuations incorporated. are these companies Level 3 Level is not based on observable valuation effect on the instrument’s a significant have could least one input that at those where 3 are Level and Liabilities at Assets They include assumptions. appropriate in determining judgement significant require that techniques various valuation using valued market and are data the funds in which the Pension to the General Partners by provided based on valuations of which are the values equity investments and infrastructure private audit of the accounts. the independent gained from are the valuation over Assurances has invested. Fund Level 2 Level These fair value. determine used to are techniques valuation or where available not market are prices quoted those where 2 are Level and Liabilities at Assets PropertyPropertyand Direct on observableInvestments include Derivatives, based significantly are market use inputs that data. techniques Investments Unit Trusts. Level 1 Level assets or liabilities. identical in active prices markets for quoted unadjusted from derived are the fair values those where 1 are Level and Liabilities at Assets unit trusts. linked securities index and quoted quoted securities, interest fixed quoted equities, include quoted Investments 20a. Fair Value Hierarchy Value 20a. Fair 61 -REPORT & ACCOUNTS 2017/2018 - FINANCIAL STATEMENTS 0 0 Total Total £000’s £000’s 468,827 484,241 4,933,482 5,154,784 5,402,309 5,639,025 0 0 0 0 £000’s inputs Level 3 Level 137,717 137,717 £000’s inputs Level 3 Level 128,895 128,895 unobservable With significant significant With unobservable With significant significant With 0 0 £000’s inputs Level 2 Level 233,034 468,827 701,861 £000’s inputs Level 2 Level 484,241 252,794 737,035 Using observable Using 0 0 Using observable Using price £000’s Level 1 Level 0 0 4,562,731 4,562,731 price £000’s Level 1 Level Quoted market Quoted market 4,773,095 4,773,095 Quoted market Quoted market Net Investment Assets Investment Net Net Investment Assets Investment Net Financial liabilities at fair value through profit and loss profit through fair value liabilities at Financial Non- Financial assets at fair value through profit and loss profit through fair value assets at Non- Financial and loss profit through fair value liabilities at Financial Non-Financial assets at fair value through profit and loss profit through fair value assets at Non-Financial Financial assets at fair value through profit and loss profit through fair value assets at Financial Assets Financial assets at fair value through profit and loss profit through fair value assets at Financial Assets Values at 31 March 2017 31 March at Values Values at 31 March 2018 31 March at Values The table overleaf provides an analysis of the assets and liabilities of the Pension Fund grouped into levels 1 to 3, based on the level at which the fair value is fair value which the at level 3, based on the to 1 levels into grouped Fund of the Pension assets and liabilities of the an analysis provides overleaf table The observable. of underlying assets as well as a reconciliation of movements in fair values. Cash flow adjustments are used to roll forward the valuations where the latest latest the forwardwhere valuations the roll to used are adjustments flow Cash fair values. in of movements reconciliation as a of underlying well assets as time of reporting. the at not available is information valuation Page 173 62 -REPORT & ACCOUNTS 2017/2018 - FINANCIAL STATEMENTS a) Market risk a) Market Market fluctuations risk is the risk in equity from of loss commodity and Fund The spreads. and credit rates exchange foreign and interest prices, activities, particularly investment its market risk to from is exposed on depends of risk exposure level The its equity holdings. through and and yield movements price expectations of future market conditions, is strategy risk management objective of the Fund’s The mix. the asset within acceptable market risk exposure control manage and identify, to on risk. return whilst optimising the excessive In general, parameters, of the diversification in market riskvolatility is managed through and industryportfolio geographical of in terms sectors and individual and its investment the Council market risks, mitigate To securities. advisors undertake and of market monitoring conditions appropriate benchmark analysis. Other risk price of a financial instrument the value the risk that Other risk price represents result of changes in market (other than those prices will fluctuate as a risk), whether those exchange risk or foreign rate interest arising from or factorsto the individual instrument caused by specific changes are The its issuer or factors market. in the affecting all such instruments arises from This risks. price security to is exposed and derivative Fund is uncertain. price which the future All for the Fund held by investments shares for Except a riskcapital. of loss of present security investments sold short, is financial instruments from the maximum risk resulting possible The of the financial instruments. the fair value by determined managers investment Fund’s The sold short shares loss from is unlimited. and the selection of diversification risk this price through mitigate and their activitysecurities and other financial instruments is monitored Fund it is within limits specified in the ensure to the Council by Strategy. Investment Other risk - sensitivity analysis price return and expected data investment of historical analysis Following Fund’s with the consultation in year, during the financial movement the following that has determined the Council advisors, investment the 2018-19 possible for reasonably in market risk price are movements reporting period. 0 0 Total 4,407 6,843 13,891 £000’s -33,963 137,717 128,895 Market Value 1 April 2017 Value Market Transfers into level 3 level into Transfers 3 out of level Transfers during year the Purchases Sales during year the gains / losses Unrealised Realised gains/losses 2018 31 March Value Market Page 174 Reconciliation of fair value measurementswithin level 3 level measurementswithin fair value of Reconciliation Responsibility for the Fund’s risk management strategy rests with rests risk strategy management Responsibility the Fund’s for Risk are policies management Committee. Fund the Superannuation the Council’s by the risks faced and analyse identify established to reflect changes in to regularly reviewed are Policies pensions operations. activity and in market conditions. Risk and risk management primaryassets will fall of its risk the value long-term is that Fund’s The to members). benefits payable short promised its liabilities (i.e. of that minimise the risk risk is to management the aim of investment Therefore the opportunity maximise and to reduction in the value of an overall this achieves Fund The portfolio. the whole Fund gains across for to market risk (price exposure reduce to asset diversification through an acceptable risk to risk)risk, and credit rate currency risk and interest is there manages its liquidity ensure risk to In addition, the Fund level. Council The flows. cash forecast Fund’s liquidity to meet the sufficient risks as part pension fund risk manages these investment of its overall programme. management 21. Nature and extent of risks arising from financial instruments financial of risks arising from and extent 21. Nature 63 -REPORT & ACCOUNTS 2017/2018 - FINANCIAL STATEMENTS 5,593 2,253 -8,864 -7,993 31,835 17,995 £000’s £000’s 67,833 132,102 912,384 565,131 207,267 Value on Value Value on Value decrease decrease 1,087,147 1,630,378 4,903,000 5,593 2,253 -8,864 -7,993 45,773 17,995 £000’s £000’s 95,591 132,102 598,152 255,512 increase increase Value on Value Value on Value 1,005,137 1,402,959 1,962,370 5,812,565 % % 0.00 0.00 0.00 0.00 0.00 0.00 4.96 9.71 2.88 19.91 13.60 11.03 18.71 change change Percentage Percentage Percentage Percentage 5,593 2,253 -8,864 -7,993 38,173 17,995 £000’s £000’s 80,525 132,102 957,638 581,407 230,129 1,234,999 1,788,688 31 Mar 17 31 Mar 18 5,334,407 Value as at as at Value Value as at as at Value Asset typeAsset Investment Investment due income Amounts sales for receivable payable Amounts purchases for Cash Margin Liability Total and cash Cash equivalents Investment portfolio assets: UK Equities Asset typeAsset Infrastructure Funds Net derivative assets Overseas Equities Global Pooled inc UK Equities Bonds incl Bond Funds Property Pooled Funds Equity Private 4.96% 9.71% 2.88% 76,423 £000’s 13.60% 11.03% 19.91% 18.71% 911,951 222,643 176,232 583,284 Value on Value decrease 1,115,697 1,775,951 £000’s 274,467 176,232 617,365 107,696 increase Value on Value 1,439,803 2,137,585 1,004,660 % 9.71 0.00 4.96 2.88 13.60 11.03 18.71 change Potential market movements (+/-) movements market Potential Percentage Percentage 90,722 £000’s 247,201 176,232 957,184 600,083 1,267,432 1,948,396 31 Mar 18 Value as at as at Value Private Equity Private Property Pooled Property Pooled Funds Global Pooled Global Pooled inc UK Equities Bonds incl Bond Funds UK Equities Overseas Equities Investment portfolio assets: Investment Cash and cash Cash equivalents Asset typeAsset Asset typeAsset UK Equities Overseas Equities UK inc Equities Global Pooled Bonds Property Infrastructure Equity Private Page 175 The potential price changes disclosed above are based on predicted based on predicted are disclosed above changes price potential The of our of market returns our experience based on calculated volatilities all other assumes that analysis The a period of 3 years. over investments and interest rates currency in particular exchange variables, foreign investments Had the market of the Fund price the same. remain rates, the change in the net assets in line with the above, increased/decreased year (the prior follows been as would have benefits pay to available below): is shown comparator 64 -REPORT & ACCOUNTS 2017/2018 - FINANCIAL STATEMENTS 10,779 £000’s 121,323 339,752 241,654 713,508 31 March 17 31 March 26,508 £000’s 246,992 149,724 353,090 776,314 31 March 18 31 March Asset typeAsset Cash Balances Cash Funds - Pooled Total Cash and cash equivalents and Cash Bonds - Directly held securities Interest rate risk - sensitivity analysis rate Interest can vary rates and can affect both interest that recognises Council The pay to of the net assets available and the value the Fund to income with the consistent is rates in interest movement A one percent benefits. risk strategy. management of sensitivity applied as partlevel the Fund’s of rates average long-term that advisor has advised investment Fund’s The the next to one year from less than one percent move expected to are analysis The likely. are such movements suggests that and experience in particular all other variables, assumes that exchange follows that year on the net assets the effect in the and shows constant, remain rates, rates: change in interest benefits of a +/- one percent pay to available 0.00 2,905 £000’s 47,695 16,948 14,103 -12,905 Value on Value decrease 4,670,988 0.00 2,905 £000’s 68,578 16,948 14,103 -12,905 increase Value on Value 5,541,452 % 0.00 0.00 0.00 0.00 0.00 19.91 change Percentage Percentage 0.00 2,905 £000’s 57,191 16,948 14,103 -12,905 31 Mar 17 5,083,730 Value as at as at Value Infrastructure Funds Asset typeAsset Net derivative Net derivative assets Investment due income Amounts sales for receivable payable Amounts purchases for Cash Margin Liability PageTotal 176 Interest rate risk rate Interest for the primary in financial assets purpose of obtaining invests Fund The rate subject interest are to investments These on investments. a return cash flows or future the risk the fair value that which represent risks, will fluctuate of changes in market because of a financial instrument the by monitored risk is routinely rate interest Fund’s The rates. interest risk with the Fund’s advisors in accordance and its investment Council interest to the exposure including monitoring strategy, management against the relevant rates of actual and assessment interest rates as movements rate interest to direct exposures Fund’s The benchmarks. disclosures These set out below. 2017 are and 31 March 2018 31 March at risk based on the underlyingat fair financial assets rate interest present value. 65 -REPORT & ACCOUNTS 2017/2018 - FINANCIAL STATEMENTS as at as at £000’s 14,125 40,223 125,388 1,136,971 1,234,999 2,551,706 Asset value value Asset 31 March 17 31 March as at as at £000’s 38,240 42,724 107,041 1,331,382 1,267,432 2,786,819 Asset value value Asset 31 March 18 31 March Total overseas assets overseas Total Non GBP Cash Overseas Private Equity, Infrastructure and Equity, Overseas Private Property funds Overseas Bonds Overseas Pooled Funds Overseas Pooled Currency exposure - asset type exposure Currency Overseas Equities Currency risk - sensitivity analysis Currency and expected data currency of historical analysis movement Following investment with the fund’s consultation in year, during financial the the value of cash/cash equivalent balances but they will affect interest interest affect they will but balances equivalent cash/cash of the value balances. on those received income risk Currency flows cash future of the fair value the risk that riskCurrency represents foreign will fluctuate in because of changes instrument of a financial holds Fund the managers, investment their Through rates. exchange both monetary and non-monetary in currencies assets denominated Most assets of these the functional currency of the Fund. other than GBP, currency to is exposed risk Fund The currency risk. not hedged for are part a large (£286m) of the However, instruments. on these financial Goldman Management in non held Sachsby assets managed Asset currency currency forward risk is hedged for through GBP currencies the by monitored risk currency is routinely rate Fund’s The contracts. risk with the Fund’s in accordance advisors its investment and Council to of exposure range the including monitoring strategy, management currency Fund’s table summarises the following The fluctuations. current 2018 and 31 March as at the hedged investments excluding exposure 2017: -1% -265 3,351 2,470 -1% -108 4,059 -1,497 £000’s 2,417 3,398 4,494 -1,213 £000’s 265 benefits 108 +1% +1% 1,497 1,213 -3,351 -2,470 -2,417 -3,398 £000’s -4,059 -4,494 £000’s Change in the net in Change assets available to pay pay to assets available Change in the net assets net assets in the Change available to pay benefits pay to available as at 10,779 £000’s £000’s 26,508 241,654 339,752 121,323 amount amount 713,508 353,090 246,992 149,724 Carrying 776,314 Carrying 31 Mar 17 amount as amount at 31 Mar 18 at Total change in assets Total available - Pooled Funds - Pooled - Directly held securities Cash Balances Cash Bonds Cash and cash equivalents Cash Cash Balances Cash - Directly held securities Bonds Funds - Pooled assets change in Total available Asset typeAsset Cash and cash equivalents and Cash Asset typeAsset Page 177 Changes to both the fair value of assets and the income received from from received the income of assets and both the fair value Changes to The benefits. pay impact to on the net assets available investments will not rates in interest a 100 bps increase that demonstrates analysis their reduce assets but will interest on fixed received affect the interest do not impact on rates Changes in interest versa. and vice fair value 66 -REPORT & ACCOUNTS 2017/2018 - FINANCIAL STATEMENTS -9.0% -9.0% 36,902 12,959 39,196 98,203 35,083 £000’s £000’s 115,035 1,133,026 1,043,093 1,162,782 1,221,451 2,341,015 2,556,715 Change to net assets net to Change Change to net assets to Change available to pay benefits pay to available available to pay benefits pay to available 43,843 15,396 46,569 41,682 £000’s £000’s +9.0% +9.0% 136,673 116,675 1,346,149 1,239,298 1,381,501 1,451,206 2,781,359 3,037,633 Change to net assets net to Change Change to net assets to Change available to pay benefits pay to available available to pay benefits pay to available 40,223 14,125 42,724 38,240 £000’s £000’s 125,388 107,041 1,234,999 1,136,971 1,267,432 1,331,382 2,551,706 2,786,819 31 March 17 31 March 31 March 18 31 March Asset value as at as at value Asset Asset value as at as at value Asset Overseas Equities Funds Overseas Pooled Overseas Bonds Infrastructure and Property funds Equity, Overseas Private Non GBP Cash change in assets available Total Currency exposure - asset type - asset exposure Currency Overseas Equities Funds Overseas Pooled Overseas Bonds Infrastructure Property and funds Equity, Overseas Private Non GBP Cash change in assets available Total Page 178 - asset type exposure Currency advisors, the Council has determined that the following movements in the values of financial assets denominated in foreign currency are reasonably possible possible reasonably currency are foreign in assets denominated of financial the values in movements the following that has determined Council the advisors, strengthening/ A relevant constant. remain in particular rates, variables, all other that assumes analysis interest This reporting the 2018-19 for period. as benefits pay to available the net assets /decrease increase would investments holds which the Fund in currencies against various of the pound weakening follows: b) Credit risk Credit b) to incur Fund the risk the counterparty and cause the that an obligation to discharge a transaction will fail risk to instrument or a financial represents Credit the consequently risk of loss is implicitly credit in their reflectpricing and of an assessment generally The marketvalues of investments a financial loss. financial assets and liabilities. in the carrying for of the Fund’s value provided 67 -REPORT & ACCOUNTS 2017/2018 - FINANCIAL STATEMENTS 0 0 95 33 28 9,795 4,943 6,931 8,187 6,870 3,302 75,918 £000’s 116,102 31 March 17 31 March Balance as at as at Balance 85 39 7,414 7,447 8,210 8,184 6,519 6,497 14,941 14,996 15,085 40,386 £000’s 99,866 31 March 18 31 March Balance as at as at Balance AAAf AAAf AAAm AAAm AAAm AAAm AAAm AAAm AAAm AAAm AAAm AAAm Rating Payden Sterling Reserve Sterling Fund Payden Royal London Cash Plus Fund Plus Cash London Royal Cash Plus Funds Cash Insight Liquidity Sterling Fund LGIM Liquidity Fund Liquidity Fund LGIM HSBC Global Liquidity Fund HSBC Global Liquidity Fund Deutsche Managed Fund Sterling Aviva Investors Sterling Liquidity Sterling Fund Investors Aviva Goldman Sachs Liquid Reserve Fund Government Aberdeen Sterling Liquidity Sterling Fund Aberdeen Blackrock USD Government LiquidityBlackrock Fund USD Government SSGA Liquidity Fund Northern Trust Sterling Fund Sterling Trust Northern Money Market Funds Market Money Page 179 Deposits are not made with banks and financial institutions unless they are rated independently and meet the Council’s credit criteria. The Council has also The criteria. credit Council’s and meet the independently rated are financial institutions unless they not made with banks and Deposits are institutions: following was held with the cash Fund’s The institution. one financial with any be placed may that the maximum amount set limits as to Contractual credit risk is represented by the net payment of a receipt that remains outstanding, and the cost of replacing the derivative position in the position the derivative of replacing the cost and outstanding, remains that of a receipt net payment the by risk is represented credit Contractual counterparties. defaulting cover to the exchanges policies held by the various insurance riskdue to is minimal residual The counterparty of a event default. the counterparties. risk against by of default collateral provide which margins by covered also are contracts Derivative In essence the Fund’s entire investment portfolio is exposed to some form of credit risk, with the exception of the derivatives positions, where the risk where positions, derivatives of the risk, of credit portfolio the exception with form some to is exposed investment entire In Fund’s the essence the selection institutions and financial quality of high counterparties, brokers However, position. derivative a positive of market the net value to equates a transaction settle to in a timely manner. failure the through occur may risk that credit minimises 68 -REPORT & ACCOUNTS 2017/2018 - FINANCIAL STATEMENTS 0 0 87 178 508 2,099 1,800 8,893 2,435 2,943 £000’s 13,057 132,102 31 March 17 31 March Balance as at at as Balance 1 91 12 1,762 5,695 2,435 2,447 26,416 10,017 £000’s 33,965 39,954 176,232 31 March 18 31 March Balance as at at as Balance A AA- BBB+ BBB+ BBB+ BBB+ AA- AAAf Rating Total Barclays - DTZ client monies account client - DTZ Barclays Northern Trust - Current Accounts - Current Trust Northern NatWest Current Account - USD Account Current NatWest NatWest Current Account - Euro Account Current NatWest Natwest Current Account Current Natwest Bank current accounts Bank current NatWest SIBA NatWest HSBC BIBCA Bank Deposit Accounts Aberdeen Ultra Short Ultra Fund Sterling Aberdeen Duration Refinancing risk interest at a time of unfavourable Fund financial instruments Pension proportion a significant of its replenish will be bound to key risk the Council is that The refinancing risk as part a strategies. treasuryinvestment have of its that financial instruments and management any not have does Council The rates. All financial liabilities at 31 March 2018 are due within one year. due within one 2018 are at 31 liabilities financial March All Management prepares periodic cash flow forecasts to understand and manage the timing of the Fund’s cash flows. The appropriate strategic level of cash level strategic The appropriate cash flows. Fund’s of the to understand and manage the timing forecasts periodic flow cash Management prepares strategy. investment part be held forms to balances of the Fund Page 180 c) Liquidity risk to ensure takes steps Council therefore The due. as they fall meet its financial obligations will not be able to the risk the Fund that Liquidity risk represents money market fund and current the Fund’s to access has immediate Council The meet its commitments. to cash resources has adequate the Fund that holdings. account 69 -REPORT & ACCOUNTS 2017/2018 - FINANCIAL STATEMENTS To ensure the long-term solvency of the Fund and ensure that sufficient funds are available to meet all the benefits as they fall due for payment for due to meet all the benefits as they fall available are funds sufficient that and ensure solvency the long-term of the Fund ensure To as stable as possible are rates contribution employer ensure To balances that strategy and liabilities and adopting an investment assets the link between recognising of the scheme by cost the long term minimise To risk and return reasonable authority administering the it considers where rates contribution determining bodies in characteristics of employing reflect the different To so. do to The actuarial valuation has been undertaken on the projected unit method. At individual employer level the projected unit funding method has been used unit funding method has been used the projected level actuarialThe has been undertaken individual employer valuation At unit method. on the projected who do not allow employers has been used for age method attained The the Fund. to will be admitted is an expectation new employees that there where salaryfor future allowing workingremaining existing members duringto the lifetime, of benefits accruing methods assess the costs These new entrants. liabilities and the marketvalue of assets. value of accrued in the differences any for allow to is adjusted rate contribution resulting The increases. Page 181 20.9% of pensionable salaries in 2017- 20% to from full funding has increased target to including payments employer, the average for rate contribution The contributions) and employer returns good investment (due to has increased as a percentage funding level The 21% in 2018-19 and 2019-20. 18 and to the liabilities. although this has been partly to calculate in the financial assumptions used by the changes offset In the 2016 triennial valuation, the smoothed value of the Fund’s assets at the valuation date was £4,556m and the liabilities were £5,103m. The assets The £5,103m. £4,556m and the liabilities were was date the valuation assets at In of the Fund’s the smoothed value the 2016 triennial valuation, increases. pay future for allowing liabilities, accrued Fund’s 89% (2013 - 83%) of the represented therefore, At the 2016 valuation a maximum deficit recovery period of 17 years (2013 - 20 years) is used for all employers. Shorter recovery periods have been used Shorterrecovery periods have for all employers. is used years) - 20 years (2013 recovery period of 17 a maximum deficit the 2016 valuation At Admission Bodies Transferee For by employers. cost paid interest the reduce and experience adverse for future a buffer This will provide affordable. where is the shorter. whichever contract period, remaining or the employees working of current future recoveryto the life period is set equal the deficit • • • • The key elements of the funding policy of the funding key elements The are: 22. Funding arrangements 22. Funding funding an actuary’s obtain to is required Fund the amended), 2013 (as Regulations Scheme (Administration) Pension Government In Local line with as place took last such valuation The the forthcoming triennial period. for rates contribution purpose the of setting employer for every years valuation three 2016. 31 March at 70 -REPORT & ACCOUNTS 2017/2018 - FINANCIAL STATEMENTS 3.8% 2.3% 2.6% % p.a. Assumptions used: Assumptions Salary rate increase rate increase Inflation/Pensions rate Discount The Fund accounts do not take account of liabilities to pay pensions and and pensions pay to of liabilities account not take do accounts Fund The value fair the valuation, the latest Based on future. in the benefits other of the actuarial 64.6% of valuation represents of the Fund of net assets will be funded from liabilities Future benefits. retirement the promised employers. from contributions future from and differs on an IAS 19 basis calculated being liabilityThe above IAS 19 because of the 2016 triennial valuation funding the results which reflectsrate. a market than a rate rather rate a discount stipulates £000’s 5,565.2 (9,062.3) (3,497.1) 5.4% p.a. 3.9% p.a. 2.4% p.a. market rate market 31 March 17 31 March 2016 to 31 March 2020 31 March 2016 to CPI for period 31 March CPI for £000’s 5,828.8 at a 6 month smoothed a 6 month at assets have been valued been valued assets have (9,029.1) (3,200.3) 31 March 18 31 March Long Long term Short term Valuation of Assets: of Valuation Rate of return on investments investments on Rate of return rate) (discount increases: pay Rate of general Present value of promised retirement retirement of promised value Present benefits bid of scheme assets at value Fair value Net liability Rate of increases to pensions to Rate of increases of (in excess payment minimum guaranteed pension): Page 182 The 2016 actuarial assumptions were as follows: actuarial 2016 The were assumptions Actuarial present value of promised retirement benefits retirement of promised value Actuarial present 23. Actuarial present value of promised retirement benefits retirement of promised value 23. Actuarial present everyIn the triennial the fund’s funding valuation, addition to year liabilities on an IAS 19 basis, actuary undertakes of the Fund’s a valuation the to forward rolled as the funding valuation using the same base data taking of changes in membership numbers account year, financial current year. the current to assumptions and updating 71 -REPORT & ACCOUNTS 2017/2018 - FINANCIAL STATEMENTS 7,018 3,816 3,406 9,982 3,934 1,203 5,790 4,634 3,335 11,974 10,424 25,772 10,780 22,437 £000’s £000’s 14,358 37,755 10,424 25,772 31 March 2017 31 March 31 March 2017 31 March 0 4,040 4,079 3,094 4,465 3,781 11,320 12,592 15,399 12,060 28,692 10,934 27,717 24,911 £000’s £000’s 18,493 56,409 15,399 28,692 31 March 2018 31 March 31 March 2018 31 March Creditors Payable - Benefits - Employees due - Contributions Debtors - Sundry Creditors due - Employers - Contributions External Creditors Total - Sundry debtors Owing to Kent County Council Owing County Kent to Total External Debtors Total Total Amounts due from Kent County Council County Kent due from Amounts Analysis of External Creditors Analysis Other Authorities Local Cash Other and individuals Entities Other Authorities Local Analysis of External Debtors Analysis Total Other and individuals Entities

Page 183 Liabilities 25. Current 24. Current Assets 24. Current 72 -REPORT & ACCOUNTS 2017/2018 - FINANCIAL STATEMENTS 2,940 -2,731 70,822 £000’s 2016-17 3,022 -3,094 71,592 £000’s 2017-18 6 628 614 £000’s 2016-17 1 614 534 Equitable Life Equitable £000’s 2017-18 166 2,049 2,373 £000’s 2016-17 124 2,373 2,087 Standard Life Standard £000’s 2017-18 7,591 6,371 1,438 £000’s 2016-17 Prudential 1641 8,480 7,591 £000’s 2017-18 contributed: and duringyear the Fund of members of the Pension single employer is the largest Council County Kent annual report in the Fund’s is included received of contributions and amount employers A list of all contributing on the pension fund website available governance in respect of pension administration, Fund Pension the Kent to Council County Kent from Charges legal and other services monitoring, investment arrangements, Pension and the arising Council out of transactions County Council Kent between County Kent due to end balance Year Fund Contributions paid Contributions Value at 1 April at Value 31 March at Value

Page party27. Related transactions 184 During the financial statements. to in a note parties, transactions elsewhere, not disclosed disclose material with related to is required Fund Pension Kent The None of the each meeting. at their interests declare to is required Committee Fund Superannuation Council County each member of the Kent the year Fund. Pension transactions undertookmaterial any or senior officers with the Kent members of the Committee 26. Additional Voluntary Contributions Voluntary 26. Additional of 4(2)(b) regulation with accordance In benefits. pension their enhance voluntarymake additional to to option the contributions Scheme have members These Accounts. Fund the Pension included within not are contributions AVC 2009, these Regulations of Funds) (Managementand Investment the LGPS Assurance Life Equitable with either Fund, Pension the from separately invested and are employer the directly by provider the AVC to paid are contributions below. figures note the disclosure included within are amounts These Company. Assurance Life or Standard Company Assurance Prudential Company, 73 -REPORT & ACCOUNTS 2017/2018 - FINANCIAL STATEMENTS 6 30 139 175 £000’s 31 March 17 31 March 8 5 32 141 186 £000’s 31 March 18 31 March Salary Allowances pension contributions Employer’s Total Other Page 185 Total remuneration payable to key management personnel is set out below: is set out personnel key management to payable remuneration Total Key management personnel management Key Corporate was the duringFund 2017-18 Pension Kent of the management financial in the positions held key who Council County Kent of employees The of Finance. Director 29. Contingent Assets 29. Contingent against the possibility meet their pension of being unable to guard bonds to hold insurance Fund Pension the Kent in body employers 37 admitted default. of employer in the event only be triggered will and payment of the Fund in favour drawn bonds are These obligations. These commitments relate to outstanding call payments due on unquoted limited partnership limited due on unquoted equity parts and infrastructure funds held in private outstanding call payments to of the relate commitments These the on includes a commitment amount The of each fund. the life over and timing in both size irregular these funds are by ‘called’ amounts The portfolio. of a propertypurchase in April settled 2018. which was 28. Contingent Liabilities and Contractual Commitments Liabilities and Contractual 28. Contingent 2017: £102.3m). £89.3m (31 March 2018 totalled 31 March as at (investments) Outstanding capital commitments 74 -REPORT & ACCOUNTS 2017/2018 - INDEPENDENT AUDITOR’S REPORT assume responsibility to anyone other than the Authority than other the and anyone to responsibility assume report, this work, our audit or for for for as a body, members Authority’s formed. have we the opinions Report and our statements financial thereon audited The fund financial opinion on the pension audit an unmodified expressed We in our report 2018. 25 July dated of Accounts in the Statement statements of Finance and Head Director of Finance Corporate Interim the pension fund financial for responsibilities Operations’ Report Annual Fund in the Pension statements Scheme the Regulations 2013 Pension Government Under the Local preparation for the Authority Officerresponsible of the is Chief Financial Fund which must include the financial statements, of the pension fund and supporting Statement and disclosures the Net Asset notes Account, the practices for Proper practices. with proper in accordance prepared and Accounts of Statement in both the pension fund financial statements of code Report Annual set out in the CIPFA/LASAAC are Fund the Pension Kingdom in the United practice on local authority 2017/18. accounting responsibility Auditor’s an opinion on whether the pension fund express Our is to responsibility in Annual Fund Reportconsistent, are Pension in the financial statements statements pension fund financial with the audited respects, all material which were based on our procedures, of Accounts in the Statement 810 on Auditing with International Standard conducted in accordance Report(Revised), to Engagements Statements. on Summary Financial Dossett Paul Auditor Appointed UK LLP, Thornton Grant and on behalf of for UK LLP Thornton Grant Square 30 Finsbury EC2P 2YU London, 26 July 2018 Who we are reporting are to we Who as a body, reportThis the members of the Authority, is made solely to and Audit 20(5) of the Local 5 paragraph with Part in accordance of the Statement 43 Act as set out in paragraph 2014 and Accountability Public Bodies published by Audited and of Responsibilities of Auditors been undertaken has Our work Limited. Sector Appointments Audit the members of the Authority those matters to state might we so that report no other and for them in an auditor’s to state to required are we or do not accept we law, by the fullest extent permitted To purpose. Pension Fund Annual Report - Pension fund financial statements Report fund financial statements Annual - Pension Fund Pension Report Annual the pension fund financial and Fund Pension The subsequent occurred that events do not reflect the effects of statements Reading the of Accounts. of our report the date on the Statement to report is thereon and the auditor’s pension fund financial statements and the of Accounts Statement the audited reading for not a substitute report thereon. auditor’s In our opinion, the accompanying pension fund financial statements are are pension fund financial statements In opinion, the accompanying our statements financial audited with the respects, in all material consistent, code practices as defined in the CIPFA/LASAAC with proper in accordance Kingdom United in the of practice on local authority 2017/18 accounting and applicable law. Opinion Council (the County of Kent financial statements pension fund The the 2018 which comprise ended 31 March the year for “Authority”) the financial to and the notes the Net assets statement Account, Fund of the policies, including a summary accounting of significant statements, pension fund financial the audited from derived are Fund Pension Kent 2018 included in the Authority’s ended 31 March the year for statements of Accounts”). “Statement (the of Accounts Statement Independent auditor’s report to the members of Kent of Kent members to the report auditor’s Independent fund of the pension consistency Council on the County Fund the Pension included in statements financial Report Annual Page 186 Agenda Item 10

By: Chairman Superannuation Fund Committee Acting Corporate Director of Finance

To: Superannuation Fund Committee – 7 September2018

Subject: FUND POSITION STATEMENT

Classification: Unrestricted

Summary: To provide a summary of the Fund asset allocation and performance.

FOR DECISION

INTRODUCTION

1. The Fund Position Statement is attached in the Appendix.

INVESTMENT RETURN QUARTER TO 30 JUNE

2. The Fund returned 6.19% in the Quarter compared with a benchmark return of 5.36% increasing in value by £364m.

3. All major Equity markets saw rises in the quarter except Emerging Markets; UK Equities outperformed Global Equities.

4. Schroders UK Equities, Baillie Gifford Global Equities and M&G Global Equities all performed strongly. The main areas of underperformance were Woodford UK Equites and both Fixed Income mandates.

INVESTMENT RETURN ONE YEAR

5. The one year return at Fund level was slightly behind benchmark (8.29% against 9.27%) but was strong in absolute terms. The long established core managers (Baillie Gifford Global Equities, Schroders UK Equities and DTZ UK Commercial Property) all outperformed with Baillie Gifford performing exceptionally well, Sarasin also produced good outperformance. M&G Global Equites in market conditions that did not favour their investment approach performed in line with the benchmark. Both Fixed Income mandates underperformed their benchmark and returns were low in absolute terms. The main equity manager under performance came from Woodford and the Schroder Global UK Equities. Pyrford also underperformed but this reflected their defensive positioning of the portfolio.

Page 187 ASSET ALLOCATION

6. The Committee made significant changes to asset allocation at the 22 June Committee and is asked to agree the following revised asset allocation:

Current Proposed Change % % % UK Equity 32 23.5 -8.5 Global Equity 32 32 - Fixed Income 15 15 - Private Equity 1.5 4 +2.5 Infrastructure 1.5 3.5 +2 Property 12 13 +1 Absolute Return 5 8 +3 Cash 1 1 -

Notes:

All additions have and will be funded by reducing UK Equites.

Private Equity and Infrastructure reflect the decisions taken on YFM, Harbourvest and Partners.

Property reflects the indirect property funds and the M&G residential property.

Absolute Return reflects the additional allocation to Pyrford from June 2017 and the Ruffer allocation

RECOMMENDATION

7. Members are asked to:

(1) Note the Fund performance, and

(2) Agree the new asset allocation reflecting decisions already taken by the Committee.

Nick Vickers Business Partner (Pension Fund) Tel: 07920 428575 E-mail: [email protected]

Page 188 FUND POSITION STATEMENT

Summary of Fund Asset Allocation and Performance

Superannuation Fund Committee

By: Chairman Superannuation Fund Committee Acting Corporate Director of Finance Page 189 Page

Kent County Council Superannuation Fund Q1 2018-19

Nick Vickers - Business Partner (Pension Fund) Kent County Council Superannuation Fund

Market Returns for Quarter ended 30 June 2018

Market Returns for Quarter ended 30 June 2018 (4) (2) ‐ 2 4 6 8 10 12

North America

Europe Ex UK

Japan

Page 190 Page Pacific Ex Japan

Emerging Markets Market Return %

Global

UK Index Linked

UK Corporate Bonds

Cash

Property Kent County Council Superannuation Fund

Fund Asset Allocation vs Benchmark as at 30 June 2018

45 Fund Benchmark 39 40 Asset Class £m % % UK Equity 1,727 28 32 35 32 32 Global Equity 2,382 39 32 30 28 Fixed Income 599 10 15 Private Equity 92 1 1 25 Infrastructure 39 1 1 20 Property 730 12 13 Fund 15 Absolute Return 418 7 5 13 15 12 Benchmark Cash 189 3 1 Page 191 Page 10 Total 6,176 100 100 10 7 5 5 3 1 111 1 0 Kent County Council Superannuation Fund

Fund Asset Class Performance for Quarter ending 30 June 2018

12.00

10.00

8.00

6.00 Fund % Benchmark %

Page 192 Page 4.00

2.00

0.00

‐2.00 UK Equity Global Equity Fixed Income Property Absolute Return Private Equity Infrastructure

Asset Class Fund % Benchmark % Outperformance % UK Equity 8.40 9.20 ‐0.81 Global Equity 9.02 6.82 2.20 Fixed Income ‐0.98 0.61 ‐1.59 Property 2.07 2.14 ‐0.07 Absolute Return 2.03 2.36 ‐0.34 Private Equity 10.52 0.09 10.43 Infrastructure 3.88 0.09 3.78 Kent County Council Superannuation Fund

Market Value Summary by Fund Manager as at 30 June 2018

Fund Mandate Asset Class Market Value as at Market Value as at Change in Market % of Total Fund 31 March 2018 30 June 2018 Value 30 June 2018 (£m) (£m) (£m) Baillie Gifford Global Equity 1,170 1,300 129 21.04% Schroders UK Equity 900 984 84 15.93% DTZ Direct Property 484 500 16 8.10% Pyrford Absolute Return 410 418 8 6.77% Goldman Sachs Fixed Interest 368 368 ‐1 5.96% M&G Global Equity 315 343 28 5.55% UBS UK UK Equity 318 345 27 5.59% Woodford UK Equity 274 283 9 4.59% Page 193 Page UBS Global Global Equity 285 306 21 4.96% Schroders GAV Global Equity 277 293 16 4.74% Schroders Fixed Interest 247 242 ‐5 3.91% Sarasin Global Equity 230 246 15 3.98% Fidelity Pooled Property 123 126 3 2.04% Internally managed cash Cash 116 118 2 1.92% Harbourvest Private Equity 65 70 6 1.14% Partners Infrastructure 37 39 1 0.62% Kames Pooled Property 52 53 1 0.86% DTZ Pooled Funds Pooled Property 51 51 0 0.83% Impax Global Equity 45 46 2 0.75% M&G Property Pooled Property 23 24 1 0.39% YFM Private Equity 22 22 0 0.36%

Total Kent Fund 5,812 6,176 364 100.00% Kent County Council Superannuation Fund

Performance Returns as at 30 June 2018

Quarter 1 Year 3 Year (p.a.) Fund Benchmark Fund Benchmark Fund Benchmark

Total Fund 6.19 5.36 8.29 9.27 11.50 10.22

Uk Equity Schroders UK Equity 9.30 9.02 8.97 8.85 8.64 9.41 UBS 9.20 9.20 ‐‐ ‐‐ ‐‐ ‐‐ Woodford 3.30 9.20 ‐12.83 9.02 1.22 9.60 Global Equity Baillie Gifford 11.06 5.79 18.95 7.86 21.87 13.77 Sarasin 6.71 6.82 9.79 8.94 13.89 14.68 Schroders GAV 4.61 6.82 5.34 8.94 13.09 14.69 UBS Emerging Markets ‐2.32 ‐2.38 ‐‐ ‐‐ ‐‐ ‐‐ UBS World Ex UK Equity 7.83 7.84 ‐‐ ‐‐ ‐‐ ‐‐ Page 194 Page Impax 4.11 6.82 4.76 8.94 14.99 14.69 M&G 8.79 7.01 9.42 9.51 14.32 15.31 Fixed Interest Goldman Sachs ‐0.18 0.86 1.10 3.50 4.66 3.51 Schroders Fixed Interest ‐2.17 0.26 ‐1.01 0.56 1.12 0.76 Property DTZ 1.97 2.14 11.85 10.70 11.42 8.26 Fidelity 2.48 2.00 12.59 9.73 8.34 7.62 Kames 2.22 2.00 9.40 9.73 8.50 7.62 M&G Property 0.80 2.00 4.90 9.73 ‐‐ ‐‐ Private Equity Harbourvest 12.80 0.09 14.52 0.28 20.75 0.26 YFM 3.73 0.09 14.46 0.28 16.50 0.26 Infrastructure Partners 3.88 0.09 11.51 0.28 19.76 0.26 Absolute Return Pyrford 2.03 2.36 ‐0.55 8.45 4.10 7.91 Kent County Council Superannuation Fund

Fund Manager Benchmarks and Performance Targets

Asset Class / Manager Performance Benchmark Performance Target

UK Equities: Schroders UK Equity Customised +1.5% pa over rolling 3 years Woodford FTSE All Share Unconstrained State Street UK Equity FTSE All Share Match UBS UK Equity FTSE All Share Match Global Equities: Baillie Gifford Customised +1.5% pa over rolling 3 years Sarasin MSCI AC World Index NDR +2.5% over rolling 3 - 5 years M&G MSCI AC World Index GDR +3% pa Page 195 Page Schroders GAV MSCI AC World Index NDR +3% - 4% pa over rolling 3 years Impax MSCI AC World Index NDR +2% pa over rolling 3 years State Street Global Equity FTSE World ex UK Match UBS Global Equity FTSE (Dev) World ex UK Match UBS Emerging Market Equities FTSE Emerging Markets Match Fixed Income: Schroders Fixed Interest 3 months Sterling Libor +4% pa over a full market cycle Goldman Sachs +3.5% Absolute +6% Absolute Property: DTZ IPD Pension Fund Index ≥ 3 year rolling average of benchmark returns Fidelity IPD UK PF Property Fund Index Kames IPD UK PF Property Fund Index M&G Property IPD UK PF Property Fund Index Alternatives: (Cash / Other Assets) Private Equity – YFM GBP 7 Day LIBID Private Equity – HarbourVest GBP 7 Day LIBID Infrastructure – Partners Group GBP 7 Day LIBID Absolute Return – Pyrford Retail Price Index (RPI) RPI + 5% Internally managed cash – KCC Treasury and GBP 7 Day LIBID Investments team Kent County Council Superannuation Fund

Fund Structure as at 30 June 2018

UK Equities Global Equities Fixed Interest Property Cash/Alternatives

Schroders Baillie Gifford Goldman Sachs DTZ Internally managed +1.5% +1.5% +6.0% Abs. Property Cash £984 m £1,300 m £368 m £551 m £118 m

UBS M&G Schroders Fidelity Partners 0.0% +3.0% +4.0% Property Infrastructure £345 m £343 m £242 m £126 m £39 m

Woodford Schroders Kames YFM Private +3.0% ‐ +4% Property Equity £283 m £293 m £53 m £22 m Page 196 Page

UBS M&G HarbourVest +0.0% Property Private Equity £306 m £24 m £70 m

Impax Pyrford Abs. Return +2.0% RPI + 5% £46 m £418 m

Sarasin +2.5% £246 m

Total Fund £6.2 bn Agenda Item 11

By: Chairman Superannuation Fund Committee Acting Corporate Director of Finance

To: Superannuation Fund Committee – 7 September 2018

Subject: FUND EMPLOYER MATTERS

Classification: Unrestricted

Summary: To report on employer related matters, applications to join the Superannuation Fund and a termination agreement. FOR DECISION

INTRODUCTION.

1. This report sets out information on employer related matters and applications from organisations to become admitted bodies within the Superannuation Fund. It also advises of a termination agreement. The Committee’s approval is sought to enter into these agreements.

2. The Committee are advised that the minutes relating to these matters are to be signed at the end of today’s meeting to facilitate completion on the desired dates.

EMPLOYERS IN THE FUND AT 30 JUNE 2018

3. There were a total of 602 employers in the Kent Pension Fund.

4. The number of active employers regularly paying contributions increased in the first 3 months up to 30 June 2018 to 362. This was as a result of 4 new employers joining the Fund and 3 Academies merging into new or existing Trusts. The number of Ceased employers hasn’t changed at

Page 197 240. These no longer have active contributing members in the LGPS and the Fund has an existing or future liability to pay pensions.

5. The following table lists employers who either joined or ceased to have active members in the Fund for the first quarter of the year for 2018-19

New Employers Effective date Scheduled Bodies Westgate on Sea Parish Council 1 April 2018 Academy Trusts Veritus Multi Academy Trust 1 May 2018 Fortis Trust 1 June 2018 Admitted Bodies Nourish Contract Catering Limited 1 April 2018 (Swale Academy Trust) Ceased/Merged to Trust Effective date Employers Academy joined a Multi- Academy Trust Danecourt Academy (Argent) 1 April 2018 Veritus Academy 1 May 2018 Bradfields Academy 1 June 2018

6. The following chart shows the Employers from whom the Fund receives monthly contributions, by Employer Group. Note the KCC figures reflect the County’s and schools’ relationships with a number of payroll providers.

Page 198 CONTRIBUTIONS FROM EMPLOYERS

7. In the first quarter of 18-19 ,the Fund received £57.5m from Employers in respect of their monthly contributions (employer and employee) as follows:

Received Early Cash on 19th Received Late Total £ £ £ £ April 10,125,904 9,140,793 84,200 19,350,896 May 11,766,335 7,105,259 93,664 18,965,259 June 10,401,830 8,559,473 150,331 19,111,634

8. KCC monitors the timing of receipt of these contributions compared to a KPI of 95%. The KPI was exceeded ieach of the first 3 months of 2018- 19 and the average for this quarter for contributions received was 99%.

9. The following chart shows the proportion paid by KCC and other employers of contributions received.

MONITOR SERVICES LTD

Page 199 10. Canterbury City Council is awarding a three and a half year contract for Cleaning Services from 1 December 2018.This involves the transfer of 1 employee from Kingdom Services Group to Monitor Services Ltd.

11. To ensure the continuity of pension arrangements for this employee, Monitor Services Ltd has made an application for admission to join the Superannuation Fund.

12. The admission application has been made under Schedule 2 Part 3 1(d) (i) of the Local Government Pension Scheme Regulations 2013, as amended, and under this regulation the admitted body is required to provide a form of bond or indemnity.

13. The Fund Actuary has assessed the employer contribution rate as 15.5% for a closed agreement and the Bond for the first year as £5,000.

14. The completed questionnaire and supporting documents provided by Monitor Services Ltd have been examined by Officers to ensure compliance with the LGPS Regulations, and Invicta Law have given a favourable opinion.

SODEXO LTD 15. Oasis Academy is awarding a two year contract for Catering Services from 1 September 2018.This involves the transfer of a number of employees from Oasis Academy to Sodexo Ltd.

16. To ensure the continuity of pension arrangements for these employees,Sodexo Ltd has made an application for admission to join the Superannuation Fund.

17. The admission application has been made under Schedule 2 Part 3 1(d) (i) of the Local Government Pension Scheme Regulations 2013, as amended, and under this regulation the admitted body is required to provide a form of bond or indemnity.

18. The Fund Actuary will assess the employer contribution rate and Bond.

19. The completed questionnaire and supporting documents provided by Sodexo Ltd have been examined by Officers to ensure compliance with the LGPS Regulations, and Invicta Law will give a favourable opinion subject to their completion of further due diligence of the commercial contract.

ABM CATERING LTD

20. The Committee previously resolved to note the withdrawal of ABM Catering Ltd as a participating employer in the Pension Fund. Their liability has now been settled and the Committee are asked to agree that we may enter into a termination agreement with ABM Catering Ltd.

Page 200 RECOMMENDATION

21. Members are asked to agree:

a) to the admission to the Kent County Council Superannuation Fund of Monitor Services Ltd;

b) to the admission to the Kent County Council Superannuation Fund of Sodexo Ltd;

c) to a termination agreement being entered into with ABM Catering Ltd;

d) that the Chairman may sign the minutes relating to recommendations (a) to (c) at the end of today’s meeting; and

e) that once legal agreements have been prepared for these matters the Kent County Council seal can be affixed to the legal documents.

Steven Tagg Treasury and Investments 03000 416747

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