West Yorkshire Pension Fund Report and Accounts for the year ended 31 March 2019 West Yorkshire Pension Fund is administered by City of Bradford Metropolitan District Council • Pension Schemes Registry Number 10041078 Contents Section 1 Appendix A Foreword 5 Resolving Complaints 109 Section 2 Appendix B Management Structure 7 Further Information and Contacts 111 Section 3 Appendix C Local Pension Board Annual Report 13 Glossary of Terms 113 Section 4 Appendix D Pensions Administration Review 16 Pension Administrative Strategy 118 Section 5 Appendix E Financial Management and Performance 22 Funding Strategy Statement 131 Section 6 Appendix F Investment Report 43 Governance Compliance Statement 154 Section 7 Appendix G Investment Management and Strategy 51 Communications Policy 158 Section 8 Appendix H Investment Markets 54 Investment Strategy Statement 163 Section 9 Appendix I Actuary’s Report 70 Conflict of Interest Policy 169 Section 10 Appendix J Auditor’s Report 74 Risk Management Report 174 Section 11 Appendix K Statement of Accounts 76 Pension Board Knowledge and Understanding Framework 197 Appendix L Pension Board Terms of Reference 204 West Yorkshire Pension Fund 2 Dowley Gap Locks, Bingley West Yorkshire Pension Fund 3 Ian Greenwood, OBE 1950–2018 On 13 November 2018 it was with great sorrow that we learned of the death of our deputy chair, Councillor Ian Greenwood OBE. One of the most influential and straight-talking political figures in Bradford, Ian Greenwood served West Yorkshire Pension Fund for a period of 14 years, both as chair and latterly as deputy chair. Twice leader of Bradford Council with a career in local politics spanning four decades, Ian Greenwood represented Little Horton ward from 1995 to 2012 and Bolton and Undercliffe ward in 2018. He also built a national profile in the pensions sector as chair of the Local Authority Pensions Fund Forum (LAPFF) from 2008 to 2015, and again in 2018, representing funds with a combined value of £230 billion. Ian was also chair of the Northern Pool – the partnership of West Yorkshire, Greater Manchester and Merseyside pension funds now known as Northern LGPS. Vice-chairs Paul Doughty and Brenda Warrington said, ‘Ian was an inspirational and visionary leader whose knowledge and experience of local government pension schemes was invaluable.’ Ian Greenwood was awarded the OBE in 2013 for services to local government. On the day of his death, Kersten England, chief executive of Bradford Council, said in a statement, ‘Many, many people in the council, the pension fund and across the district in our communities, public services and businesses have worked with Ian over the years and will be sharing a huge sense of loss today.’ West Yorkshire Pension Fund 4 Section 1 FOREWORD Section 1 Foreword West Yorkshire Pension Fund 5 Section 1 FOREWORD Foreword West Yorkshire Pension Fund (WYPF) is a local government joined our shared service arrangements in August 2018, pension scheme, founded in 1974. At the end of March 2019 demonstrating our continuing ability to deliver a low-cost we had 291,514 members and 430 employers across the UK. high-quality service. The fund has been recognised for its Our largest employers are the five West Yorkshire councils: achievements nationally by winning a number of prestigious Bradford, Calderdale, Kirklees, Leeds and Wakefield. awards. The value of the fund rose during the year by 5.87% to £14.3 It is my sad duty to pay tribute to Councillor Ian Greenwood, billion, a satisfactory result, driven by favourable markets. who died during the year. Ian served the fund as chair and more The rise is after total payments of £464.4m (2017–18, £450.0m recently as deputy chair of the Investment Advisory Panel, and 2018–19, £14.4m) to Greater Manchester Pension Fund in as chair of the NLGPS. His contribution extended beyond the respect of the transfer of FirstGroup West Yorkshire’s liabilities. fund itself, as he was also chair of the Local Authority Pension Fund Forum and a member of the National Scheme Advisory With the continuing uncertainty in equity markets over the Board. He will be missed by his many friends and colleagues. first six months of the year the Investment Advisory Panel continued to reduce exposure to equities, which had reached I would like to thank members of the Joint Advisory Group, over 70% of fund assets at the beginning of 2018. Following the Investment Advisory Panel, and our external advisers, as the falls in markets in the last quarter the decision was made well as the administration and investment staff, for all their to begin reinvestment of the liquid assets, as valuations were efforts and commitment, which is evident in the continuing looking attractive. The planned increases to investment in success of the fund. infrastructure, a much less volatile asset class, continued throughout the year. The Investment Advisory Panel will I am sure you will find the Report and Accounts interesting continue to review the asset allocation quarterly, and make and informative, and can confirm that the fund remains well adjustments against the benchmark based on future expected funded and financially sound, and will provide financial security returns. in retirement for its members. The government requires LGPS funds to pool assets in order to achieve cost efficiencies on investments. Having the lowest cost of investments of all the LGPS funds, we concur with the objectives, although we will benefit less than the average fund from the process. We continue to work with our pooling partners, two other large, efficient metropolitan funds, Greater Manchester and Merseyside, to develop the Northern LGPS; together we have already achieved lower costs in some areas without compromising anticipated returns. The Northern LGPS (NLGPS) continues to meet all the deadlines set by the government. The NLGPS has appointed Northern Trust Global Services PLC (NT) to be the joint custodian, and all the assets of the NLGPS will be transferred to NT in 2019. The infrastructure partnership, GLIL, now has commitments of £1.825 billion from NLGPS and one other pool, and has already invested over £1bn into greenfield and existing assets, which will generate a Councillor Andrew Thornton good return as well as providing a good yield to facilitate the payment of pensions. These assets include modern rail rolling Chair stock, and other assets which reduce reliance on fossil fuels. Joint Advisory Group and Our pensions administration teams take great pride in Investment Advisory Panel delivering a high-quality service at a very low cost. This has been achieved by system efficiencies, mostly developed in-house by our dedicated staff. Other schemes have recognised our quality and low cost and as a result our shared service administration provision has grown. At the beginning of the year, we provided administration for Lincolnshire Pension Fund and eleven fire and rescue authorities. This has now increased to 14 fire and rescue authorities, and the London Borough of Hounslow West Yorkshire Pension Fund 6 Section 2 MANAGEMENT STRUCTURE Section 2 Management Structure West Yorkshire Pension Fund 7 Section 2 MANAGEMENT STRUCTURE Members of the WYPF Joint Advisory Group Bradford Council Councillor A Thornton Councillor M Ellis Councillor S Lal Chair Deputy Chair Calderdale Council Councillor B Metcalfe Councillor S Baines MBE Councillor J Lynn Kirklees Council Councillor E Firth Councillor F Loonat Councillor H Richards Leeds Council Councillor A Scopes Councillor P Harrand Councillor N Dawson Wakefield Council Councillor L Shaw Councillor J Speight Councillor G Stokes Trade union representatives Tristan Chard – GMB Liz Bailey – UNISON Ian Greenwood OBE – UNISON Scheme member representatives Kenneth Sutcliffe Wendy Robinson Representative from City of Bradford Metropolitan District Council Andrew Crookham (left March 2019) Assistant Director, Finance and Procurement – BMDC West Yorkshire Pension Fund 8 Section 2 MANAGEMENT STRUCTURE Members of the WYPF Investment Advisory Panel Bradford Council Councillor A Thornton Councillor M Ellis Chair Calderdale Council Councillor B Metcalfe Councillor S Baines MBE Kirklees Council Councillor E Firth Councillor H Richards Leeds Council Councillor A Scopes Councillor P Harrand Wakefield Council Councillor J Speight Councillor L Shaw Trade union representatives Liz Bailey (Deputy Chair Ian Greenwood OBE Tristan Chard – GMB from January 2019) – (to November 2018) UNISON – UNISON West Yorkshire Pension Fund Rodney Barton – Director External advisers Noel Mills Mark Stevens Representative from the Finance Directors of the councils of West Yorkshire Nigel Broadbent Head of Finance – Calderdale Council Scheme member representatives Chris Greaves Gerald Hey West Yorkshire Pension Fund 9 Section 2 MANAGEMENT STRUCTURE Members of the WYPF Local Pension Board Employer representatives Councillor M Slater Councillor G Burton Ruth Manning Bradford MDC Wakefield MDC Northern School of Chair Contemporary Dance Councillor J Lewis Leeds City Council Member representatives Gary Nesbitt – GMB Colin Sykes – UNISON Mark Morris – Unite Mick Binks – UNISON Appointed service providers and advisers Actuarial services Aon Hewitt 25 Marsh Street Bristol BS1 4AQ AVC providers Equitable Life Assurance Society PO Box 177 Walton Street Aylesbury Buckinghamshire HP21 7YH Prudential Lancing BN15 8GB Scottish Widows PO Box 902 15 Dalkeith Road Edinburgh EH16 5BU West Yorkshire Pension Fund 10 Section 2 MANAGEMENT STRUCTURE Section 151 officer Andrew Crookham (left March