West Yorkshire Pension Fund Report and Accounts for the year ended 31 March 2020 West Yorkshire Pension Fund is administered by City of Bradford Metropolitan District Council • Pension Schemes Registry Number 10041078 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 This page is intentionally left blank West Yorkshire Pension Fund 4 Section FOREWORD Section 1 Foreword West Yorkshire Pension Fund 5 Section FOREWORD Foreword West Yorkshire Pension Fund (WYPF) is a local government Our pensions administration teams take great pride in pension scheme, founded in 1974. At the end of March 2020 delivering a high-quality service at a very low cost. This has been we had 294,447 members and 451 employers across the UK. achieved by system efficiencies, mostly developed in-house by our Our largest employers are the five West Yorkshire councils: dedicated staff. Other schemes have recognised our quality and Bradford, Calderdale, Kirklees, Leeds and Wakefield. low cost and as a result our shared service administration provision has grown. At the beginning of the year, we provided The impact of COVID-19 pandemic on global financial markets administration for Lincolnshire Pension Fund and Hounslow caused the value of the fund to reduce during the year by - Pension Fund, and fourteen fire and rescue authorities. In 2020 7.4% to £13.2 billion. This short term reduction is very London Borough of Barnet Pension Fund and two more fire and disappointing, but to be expected in the circumstances. The rescue authorities will be joining us, demonstrating our subsequent period has seen a substantial recovery in markets continuing ability to deliver a low-cost high-quality service. The which has obviously improved the situation for the Fund, but fund has been recognised for its achievements nationally by there is still considerable uncertainty for investment returns in winning a number of prestigious awards. the next year. I would like to thank members of the Joint Advisory Group, the With the continuing uncertainty in equity markets over the Investment Advisory Panel, and our external advisers, first six months of the 2019-20 financial year the Investment particularly Noel Mills who retired at the end of 2019, as well as Advisory Panel decided to reduce exposure to equities, which the administration and investment staff, for all their efforts and had reached over 70% of fund assets at the beginning of year commitment, which is evident in the continuing success of the under review. The planned increases to investment in fund. infrastructure, a much less volatile asset class, continued throughout the year. Following the falls in markets in the last I am sure you will find the Report and Accounts interesting and quarter of 2019 the decision was made to begin reinvestment informative, and can confirm that the fund remains well funded of the liquid assets, as valuations were looking attractive, but and financially sound, and will provide financial security in this was not fully completed as the scale of the COVID-19 retirement for its members. impact on the market became apparent. The Investment Advisory Panel will continue to review the asset allocation quarterly, and make adjustments against the benchmark based on future expected returns. 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 WYPF 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 (NLGPS); together we have already achieved lower costs in some areas without compromising anticipated returns. The infrastructure partnership, GLIL, now has commitments of £1.8 billion from NLGPS and one other pool, and has already invested over £1.1 billion. These assets include on and off-shore wind turbines, modern rail rolling stock, and other assets which reduce reliance on fossil fuels. The private equity partnership, NPEP, has committed £871m to 15 funds, and has established a co-investment platform Councillor Andrew Thornton which will substantially reduce the cost of private equity investment for the NLGPS partners. The NLGPS continues to Chair meet all the deadlines set by the government. The NLGPS has Joint Advisory Group and appointed Northern Trust Global Services PLC (NT) to be the Investment Advisory Panel joint custodian, and all the assets of the NLGPS transferred to NT in 2019. West Yorkshire Pension Fund 6 Section MANAGEMENT STRUCTURE Section 2 Management Structure West Yorkshire Pension Fund 7 Section MANAGEMENT STRUCTURE Members of the WYPF Joint Advisory Group Bradford Council Councillor A Thornton Councillor G Winnard Councillor T Salam Chair Deputy Chair Calderdale Council Councillor B Metcalfe Councillor S Baines MBE Councillor J Lynn Kirklees Council Councillor G Asif Councillor M Ahmed Councillor R Mugartroyd Leeds Council Councillor A Scopes Councillor P Harrand Councillor N Dawson Wakefield Council Councillor L Shaw Councillor J Speight Councillor M Graham Trade union representatives T Chard – GMB L Bailey – UNISON A Goring – UNISON Scheme member representatives K Sutcliffe (to July 19) W Robinson (to July 19) Representative from City of Bradford Metropolitan District Council C Chapman Director of Finance / s151 Officer - BMDC West Yorkshire Pension Fund 8 Section MANAGEMENT STRUCTURE Members of the WYPF Investment Advisory Panel Bradford Council Councillor A Thornton Councillor G Winnard Chair Calderdale Council Councillor J Lynn Councillor S Baines MBE Kirklees Council Councillor G Asif Councillor M Ahmed Leeds Council Councillor A Scopes Councillor P Harrand Wakefield Council Councillor J Speight Councillor L Shaw Trade union representatives T Chard – GMB L Bailey – UNISON A Goring – UNISON West Yorkshire Pension Fund R Barton – Director External advisers N Mills (to Nov 19) M Stevens Representative from the Finance Directors of the councils of West Yorkshire N Broadbent Head of Finance – Calderdale Council Scheme member representatives C Greaves G Hey (to Dec 19) P Cole (from Jan 20) West Yorkshire Pension Fund 9 Section MANAGEMENT STRUCTURE Members of the WYPF Local Pension Board Employer representatives Councillor M Slater Councillor G Burton R Manning Bradford MDC Wakefield MDC Northern School of Chair (to May 19) Contemporary Dance Councillor Johnson Councillor D Jenkins (From Jun 19) Councillor S Lal (From Jun 19) Leeds City Council Bradford MDC Wakefield MDC Chair (from Jun 19) Councillor G Hyde (To May 19) Councillor J Lewis Leeds City Council Leeds City Council ( to ???) Member representatives G Nesbitt – GMB C Sykes – UNISON M Morris – Unite M Binks – UNISON Appointed service providers and advisers Actuarial services Aon Hewitt 25 Marsh Street Bristol BS1 4AQ AVC providers Utmost Life and Pensions Walton Street Aylesbury Bucks HP21 7QW Prudential Lancing BN15 8GB Scottish Widows PO Box 902 15 Dalkeith Road Edinburgh EH16 5BU West Yorkshire Pension Fund 10 Section MANAGEMENT STRUCTURE Section 151 officer C Chapman – Director of Finance / s151 City of Bradford Metropolitan District Council Britannia House Bradford BD1 1HX Auditors Mazars LLP Gelderd Road Gildersome Leeds LS27 7JN Banker HSBC 8 Canada Square Canary Wharf London E14 5HQ Northern Trust Financial Custodian 1 Canada Square Canary Wharf London E14 5AB Legal adviser M Bowness – Interim City Solicitor City of Bradford Metropolitan District Council City Hall Bradford BD1 1HY Pensions Civica UK Limited computer services Vanguard House Dewsbury Road Leeds LS11 5DD West Yorkshire Pension Fund 11 Section MANAGEMENT STRUCTURE Internal dispute resolution advisers Appointed persons for R Barton – Director, WYPF stage 1 internal dispute resolution procedure (IDRP) City of Bradford Metropolitan District Council WYPF Ground Floor Aldermanbury House 4 Godwin Street Bradford BD1 2ST Appointed persons for K England – Chief Executive stage 2 internal dispute resolution procedure (IDRP) City of Bradford Metropolitan District Council City Hall Bradford BD1 1HY IDRP medical adviser Santia Occupational Health Santia House Parc Nantgarw Cardiff CF15 7QX West Yorkshire Pension Fund 12 Section LOCAL PENSION BOARD ANNUAL REPORT Section 3 Local Pension Board Annual Report West Yorkshire Pension Fund 13 Section LOCAL PENSION