To receive an update by the Portfolio Member for Finance on the Gwynedd Pension Fund.
Minutes:
In accordance with the request made by the Audit Committee at its 10th December, 2014 meeting, the Portfolio Member for Finance provided the Committee with a synopsis of the performance of the Gwynedd Pension Fund for 2013/14.
The Portfolio Member for Finance as the Isle of Anglesey County Council’s representative on the Gwynedd Pensions Fund Committee reported as follows based on information contained in the Pension Fund summary report and accounts for 2013/14 –
• That subject to audit, the Pension Fund Accounts summary shows that total income for the period was £83.523m compared to £78.525m in the previous year of which the bulk is made up of a combination of Employer contributions (£50.909m in 2013/14) and Employee contributions (£14.791m in 2013/14).
• For 2013/14, expenditure totalled £55.267m, the greater part of which was made up of pension benefits (£34.424m).
• That there was a surplus of £28.256m on the Fund at the end of 2013/4 which was available for investment. This is significant given there is a general misconception that not enough is being paid into the Fund in the form of annual contributions.
• The Fund’s net assets position stood at £1,310m at 31 March, 2014 representing an increase of £117m during the year. The Fund’s investment approach is based on reducing risk by investing across a range of different asset classes e.g. equities, property and more recently, infrastructure.
• The overall fund return for 2013/14 was 8.2% against a benchmark of 6.3%.Over three years the Fund return was 6.7% against a benchmark of 6.5%.
• During 2013/14, the Fund’s triennial actuarial valuation as at March, 2013 was completed. The funding level increased from 84% to 85% which is ahead of the average of 79% in England and Wales. However, the deficit in the Fund also increased due in part to longevity factors and a low level of gilt yield at the time of valuation.
• Compared with other local authority funds, the Gwynedd Pension Fund ranked 19th out of 85 in terms of investment performance which is indicative of a sound performance. It is a solid fund which has a broad mix of investments.
The Committee was given the opportunity to question the Portfolio Member for Finance on the information presented and the following issues were raised –
• The Fund’s management charges compared with other similar funds. The Committee was informed that investment management expenses were £7.316m for 2013/14 and administration expenses were £1.268m. A central Government consultation paper has proposed that equity investment should be passive rather than active in order to reduce costs. The Gwynedd Pension Fund takes the view that funds should be given the choice to comply with the proposal or explain a decision to pursue active management.
• Whether the return on the Gwynedd Pension Fund compares favourably with the Isle of Anglesey Charitable Trust Fund. The Committee was informed that the two funds are different as regards investment objectives with the Charitable Trust Fund invested mainly to produce a good yield while the Pension Fund is invested with a view to long term performance.
• Whether the Gwynedd Pension Fund has the capacity to continue as it is in the event of another stock market crash. The Committee was informed that the Gwynedd Pension Fund by its very nature is subject to market fluctuations but that its investment strategy seeks to mitigate risk by allocating assets across a spread of categories. Moreover the Fund does have £26.148m in cash and bank deposits.
The Committee noted the information presented along with the Gwynedd Pension Fund position as at the end of 2013/14 and indicated that it would wish to continue to monitor the Pension Fund performance on an annual basis.
NO FURTHER ACTION ARISING