Agenda item

(To receive a report by Claire Machej (Accounting, Investment and Governance Manager) which brings the draft Annual Report and Accounts for the Pension Fund to the Pensions Board)

The Accounting, Investment and Governance Manager introduced the report and explained that the annual report and accounts had been prepared in accordance with statutory and industry guidance primarily set out in the code of practice for local authority accounting.

The timing issue relating to 31 March valuations for unquoted holdings was brought to the Boards attention. The draft accounts had been published in advance of the fund receiving all 31 March valuation for unquoted holdings. The accounts included all valuations that were received prior to 30 June. As further information was received, this would be reviewed and included as part of the accounts if deemed material. This may mean that the final version of the accounts is different. Any changes made would be detailed to the Board in October. The annual report and accounts were currently with the external auditor and their findings were expected to be reported to the Board in October.

Questions had been submitted prior to this meeting. It was confirmed that further detail would be included regarding the change in actuary and the timing and frequency of internal audits would be reviewed. An additional question related to the presentation of savings information in the annual report achieved through pooling: there was a requirement from MHCLG that the fund capture savings information, however, no guidance had been provided on how to collate and measure this. The calculations at Border to Coast were all done at an individual fund level and had been put together through collaboration with other funds in Border to Coast. MHCLG stated that regulatory share capital should be captured as a cost. This sat at approximately £1.1 million for Lincolnshire and if Border to Coast were to disband that money would come back to the Fund. Savings had a focus on investment management fees and were a comparison between those seen at Border to Coast and the previous fees paid if there was a like for like comparison. Where a like for like wasn't possible, sector benchmark fees had been used.

The Board asked if the external auditors had completed their audit of the accounts. The Accounting, Investment and Governance Manager explained that their work started mid-June and they had completed the revenue element of their work. No issues had yet been flagged. An additional cost of £6,000 was expected for the extra work they need to do for unquoted holdings.

Referencing some of the administration benchmarking data within the report, the Board felt this was misleading. The Accounting, Investment and Governance Manager explained that the information included within the annual report was guided to by regulations. The number of funds that submitted data to national benchmarking was important to its overall quality.

The Board felt that inclusion of the savings from investment crossing included in the pooling savings was slightly unfair as this might be possible outside of pooling too. The Head of Pensions explained that it would depend on what the fund was going into, and if a manager was able to offer any crossing themselves. As part of the crossing opportunity, the fund was also able to avoid the impact of a dilution levy.

RESOLVED

That the draft Pension Fund Annual Report and Accounts be noted.