Welcome to your 26th Annual Meeting S
Agenda 11.00am Welcome Councillor Biggins, Chair of Pensions Committee Pensions Administration update Debbie Sharp, Pensions Administration Manager Investment performance Justin Bridges, Head of Treasury and Pensions Actuarial valuation update James Walton, Scheme Administrator LGPS Central investment update Valborg Lie and Gordon Ross, LGPS Central Sacha Sadan, Director Corporate Governance and Responsible investments James Sparshott, Head of Local Authorities, Legal and General 12.45pm Questions and close Councillor Biggins, Chair of Pensions Committee This meeting is being filmed and will be available to watch on our website. A meeting feedback form will be emailed to you after the meeting. Prefer paper? Some paper copies available after the meeting.
Pensions Administration Update S Debbie Sharp Pensions Administration Manager
About us Main 87 LGPS administration We look after administering aim: your LGPS authorities in accuracy, pension in England and timeliness and Shropshire Wales value for money
LGPS Governance Structure LGPS Structure National Secretary of State Scheme Advisory Pensions for MHCLG= Board “Responsible Regulator Authority” Local Administering Authority = “Scheme Manager” Administering Authority = “Scheme Manager” Pensions Board Pensions Committee (or equivalent)
Our role Collect and Report to check data and Pay member governing contributions benefits accurately bodies and on time inline Keep robust with regulations Set out and assist internal controls scheme employers with responsibilities Ensure data is Issue annual kept safe Communicate benefit effectively with members statements
LGPS in England and Wales Shropshire County Pension Fund 5.9 million total 47,700 total 2.0 million active members 16,340 active members 2.2 million deferred 19,132 deferred 1.7 million pensioners 12,228 pensioners 18,037 employers 199 employers* *or 151 with current active members
Lets look back… 1990s 2000s 2010s 2003 - 10 th annual meeting • • • 1993 - 1st annual meeting 2014 – Public sector pension changes brings removal of covering investment strategy, • 1998 - LG reorganisation final salary scheme and responsible investment (Transfer of services to T&W career average introduced • Council) 2003 – Our website and ‘My • 2016 - End of contracting out Pension Online’ launched • 1998 – Change in scheme rules • • 2018 – TPR sets cyber 2006 - Change in pensions tax • 1999 - Repercussions of mis- security principles for regime – ‘A’ day selling personal pensions – pension schemes • reinstatements 2008 – More changes to scheme • 2019 - Ban on pensions cold • • 2000 – Early days of cyber calling 2011 – Lord Hutton publishes security - ‘millennium bug’ report on proposals to change • 2020s……. public sector pension schemes
What’s in-store for the next decade? • Further scheme changes? Equality repercussions from McCloud case 2020 • Increasing use of technology in communicating • Automation of benefit administration • Dealing with repercussions from scammed transfers - LG funds now being forced to reinstate • Pensions dashboard? • Cyber ‘resilience’ – top focus of TPR More of the same…..
Ongoing 06 01 challenges Ensuring we Changing don’t hold regulations unnecessary McCloud missing data data 05 02 Increase in More data to third party hold securely payroll providers Liaising with Helping members more 04 03 understand employers the scheme
LGPS benefit package overview A secure pension payable for life and adjusted to take into account cost of living In event of death pensions paid to spouse, civil partner, cohabiting partner and eligible children and a lump sum death grant ‘Normal pension age’ linked to state pension age but option to take pension early between 55 – 75 Ill health and redundancy cover Cost – monthly employee contribution based on annual pay – 9 bands between 5.5% and 12.5%
How does it work? Employer and employee contributions and investment returns … …benefits paid out are not investment linked – instead based on set formula in regulations using pay!
National pensions consultations Consultation Stage Key dates Academy treatment in Still being reviewed Ongoing review LGPS Exit payment cap Consultation now closed Not likely before and awaiting response 1 April 2020 Fair deal – outsourcing Consultation closed April Ongoing protection 2019 Scheme valuation and Paused February 2019 Paused cost management process McCloud MHCLG looking at remedy Ongoing
Check your pension online Update your personal details Check your pay/pension in payment Check current value Run benefit projections Check death benefits
Investment Performance Update S Justin Bridges Head of Treasury and Pensions
Fund Overview • Value just above £1.91 billion as at 31 March 2019 • Value of the Fund as at 28 Nov 2019 £2 billion • Membership – 47,700 • 199 employers (or 151 with current active members)
Funds assets invested as at 31 March 2016 Index Linked Bonds, 10.0% Infrastructure, 3.0% Hedge Funds, 10.0% Investment Grade Bonds, 7.5% Private Equity, 5.0% Property, 5.0% Absolute Return Bonds, 7.5% UK Equities, 8.0% Global Equities (Passive), 20.0% Global Equities, 24.0% Index Linked Bonds Investment Grade Bonds Absolute Return Bonds UK Equities Global Equities Global Equities (Passive) Property Private Equity
Funds assets invested as at 31 March 2019 Property Debt, 3.5% Insurance Linked Infrastructure, 3.0% Security, 1.5% Hedge Funds, 7.5% Private Equity, 5.0% Unconstrained Bonds, 24.0% Property, 5.0% Liability Driven Investment, 3.5% UK Equities, 8.0% Global Equities (Passive), 28.0% Global Equities, 11.0% Unconstrained Bonds Liability Driven Investment UK Equities Global Equities Global Equities (Passive) Property Private Equity Hedge Funds
Annualised returns over last 3 financial years Annualised Index returns from 31/03/2016 to 29/03/2019 20.0% Sterling terms Local currency terms 17.4% 18.0% 16.0% 14.8% 13.7% 14.0% 12.3% 11.7% 12.0% 11.0% 9.5% 10.0% 8.6% 8.3% 8.1% 8.0% 6.7% 6.0% 4.7% 3.6% 4.0% 2.0% 0.0% UK Equities US Equities Europe Ex UK Japanese Emerging UK Fixed UK Index UK Corporate MSCI UK Equities Equities Market Interest Gilts Linked Gilts Bonds Property* Equities
Individual Manager Performance - 3 years annualised WHOLE FUND RETURN DRC - Property Debt***** Securis - Insurance Linked Securities**** Global Infrastructure Partners - Global Infrastructure Aberdeen - Property HarbourVest - Private Equity Blackrock - Hedge Funds BMO - Liability Driven Investment*** GAM - Absolute Return Bonds*** BlackRock - Global Fixed Income PIMCO - Global Bonds LGPS Central - Global Equities** Harris Associates - Global Equities* Investec - Global Equities* Legal & General - Global Equities MFS - Global Equities* * terminated Feb 19 ** inception date 15/2/19 Majedie - UK Equities *** inception date 12/5/16 **** inception date 31/5/18 -2.00 0.00 2.00 4.00 6.00 8.00 10.00 12.00 14.00 16.00 18.00 ***** inception date 31/10/18 Percentage Return p.a. (%) Fund Benchmark
Investment performance over 3, 5 and 10 years 12 10 Annualised Return (%) 8 Shropshire Fund 6 Composite Benchmark 4 2 0 3 Year to March 5 Year to March 10 Year to March 2019 2019 2019
Expected forward looking annualised returns Capital Market Assumptions over 10 years in GBP 9.0% 8.2% Source: Aon Capital market assumptions as at 8.0% 6.8% 6.7% 6.7% 7.0% 6.1% 6.0% 31 March 2019 5.2% 5.0% 4.0% 3.0% 1.9% 2.0% 1.2% 1.0% 0.2% 0.0% UK Equities US Equities European Japanese Emerging UK Fixed UK Index 10 Yr AA UK Property Equities Equities Market Interest Gilts Linked Gilts Corporate Equities (20 Yr) (20 Yr) Bonds
Equity Protection Strategy • Equity Markets Rallied Strongly • Resulted in an increased Funding level • Equity Protection Strategy Implemented • Lock in gains and protect against future price falls • £580m of Equities protected against falls of between 3-30%
Issues to be addressed in next 6-12 months? • Prepare for further transition of assets into LGPS Central. £260m already transitioned in March 2019 into global active equities sub fund. • Review Investment Strategy following Valuation • Implement investment strategy changes
To Sum Up • The fund value increased by £421 million over the last 3 years & outperformed its benchmark by 0.6% p.a. • 5 & 10 year performance positive & above benchmark • Investment Strategy Review commencing following valuation results and work with LGPS Central. • Annual reports on the Pension Fund website
Overview of the 2019 Actuarial Valuation S James Walton Scheme Administrator and Director of Finance, Governance & Assurance
Purpose of an Actuarial Valuation Regulations say you have to … F U T U R E PA S T Has the Fund got How much money enough money to pay is needed to pay benefits earned to benefits earned in date? future?
Recommend
More recommend
