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Annual General MeetingChris Tambini Assistant Director, Ian Howe
Pensions Manager, Colin Pratt Investment Manager
The career average revalued earnings (CARE) scheme implemented from 1 April 2014
On-line system implemented
New pension administration system implemented
New 2014 career average revalued earnings “CARE” scheme implemented – aggregation rules still outstanding
Members feedback – satisfaction score of 96% who rated service as good or excellent
Benchmarking LCC cost £18.24 per member Local Authority average £26.62 per member
Auto enrolment completed for the larger fund employers and well underway for the smaller employers
Employer numbers continue to rise (now over 200 employers with active contributors)
New on line service fully implemented with our partner Hymans delivering savings in printing and postage
On line service is instrumental in scheme communications to scheme members
Members are able to see personalised impact of different variables under the new scheme e.g. retirement age, bigger lump sum and their annual benefit statement at March 2014
New pension administration system implemented Benefits are now more complex, final salary link to
pre April 2014 benefits and CARE benefits from April 2014
Communication exercise with employers has started and will continue
Additional requirements introduced by new scheme
Co-operation is needed with monthly and year end reporting
Consultation launched in June 2013 Public Sector Pensions Act 2013 (which covers all
Public Sector Schemes, not just LGPS) includes greater emphasis on governance arrangements
Local Pension Board to be in place from April 2015 (to assist the Scheme Manager)
Pension Board to include 50% staff representation Members have to have a certain levels of knowledge
and competence
Regulations not yet finalised, although consultation exercises mean that their content is clear
Consultation and draft regulations have been issued incredibly late, given the immovable date of 1st April 2015 to have a Local Pension Board in place
Leicestershire Board will have three member representatives and three employer representatives
Elections of member representatives will take place at today’s meeting
One currency mandate terminated during year, but one remains in place
Asset allocation mandate terminated during year January 2014 Annual Strategy Meeting agreed to ask
Investment Subcommittee to consider the merits of investing in direct lending and emerging market debt
Portfolios for these assets implemented during 2014/15 and currently partially funded
Fund’s sources of return are relatively well diversified, but equities remain the dominant asset class
Underperformance of benchmark by 1.5% in 2013/14 (3.9% vs. 5.4%), due to the underperformance of a number of individual managers
So far, returns (relative to benchmark) have been much better in 2014/15. Some of last year’s underperformers have produced very good returns this year
Annual returns over 5 years are in-line with benchmark and well above long-term assumptions
Aspect Capital have produced a return of c.40% in the nine months
Millennium have earned £15m from currency management Differentiation within markets – UK equities +2%, NA equities
+18%, European equities – 3%, Emerging Market equities – 2%
Currency does matter – US$ + 7%, Euro – 6%, Yen – 8% (all relative to sterling). Fund has hedged euro and yen exposure, but remains fully exposed to US$.
Despite recent wobbles, Fund size up c.£150m in 9 months, despite £50m payment out in respect of Probation
Launched in late June 2013, responses required by late September
Initial response from the Government is to encourage collaboration between funds, rather than go ahead with forced mergers
Possibility of the formation of Collective Investment Vehicles into which individual funds could invest. Particular prominence given to encouragement of more use of the passive (indexed) management for listed assets
Leicestershire’s response was anti-forced merger but in favour of greater levels of collaboration between Funds, which is capable of producing savings
Current Government thinking appears muddled and there are a number of practical issues that might make Collective Investment Vehicles unworkable, or at least less-than-optimal
Mergers are NOT off the agenda, but appear to have slipped down the list of priorities for Central Government
Aggregation rules to be clarified Future governance structure has to be in place by April
2015 to satisfy Public Sector Pensions Act Member training ahead of new governance structure
will be a priority Investment management arrangements will be kept
under review, with the Investment Subcommittee remaining pro-active
Expectation that investment markets will be volatile
Any Questions?