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Bath & North East Somerset Council | |||
MEETING: |
AVON PENSION FUND COMMITTEE |
AGENDA | |
MEETING DATE: |
7 MARCH 2008 |
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TITLE: |
2008-11 SERVICE PLAN AND BUDGET | ||
WARD: |
`ALL' | ||
AN OPEN PUBLIC ITEM | |||
List of attachments to this report: Annex: 2008 - 2011 Service Plan and Budget (including 7 Appendices). | |||
1. THE ISSUE
1.1 The purpose of this report is to present to Committee the 3-Year Service Plan and Budget for the period 1 April 2008 to 31 March 2011.
1.2 The Service Plan (Annex) reports on progress made against 2007/08 planned actions and then details new development proposals that are planned to be undertaken during the next 3 financial years. These are designed to respond to known legislative changes and Committee initiatives as well as to take the Service forward by improving performance and overall quality of service to its stakeholders.
2 RECOMMENDATION
2.1 That the Committee approves the 3 Year Service Plan and Budget for 2008-11 for the Avon Pension Fund
3 FINANCIAL IMPLICATIONS
3.1 The administrative and management costs incurred by the Avon Pension Fund are recovered from the employing bodies through the employers' contribution rates.
3.2 The Local Government Pension Scheme (Management and Investment of Funds) Regulations 1998 provide that any costs, charges and expenses incurred administering a pension fund may be paid from it.
3.3 Financial implications are contained within the body of the Report.
4 BUDGET 2008/09
4.1 Inflation - The rate of inflation assumed in this budget is 2.5% on all costs including salaries.
4.2 Administration Costs - The budget for this has increased by £13,500 from last year and arises principally in the areas of
- Conference fees and the costs of travel to both training and conferences due to the requirements of the new scheme - £4,000.
- The external audit fee has increased by £7,000.
- The equipment budget has increased by £4,500 mostly attributable to an increase in the provision for installing broadband connections in the homes of staff under the 'Work Smart' initiative.
- There is an increase of £4,000 for the managed print service as the budget for this seems to have been underestimated last year.
These are offset by a reduction in the training budget of £7,000.
4.3 Communication Costs - This budget has decreased by £62,500. This is mostly attributable to there being a minimal budget of £4,000 for reprints of the more condensed new scheme guides (found to be more cost effectively available) that are to be produced in March 2008 for the new scheme along with other miscellaneous guides needed for the new scheme. The 2007/08 budget included a sum of £120,500 for the production of scheme guides that will not be required this year. This reduction in budget of £116,500 has partially been offset by an increase in the budget of £32,500 for newsletters, which will include two issues of Pension News whereas only one was issued last year, and the annual report. Additionally there will be an increase of £21,000 in expenditure on developing the website.
4.4 Information Systems - The budget for this has increased by £62,500. This is mostly attributable to the cost of an upgrade to the Axis system ("Altair") at a cost of £54,000, being £43,000 per annum for 3 years to amortise the capital outlay, in line with B&NES policy, and £11,000 per annum ongoing revenue costs. This is because the existing system is in need of a radical overhaul. There have also been increases in the cost of the existing Heywood licences.
4.5 Compliance Costs - The budget for this has increased by £9,000. This increase is largely attributable to an uplift in the budget for the triennial actuarial valuation as it was found that the budget for the previous valuation was inadequate to deal with the cost of the queries raised by employers, particularly when contribution rates are increasing.
4.6 Salaries - This budget has decreased by £50,500. This small reduction in costs has arisen under the new structure where there has been a reduction in the number of budgeted staff of 3.5 FTEs, being one less member of staff than was budgeted last year within the technical and communications team and three less within benefits and administration, partially offset by some minor changes in hours by part time staff. The saving in this area has been partly utilised by a new grading structure.
4.7 Central Allocated Costs - The budget for this has increased by £34,000. This is mostly due to assumed inflationary increases on last year's budgeted cost. However, during 2007/08 some further centrally charged costs, in particular additional IT, human resources and central finance charges, were made that had not been included in the original budget. These have been included in 08/09 with inflationary increases.
4.8 Members' Allowances - The budget for this has had an inflationary increase applied to it.
4.9 Independent Members' Costs - The budget for this has increased by £2,000. The budget for this has had a cost of living increase applied and additionally travel costs have been revised upwards because of the higher number of workshops.
4.10 Miscellaneous Recoveries / Income - The budget for this has reduced by £10,500. This is largely due to a reduction in the estimated level of recharge to the authority for the time of the Pensions and Projects Accountant, as she is currently acting Pension Fund Accountant. Along with the temporary assistant she will be fully engaged on year end work for at least the first quarter of the financial year. This is partially offset by the value of the recharges increasing as a result of inflation.
4.11 Global Custodian Fees - This budget has decreased by £42,000 due to the reduced costs of custody under the new structure.
4.12 Investment Manager Fees - This budget has reduced by £491,000. Manager fees are not easy to estimate as they require assumptions of growth and performance that are difficult to predict. However it is reasonable to assume that the budget will be lower than last year because of the delay in implementing the property investment.
4.13 Investment Expenses - The budget for this has increased by £21,000 due to the following factors:
- Performance measurement by WM has increased by £5,000 due to the increased number of managers in the new investment structure.
- New budgets for equipment, subsistence and professional subscriptions have been introduced at a total cost of £3,500.
- There has been an increase of £4,000 in the budgeted cost of course fees, reflecting the decision to pay for training for non-voting members.
- The training budget for staff has increased by £5,000 to reflect the fact that two new senior members of staff are to be recruited in the new financial year.
- The budget for committee workshops has increased by £2,500 due to higher venue costs.
- Total travel costs for members and staff has increased by £4,000 largely to reflect the cost of travel to training courses.
- The publications budget has been increased by £1,000 reflecting the need to keep abreast of changes in the legislative and investment environment
- The fee for the independent advisor has had an inflationary uplift of £1,000.
These increases have been offset by a reduction in the investment accounting budget of £3,000, as from an accountancy viewpoint the structure is simpler because of the greater use of pooled funds. In addition a further £3,000 will be saved because of the decision not to continue with a consultative forum.
5. SERVICE PLAN 2007/10
5.1 Full details of progress are included in Appendix 4 of the Service Plan. The Fund has made some important strides forward in the year in terms of increasing efficiency, making cost savings, reducing backlog, improving security and developing better client relationships.
Notable successes were:
- Coping with the uncertainty caused by government indecision and delays in clarifying regulation changes.
- Providing employer and employee access to their data electronically, including a 'Self- Service' facility via the web browser.
- Implement required changes for the New Scheme to come in on 1st April 2008.
- Members Annual Benefit Statements sent out on time.
- Member data quality vastly improved; faster and more accurate ongoing update of member data changes by electronic means (EDI);
- Closer liaison with employers including the establishment of working groups on the New Scheme. These will be continued for other important developments such as EDI.
Changing Times
There has been a strengthening in the Technical area with the appointment of a new post of Senior Technical Officer, whose major task this year has been to facilitate the introduction of the New Scheme. It is expected that the technical and managerial aspects of pensions will grow as the routine administration reduces in the wake of EDI and even smaller employers submitting changes by on-line forms.
6. RISK MANAGEMENT
Having identified and mitigated a number of risk areas in previous years, the Fund monitors and maintains the risk register on a quarterly basis.
7. CONSULTATION
The Budget and Service Plan has been circulated to staff and unions for consultation. A session was held to discuss the Service Plan and the Plan takes into account ideas raised by staff at the session.
Contact person |
Budget - Beth Ewins, Pension Fund Accountant (Tel: 01225 395259) Service Plan -- Tony Bartlett, Business Services Manager (Tel: 01225 477302) & Steve McMillan, Pensions Manager (Tel: 01225 395254) |
Background papers |
Various Accounting Records Committee Report 4 March 2005 and Service Plan 2005/08 Committee Report 28 March 2004 and Service Plan 2004/07 |