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Bath & North East Somerset Council | |||
MEETING: |
AVON PENSION FUND COMMITTEE |
AGENDA | |
MEETING DATE: |
6 MARCH 2009 |
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TITLE: |
2009-12 SERVICE PLAN AND BUDGET | ||
WARD: |
`ALL' | ||
AN OPEN PUBLIC ITEM | |||
List of attachments to this report: Annex: 2009 - 2012 Service Plan and Budget (including 5 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 2009 to 31 March 2012
1.2 The Service Plan (Annex) reports on progress made against 2008/09 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. The Budget is included as Appendix 4 of The Service Plan.
2 RECOMMENDATION
2.1 That the Committee approves the 3 Year Service Plan and Budget for 2009-12 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 2009/10
4.1 Inflation: the rate of inflation assumed in this budget is 2.5% on all costs including salaries.
4.2 In addition to inflation the budget, excluding fund management fees, has increased by £220,000. This is a result of the increased size and complexity of the fund. The increase is as follows:-
4.3 Administration Costs - budget has a net increase of £24,000 from last year's original budget principally due to:-
- External Audit Fees. An increase in the external audit fees budget for 2008/09 was approved by the Committee in December 2008. The increase is a result of the new Audit Commission regime enhancing the audits of local government pension schemes and separating them from their administering body's audits. Budget Increased by £36,000.
- Actuarial Fees. A change in the accounting treatment of the Triennial Valuation in accordance with the recommendation of the Audit Commission will result in a one off reduction in Actuarial Fees in 2009/10 of £31,000. However this has been offset by an increase in the volume of ongoing actuarial work and extra costs of work commissioned ahead of the 2010 valuation of £20,000. Budget reduced by £11,000.
4.4 Communication Costs - budget has a net decrease of £19,000 from last year's original budget principally due to:-
- Web Site Development work having been completed. Budget reduced by £21,000.
4.5 Information Systems - budget has a net increase of £4,000 principally due to:-
- Hardware requirements for Altair pension's administration system, costing a total of £51,000 amortised over three years. Budget increased by £17,000.
- Greater discount on cost of Altair than previously budgeted saving £42,500 amortised over three years. Budget reduced by £14,000.
4.6 Compliance Costs - The budget has increased by £16,000 principally due to:-
- Increased use of Actuarial services as a result of the increased number of options available to pensioners. Budget increased by £11,000.
- Increased use of Actuarial services as a result of changes in the ill health regulations, expected to result in a higher number of Internal Dispute Resolution Procedure cases. Budget increased by £5000.
4.7 Salaries - The budget has increased by £57,000 principally due to:-
- The employment of an additional part time Assistant Investments Manager and some increases in grades and increments. Budget increased by £57,000.
4.8 Investment Expenses - The budget has increased by £80,000 principally due to:-
- Increased use of consultants for review of investment strategy and tactical asset allocation. Budget increased by £49,000.
- External legal services for investment and actuarial advice including investment management contracts and adhoc advice as required. Budget increased by £21,000.
- Contingency for recruitment costs, only to be used if required for the recruitment of Investments staff. New budget of £10,000.
4.9 Independent Members' Costs - The budget has increased by £20,000 entirely due to:-
- Contingency for reappointment costs, only to be used if required for the reappointment of Independent Members.
4.10 Global Custodian Fees - The budget has increased by £15,000 entirely due to:-
- Additional costs of the Property Portfolios.
4.11 Central Allocated Costs - The budget has increased by £10,000 entirely due to:-
- Contingency for additional charge from IT based on the amount of data held. An effort is being made to reduce the amount of data held in order to avoid the charge.
4.12 Miscellaneous Recoveries / Income - The income budget has reduced by £16,000 entirely due to:-
- Removal from the budget of the recharge of half the cost of the Pensions and Projects Accountant to B&NES Council. This recharge has never been made and in view of the increased amount of accounting work required in the Pension Fund, it is unlikely that it will be made.
4.13 Investment Manager Fees - are excluded from the figures above because they are based on market values and also include an element of performance related fees. Higher fees are largely a reflection of a positive investment performance whilst lower fees reflect a reduction in the investment performance. In recognition of the investment outlook the budget for Investment manager fees in 2009/10 has been reduced by £1.71m from an original budget in 2008/09 of £6.84m. Any expenditure over budget will be as a result of a better than expected investment performance.
5. SERVICE PLAN 2009/12
5.1 Full details of progress of the 2008/11 plan are included in Appendix 3 of the Service Plan. This year the same Appendix includes the new medium-term targets for the 2009/10 year and those from 2008/09 which were not fully completed are carried forward. 10 out of the 12 targets for 2008/09 (83%) were fully completed and the other 2 are carried over.
6. RISK MANAGEMENT
6.1 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
7.1 The Budget and Service Plan has been circulated to staff for comment.
Contact persons |
Budget - Martin Phillips, Finance & Systems Manager (Pensions) (Tel: 01225 395259) Service Plan -- Tony Bartlett, Head of Business, Finance and Pensions (Tel: 01225 477302) & Steve McMillan, Pensions Manager (Tel: 01225 395254) |
Background papers |
Various Accounting Records Committee Report 19 December 2008 Audit Plan 2008/09 Committee Report 7 March 2008 and Service Plan 2009/11 Committee Report 2 March 2007 and Service Plan 2008/10 |