The Strathclyde Pension Fund Committee held its regular quarterly meeting today against the background of the FTSE All Share having fallen by 22.6% in the period under review (from 1 July to 31 October), largely driven by the fall-out of the banking crisis and over fears that the UK could be entering a period of economic recession.
Total asset value for the main Fund was £7,723m at end October. Its funding position had reduced from an estimated 85% at the end of June 2008 to 80% at the end of September 2008. The No.3 Fund funding position had reduced from 86% to 82% (and 71% on a swaps basis) over the same period.
Since 31 October we have seen some significant steps towards a systematic resolution of the banking crisis. The UK government’s rescue plan, involving a combination of increased liquidity provision, government guarantee of short-term borrowing and re-capitalisation through public sector investment, has been adopted to some degree or other by several other countries.
The Fund is maintaining the approach it has followed throughout the crisis: it is keeping the situation under close review but maintaining its long-term strategy. This approach has just won the European Public Sector Institutional Investor of the Year award at the 2008 Funds Europe awards on 4 December.
A year after agreeing to become signatories of the UN Principles for responsible Investment, the Fund has completed a review of its adherence to the principles. The review provided substantial reassurance of the reality, variety and extent of responsible investment activity by the Fund’s investment managers, together with a number of actions for improvement.
Administrative performance for the first half of 2008/09 is extremely strong. All targets have been achieved and the Member Records and Liabilities team has made huge progress achieving reductions in the data errors for all major employers. In combination the total error rate is 3.8%. This compares with 23% at the same point in 2007 and 21% in 2006. A complete data download was submitted to the actuary at end August in line with the timetable for the 2008 actuarial valuation.
Draft valuation results confirm that data improvement has again been a very positive factor, effectively adding £435m to the funding position. Provisional results of the valuation indicate a funding level of around 95% (assets as a % of liabilities) as at 31 March 2008.
Subject to consultation on a revised draft Funding Strategy Statement the common employer contribution rates previously advised to employers as planning assumptions will be implemented. These are:
§ 17.3% (of pensionable payroll) from 1st April 2009;
§ 18.2% (of pensionable payroll) from 1st April 2010; and
§ 19.3% (of pensionable payroll) from 1st April 2011.
Two new Admitted Bodies (new employers) were given permission to participate in the Fund: Clyde Gateway Urban Regeneration Company and TATA Consultancy Services (TCS).
To view the agenda, reports and minutes of the meeting follow this link.