The full agenda, reports and minutes of today’s Strathclyde Pension Fund Committee provide more information on topics that include the following.
In the current economic climate, with pressures to cut costs, public sector pension provision continues to be the subject of great political and media interest. Audit Scotland have advised that they are going to carry out a study to evaluate the current position of, and current developments affecting, the six main public sector pension schemes in Scotland. The study is a follow up to the 2006 report Public Sector Pension Schemes in Scotland and aims, in particular, to assess the short, medium and long-term spending implication of the main pension schemes for the Scottish budget.
The Fund produced a total annual return of 36.3% for 2009/2010. This compares favourably to the average UK pension fund, as measured by the WM All Funds Universe, returning 30.1 % and the average local authority pension fund, as measured by the WM Local Authority Universe, returning 35.1%.
The Fund has achieved a 10-year annualised return of 4.0%. This is below (-2.1%) the Actuary’s current assumed return of 6.1% per annum and illustrates that, despite the recovery in financial markets, the turmoil caused by the credit crunch has still had a negative impact on the long term performance of the Fund.
As at 31 March 2010 (when the Fund’s total asset value was £10,307m) the Fund was estimated to be 89.8% funded. Both the funding position and employer contribution rates will next be fully reviewed during the formal actuarial valuation as at 31st March 2011 with any revised rates effective from 1st April 2012. The Fund’s total asset value had fallen slightly to £10,290m by 30 April 2010.
Following the three-yearly review of the Fund’s investment strategy and structure, the tender process for the three proposed property mandates (whose overall target portfolio size remains 12% of the Fund) has resulted in 18 candidates tendering.
The impact on cash flow to the Fund is being monitored closely, as a large increase in retirals is anticipated over the next three years.
As a means to addressing and improving its performance in respect of its Responsible Investment policy the Fund is progressing consideration of appointing a third party responsible investment engagement overlay service and is investigating membership of one or more industry forums or industry initiatives.
Further progress on missing records was made this quarter by a number of employers. At 0.49%, the total exceptions figure for the prior year dataset is lower than at any time previously reported. Queries from employers’ 2009 year-end payroll returns have reduced from 1.88% to 1.33% over the quarter. Taking the two datasets together the total exception rate at year was 1.82% meaning that the year end target of <2.0% was achieved.
Two new employers were given permission to participate in the Fund as admitted bodies: Cernach Housing Association and Queens Cross Housing Association.
Three employers have sought indicative cessation calculations or closed scheme contribution rates in the last quarter: Castlemilk Stress Centre, Cycling Scotland and New Lanark Conservation Trust.