Issue - meetings

That the report be noted.

The Corporate Finance Manager introduced the report on the draft Clwyd Pension Fund Statement of Accounts 2017/18 which, following a change in regulations, were now separated from the Council’s Statement of Accounts.  As previously agreed by the Committee and the Council, approval of the Pension Fund accounts had been delegated to the Clwyd Pension Fund Committee as the more appropriate body.

Peter Worth, who had prepared the accounts, confirmed that the draft accounts had been presented to the Clwyd Pension Fund Committee in June and that the presentation slides he had used to explain the accounts to that Committee could be shared with Audit Committee Members if they so wished.  He provided information on his professional background and set out the key changes to both streamline the accounts and include additional disclosures to ensure compliance with the financial reporting framework.  The salient points were that:

1.    Investment management fees had increased by £6m reflecting:

o   An increase in the fund-based fees to the Fund’s core managers mirroring the increase in the overall Fund value;

o   additional fees for new investments in private equity and infrastructure;

o   additional costs being reported by fund managers reflecting regulatory changes resulting in greater transparency on fee charges.

It was noted that the fees were at the higher end of the range.  This reflected the investment portfolio of the Fund and had been reported to the Clwyd Pension Fund Committee.

2.    Net investment return had declined from £318m in 2015/16 to £87m in 2016/17. This reflected a downturn in global equity markets.

3.    The estimated funding position at the end of March 2018 - based on IAS19 - indicated a significant improvement from 2016.

Sally Ellis referred to the explanation on the increase in management expenses and asked how this was being monitored.  Peter Worth said that this was due to the number of small tranches of investments made throughout the year and that a balanced view was needed to consider the links between cost of management fees for those investments, the rates of return and risk management.  He went on to refer to work with the Local Government Association to extend reporting of those links as part of the annual report.

The Chief Executive advised that the Clwyd Pension Fund Committee had a strong understanding of the issue and provided robust challenge to satisfy itself on management fees and value for money.  He said that the Fund differed to others in respect of its strategy of balancing risk and performing well.  His suggestion that the Audit Committee could receive a future report and presentation to give assurance on governance arrangements of the Fund, was welcomed by Sally Ellis.

RESOLVED:

That the report be noted.