Agenda item

Clwyd Pension Fund Accounts 2017/18.

To provide Committee Members with the Clwyd Pension Fund Accounts 2017/18 for consideration and changes to the approval process.


That Members noted the delegation of the approval of the accounts and commented on the draft unaudited Pension Fund accounts.



Mr Ferguson, the Corporate Finance Manager, introduced this item by explaining his role having legal responsibility for the administration of finance and for the submission of accounts on time.  He explained a change in legislation resulting in the Pension Fund accounts now being separate to the Council's main accounts.  As a result of this, the Pension Fund Committee was now responsible for the formal agreement of their own accounts, whereas in the past this was a responsibility of Council as they were part of the Council's accounts.


The Chairman then passed this item over to Mr Worth, an independent consultant appointed to prepare the Fund accounts for the current year until there is a permanent replacement to a vacant Finance Team post. Mr Worth gave a brief introduction on his experience and current role in Clwyd Pension Fund and clarified that the draft annual accounts are to be submitted to the Wales Audit Office (WAO) by 15th June 2018.  WAO will commence the audit in June/July 2018.


The Chairman added that it is important to look into the style, format and quality of the accounts.


Mr Worth outlined that the accounts are to be prepared in line with the CIPFA Code of Practice (“The Code”) where each year a new code is issued reflecting the changes to the Accounting Standards. This is the first year that the accounts are being separated out from the Council accounts. Wales are now following the model adopted by Scotland three years ago i.e. LGPS accounts are no longer included in the administering authority’s separate statement of accounts but continue to be reported in the Annual Report by 1 December 2018 at the latest. The audited accounts will be included in the Fund’s Annual Report and submitted for approval by the Committee on 5th September 2018.


Mr Worth presented the accounts and emphasised certain elements to the Committee for background knowledge. The key points were:


  • From slide 4, the normal contributions are the contributions that the employer makes for employees during the year


  • Deficit contributions are to remove the funding deficit which is below 100% funded. In the 2016/17 accounts, the deficit contributions were c£28 million whereas in 2017/18 this figure was c£52 million. This reflects that three employers paid their deficit contributions upfront. This is an advantage because it’s a discounted figure (using the actuary’s discount rate) since the employer has paid three years of contributions in the first year.


  • Augmentation contributions are the additional contributions such as for non-ill health early retirement i.e. the unreduced benefits before normal retirement age.


  • A key figure is the change in market value of investments since this dictates the movement in market value which reconciles the opening and closing assets.


  • Management expenses comprise administration costs, oversight and governance costs and investment management expenses. Some investment management costs are billed directly to the Fund but most of those costs are netted off the reported asset values.


Councillor Llewelyn Jones queried the difference between the net investment assets shown in the draft accounts and the total market value reported by JLT in their report as at 31 March 2018. Mrs Fielder stated that the valuation that JLT based the figures on was at a date prior to final close of the accounts. Therefore, some difference would be expected due to updated private market valuations and the fact that the Fund accounts include debtors and creditors.  The Fund accounts are the final figures (once audited).


Mr Worth described the various notes on the accounts which are important to focus on, for example;

  • Note 13 shows the investment assets and includes investment vehicles
  • Notes 16-17 set out the instruments the Fund has for trading and the financial risks which impact them.


Outlined on page 29 of the Fund accounts is the actuarial present value under the IAS26 exercise. This is prepared under a different accounting standard as IAS26 and IAS19 are accounting standards which provide normalised valuation for pension liabilities across employers.

The Actuary’s statement shows the liabilities at the last valuation e.g. a funding level of 76% in 2016 whereas the latest estimate is 89%.

Councillor Bateman wanted clarification for the change from c£318 million in 2016/17 down to c£87 million in 2017/18 in the net return on investments on page 1 of the Fund accounts.

Mr Worth clarified that the change in market value reflected the relative differences in returns over 2016/17 versus 2017/18 from global markets.

Mr Edwards from the WAO added that WAO will now audit the final accounts with a view to ensuring the proposed accounts represent a true and fair view, and they comply with the CIPFA requirements.  They will then prepare their formal opinion will be reported back with the final accounts to the Committee for approval on 5th September 2018.


That Members noted the delegation of the approval of the accounts and commented on the draft unaudited Pension Fund accounts.


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