Meeting documents

Pension Fund Committee
Friday, 22 February 2002

PF220202-15

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ITEM PF15

PENSION FUND COMMITTEE – 22 FEBRUARY 2002

MANAGEMENT AND ADMINISTRATION BUDGET 2002/03

Report by Director for Business Support & County Treasurer

 

Introduction

  1. The District Auditor in his review of the Pension Fund 1995/96 recommended that members should agree an annual budget for management and administration charges to the Fund. The District Auditor observed that charges to the Fund were not the subject of a specific budget approved in advance and therefore were subject to a lesser degree of control than County Fund expenditure. Budgets have been prepared and agreed by the Committee since this recommendation was made. A budget for 2002/03 is included as Annex 1. Details of each budget element are given below together with an explanation of how they have been calculated.

    2. Fund Managers’ Fees

  2. Fees for Schroders and Deutsche are performance related. Fees are paid according to the level of performance above or below the benchmark, which is the CAPS median performance. The budget for 2002/03 is based on actual performance for the period 1 October 1999 to 30 September 2001 plus assumed benchmark performance to the 30 September 2002. Fee levels are based on prevailing market conditions as at 31 December 2001.

    3. CSL Recharge for Scheme Administration

  3. This recharge is determined by multiplying the number of scheme members, including pensioners, as at 30 September 2001 by a charge per member. The Charge for pensioners’ payroll is based on a similar process. The charge was fixed when the contract with CSL was renewed in 1998 and is increased in line with the retail price index. Some efficiency savings were achieved as part of the contract renewal in April 2001 and these are reflected in the budget. This contract will cease at the end of the budget year.

    4. Oxfordshire County Council Staff Recharges

  4. These recharges cover the employment of the Investment Manager and the Client Pensions Manager plus the equivalent of 2.5 support staff. It also includes the cost of senior financial management and supervision, internal audit, legal unit and committee administration services. The increase in the recharge to scheme administration for 2002/03 is mainly a result of the Committee’s decision last year to appoint an additional administrative support worker to assist the Client Pension Manager.

    5. Financial Adviser and Actuary Fees

  5. The Sub-Committee reviewed the Financial Adviser’s fee in November 2001. The Actuarial fees in the year 2002/03 are based on a normal level of activity for an inter-valuation year.

    6. Other Costs and Income

  6. Other investment management costs include the cost of investment software and subscriptions to NAPF(Voting), CAPS and Risk Reporting. These costs are more than offset by the income received from commission recapture.

  7. The commission recapture budget has been increased for 2002/03 because of the experience of the current year. A new income budget has been created for stock lending.

  8. Other scheme administration costs included printing and stationary costs, subscriptions to NAPF (membership) and LGMB, AXIS systems improvement work, member training and member/officer attendance at seminars.

  9. The contract with CSL expires on 31 March 2003.The Best Value Committee are considering the options for service provision from April 2003 onwards, which are either to bring the service back in-house without going out to tender or to tender for the service in April 2002 allowing for an in-house bid. A sum of £48,000 will be required to pay for the external cost of tendering and the Chairman will be asked to agree this sum on behalf of the Committee should this option be chosen. There may be some termination/transitional costs falling to the Council when the service is taken over from CSL. A token contingency sum of £20,000 is included in the 2002/03 budget to cover such eventuality and further reports on the cost of changeover will be made later in the year.

Financial and Staff Implications

  1. There are none other than mentioned above.

    2. Environmental Implications and Implications for People Living in Poverty

  2. There are none.

    3. RECOMMENDATION

  3. The Committee is RECOMMENDED to agree the Pension Fund Management and Administration Budget for 2002/2003.

 

CHRIS GRAY
Director for Business Support and County Treasurer

Background papers: nil

Contact officer: Barry Phillips, Tel No 01865 810805

January 2002

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