Meeting documents

Pension Fund Committee
Friday, 15 November 2002

PF151102-11

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ITEM PF11

PENSION FUND COMMITTEE – 15 NOVEMBER 2002

OXFORDSHIRE COUNTY COUNCIL PENSION FUND – CIPFA LOCAL AUTHORITY PENSION FUND INVESTMENT STATISTICS

Report by Director for Business Support & County Treasurer

Background

  1. The WM Company, who are an investment measurement service provider, compile the CIPFA statistics for Local Authority Pension Funds. The statistics cover 93 local authority pension funds out of a possible universe of 103 funds. The total market value of the funds measured was over £84.9 billion at 31 March 2002.

  2. The statistics cover investment returns for the 3, 5 and 10-year periods ended 31 March 2002. The statistics also cover asset distribution, showing the percentage weighting of funds in each major asset class e.g. UK equities, Overseas equities.

    3. Summary of Results

  3. Annex 1, Table 1 compares the Oxfordshire Pension Fund asset distribution with other local authority pension funds, the CAPS median pension fund and Oxfordshire’s new customised benchmark, which was agreed by the Pension Fund Committee following the asset liability study.

  4. The asset distribution of the Oxfordshire Pension Fund was similar to the WM Local Authority average universe at 31 March 2002. However, there were some minor differences – the Oxfordshire Fund had higher weightings in UK equities (51% v 48%) and overseas bonds (8% v 4%), but lower weightings in index linked (0% v 5%) and property (3% v 6%).

  5. Annex 1, Table 2 compares the Oxfordshire Pension Fund’s investment performance for 3, 5 and 10 year periods with the 93 local authority pension funds measured. The table also compares investment returns with the retail price index and average earnings.

  6. Annex 1, Table 3 provides the actuarial assumptions made at the last valuation at 31 March 2001. When setting his assumptions the Actuary is basing these over a very long-term time horizon but it is worth noting that the actual 3-year investment returns (Oxfordshire 0.9% and the local authority average of 2.0 %) fall well short of the Actuary’s longer term forecasts of 7.25% for equities and 4.9% for Government Bonds.

  7. Annex 2, Annex 3 and Annex 4 compare in more detail the investment performance of the Oxfordshire Fund with other English County Councils for the 3, 5 and 10 year periods. The figures show that the Oxfordshire Fund’s investment performance was below the average of other County Councils for all three periods. The three-year investment performance period was particularly disappointing and is one of the main reasons why the Pension Fund is considering going out to tender for new management arrangements.

    8. Financial and Staff Implications

  8. Both absolute and relative investment performance has a significant impact on the actuarial valuation of the Pension Fund. Any downward trend in future investment returns is likely to generate an increase in the employer contribution rates.

    9. Environmental Implications and Implications for People Living in Poverty

  9. There are none arising from this report.

    10. RECOMMENDATION

  10. The Committee is RECOMMENDED to receive the report.

CHRIS GRAY
Director for Business Support & County Treasurer

Background papers: CIPFA Local Authority Pension Fund Statistics.

Contract officer: Tony Wheeler, Loans & Investments Manager Tel: (01865) 815287

November 2002

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