LGPS Annual Report 2013

The Board has now published the first ever Annual Report for the entire LGPS in England and Wales. It is a pilot report and is based on factual information on the 2008 LGPS collated from the Annual Reports and audited Financial Statements of the 89 LGPS funds in England and Wales to the 31 March 2013 and consolidated information provided by the Governments Actuary Department and State Street Investment Advisers (SSIA).

The pilot Scheme Annual Report comprises the following sections:

  • - An LGPS overview by the Chair of the Board
  • - Details of the LGPS data analyses
  • - Details about the underlying LGPS data sources and their limitations.

This information is available as formatted webpages via the following links:

The Board is developing plans for the 2014 Annual Report and the progress made and future plan is as follows:

2014 annual report – progress also available as a standalone pdf, 1 page, 120.0Kb

Please note the Board would welcome stakeholder feedback on the pilot LGPS annual report and the proposals for the 2014 LGPS Annual Report. This should be sent to Liam Robson.  Please note that any queries as regards to individual funds' annual reports and financial statements should be referred to the fund administering authority.

Individual LGPS funds 2013 annual reports

For the first time ever the individual underlying annual reports and audited financial statements of each individual LGPS pension fund for the financial year ending 31 March 2013 are now also available in one place via a publicly accessible central resource via the following link

2013 annual reports and audited financial statements of each LGPS pension fund also available as standalone pdfs

In addition the triennial valuation reports of individual LGPS funds in England & Wales as at the 31st March 2013 have been published on this website by the Board. This is the first time individual fund triennial valuation reports produced by the LGPS actuaries have been made available via a publicly accessible central resource. These are available via the following link:

2013 fund valuation reports also available as a standalone pdfs You can also use the menus to the right of this page to go direct to what you are looking for.

Analyses and observations

2013 Annual Report - analyses and observations

Membership

We have analysed scheme membership by active, deferred and pensioner members as at 31 March 2013 and for comparison 31 March 2012. The deferred category includes frozen refund members/undecided leavers. The total number of participating employers was 9,340.
Overall the membership of the LGPS grew increasing from 4.6m in 2012 to 4.8m in 2013. Membership of each category increased, with new active members and retiring pensioners increasing in both absolute and relative terms. The greatest increase was in the deferred membership category.

Governance

The level of detail and comprehensiveness of information on Pension Committee membership and meeting attendance varies between individual funds. Some funds only reported the end of year Committee membership, while others reported all appointments and resignations over the accounting period and attendance by each committee member. This makes it difficult to provide further analysis for the scheme as a whole. However, as an estimate of the resource dedicated to each funds stewardship and oversight, the numbers sitting on Pension Committees averaged 10 members. Governance compliance statements provide an assurance that all Pension Committees meet at least quarterly and were advised by actuaries and other professional advisors.

Investments

The investments assets of the LGPS are shown as reported in the fund accounts. The total directly invested in securities (fixed and index-linked), equities (UK and overseas), property (pooled and direct), plus pooled investments and other investment categories, have been analysed and charted. A separate chart shows assets that fall under ‘other’ as a category.

The Net Return on Investment has been calculated at 12.5% after fees and there is a fund by fund comparison of investment performance. SSIA’s investment performance league tables provide average returns by asset class set against relevant market indices.

Funding

The Shadow Advisory Board has produced a separate summary and key messages report of the 2013 triennial valuation results and have collated the 2010 triennial valuation results for comparison. The LGPS funding level is 79%. Please see the menu on the right of this page under valuations.

Income and Expenditure

Income and Expenditure has been aggregated on the Scheme account, is shown separately as income and outgoings. Each fund has different cash flow profiles and will plan their short and long term cash requirements and investment and funding strategies with advice from investment advisors and actuaries. Two areas under the spotlight during the DCLG Call for Evidence were investment and administration expenses. A review of the SF3 submissions compared with accounting disclosures, which would be expected to match exactly, showed that these figures differed considerably both in magnitude and direction. The Board is in discussion with DCLG and CIPFA about how to eliminate this discrepancy.

Statement of Account

The Statement of Account shows the aggregated Scheme account based on CIPFA fund accounting guidance. The Net Asset Statement shows the aggregated Scheme Net Asset Statement based on to CIPFA fund accounting guidance.

Data sources, treatment and limitations

Data sources

This 2013 LGPS Annual Report is based on each individual LGPS funds 2013 statutory annual reports and audited financial statements as at 31 March 2013.
This is the first time these all have been collated and published in one place. The intention is to do this every year and to build a complete and comparable set of annual reports for the scheme in its entirety as a whole and for every fund.
For the first time the annual accounts have been reviewed to draw out any information which is reported completely and consistently across all funds. At the highest level of financial reporting, the fund financial statements have been gathered together and totalled to produce an aggregated Scheme account and net assets statement.

The Statement of Accounts summarise the Scheme’s transactions for 2012-13 and its position at year end as at 31 March 2013. The data used comes from the individual LGPS funds' financial statements which are prepared in accordance with the Code of Practice on Local Authority Accounting in the United Kingdom (The Code). The Code is issued by the Chartered Institute of Public Finance and Accountancy, CIPFA and is based on International Financial Reporting Standards (IFRS), as amended for the UK public sector. The individual LGPS fund accounts have been prepared on an accruals basis in accordance with the Code, apart from transfer values which are accounted for on a cash basis in accordance with the Code.

The Net Assets Statement, similarly summarises the Scheme’s assets over 2012-13 and its position at year end as at 31 March 2013.

The individual LGPS fund accounts do not take account of obligations to pay pensions and benefits which fall due after the end of the financial year, nor do they take into account the actuarial present value of promised retirement benefits. IAS 26 gives administering authorities the option to disclose this information by appending an actuarial report, prepared for this purpose. If not part of the annual report, these statements have also been collated and are shown as attachments in the split records column.
These statements are as at the most recent Scheme valuation date.  In the case for 2013 annual reports, this is 31 March 2010.

Data limitations

It is important to note that the data contained in this 2013 LGPS Annual Report is based on the individual LGPS fund annual report and audited accounts. The SSAB is reliant on the general accuracy of the fund annual reports without independent verification. Whilst the data have been checked for reasonableness and consistency, a full independent audit of the aggregated data has not been completed.
The charts, analysis and general commentary are based on the face accounts, or broad ‘high-level’ figures. Analysis of account notes demonstrated variations in depth of reporting and subjective interpretation of some accounting classifications.
These findings in analysing the more detailed notes sections of the annual reports have been shared with CIPFA and DCLG in order to support their work in improving guidance on annual report and accounts and collection of SF3 data. The information may also be used by the shadow LGPS advisory board sub committees to help establish baseline datasets and to build on comparable metrics for assessing the financial health of each individual fund and the scheme as a whole.

Additional sources of data

The fund report and accounts produced by each fund are the primary source of data. Though comprehensive, there isn’t a requirement to provide or disclosure certain information nor in a prescribed standard. To supplement the annual report and accounts aggregated data, additional information available also includes the Government Actuaries Department (GAD) provided age and salary/pension profiles for the membership of the scheme. This gives approximate ages and salary/pensions in payment for the active and pensioner membership categories. All active membership figures are based on full time equivalent pay and pensioner data includes all pensions in payment including pensions paid to children, spouses and ill health retirees. It should be noted that this data also includes the Environment Agency funds and is missing data submissions from a small number of funds. However GAD is confident that this is not material in providing averages for the model scheme.

SSIA has provided an investment performance report that gives an asset and performance breakdown in the form of a league table. This does not include all funds in the LGPS England and Wales, and also includes six Scotland LGPS funds.

2014 Annual Report – progress

The production of an annual report for the LGPS has been one of the top priorities of the LGPS Shadow LGPS Advisory Board. The work to do this was divided into a number of stages and phases

Stage 1 - Establish a factual national baseline for the old LGPS as at 31 March 2013 by

- collating all LGPS fund 2013 annual reports into one place and publish the reports on the Board website. Completed.

- aggregating the fund source data and publish a set of accounts for LGPS as a whole on the Board website. Completed.

- gathering other sources of scheme and fund data (from GAD and SSIA) and incorporate this into the pilot annual report and publish on the Board website. Completed.

- promoting the 2013 LGPS annual report as a pilot for the new 2014 LGPS annual report and to seek stakeholder comment. Current position November 2014.

Stage 2 – Develop a matrix of quantitative and qualitative measures and financial and non-financial indicators to report on the health of the LGPS.

The LGPS Advisory Board value for money and collaboration sub-committees have developed a list of possible financial indicators as follows:

Funding level calculated at last triennial valuation on consistent assumptions, by comparison with:

- The proportion of the fund's deficit (calculated on the above consistent assumptions) which is being paid off annually.

- Historic net investment returns (over 1, 3 and 5 year period) as compared with the fund's required future investment returns.

- Historic net investment returns (over 1, 3 and 5 year period) as compared with other LGPS funds (median measurement).

- A deficit spread period (calculated using figures under indicator 1b) which is reducing each triennial valuation.

- Net inward cashflows as a proportion of fund assets.

- Investments costs reported on a consistent and transparent basis.

- Administration costs reported on a consistent and transparent basis (within an agreed range as set by reference to CIPFA benchmark).

- A measure of fund liabilities considering factors that cause local variation in that fund's liability profile.

The LGPS Board annual report working group is also developing some non financial indicators that will cover areas such as governance and management, staffing and resources, benefits administration and quality of member services, communications and transparency, and external review and assurance.

Stage 3 – Describe the LGPS annual performance reporting framework and pilot LGPS ‘health’ indicators in 2014 then populate with data, and publish in 2015

The aim of LGPS Annual Report and LGPS ‘health’ indicators is to provide a way to annually assess and benchmark the overall “health” of the new 2014 LGPS relative to other large public or private pension schemes, and the relative “health” of each LGPS fund compared to other LGPS funds. The Annual Report will also provide a bona fide single information source on the “health” of the LGPS for its members, the media and other stakeholders.

The LGPS performance reporting framework and possible matrix of the draft financial and non-financial indicators will be published later in 2014 and will be used to further analyse the 2013 annual report data in areas where it is considered reliable information is currently available.

A final matrix of LGPS health indicators (populated with improved and comparative data has been collected on a consistent and transparent basis) will be published in the 2014 LGPS annual report in 2015. By 2020 or preferably earlier it is the aim the LGPS would be winning UK, EU and global awards for its excellence.