Agenda item

A report of the Interim Director of Finance was presented to provide Members with the 2022/23 draft Annual Report and Accounts for the Teesside Pension Fund.

The terms of reference for the Teesside Pension Fund Committee required the Annual Report and Accounts to be considered by Members. A copy of the draft unaudited Report and Accounts for the year ended 31 March 2023 was attached to the submitted report.

The overall financial performance of the Fund for the year to 31 March 2023 was broadly neutral.  The Fund’s value rose slightly to £5.064 billion, an increase over the year of approximately £27 million.  Performance was muted but positive overall across equities, but property assets were negative, showing a -9% return over the year, largely because of revaluations following challenging economic conditions in some sectors.

The membership of the Fund continued to increase, with total membership at the year-end now standing at 80,338 an increase of 2,443 over last year. The number of active members had increased by 764 or 3.0% over the year and increased by 15.3% over the past four years.  The number of pensioners increased by 703 or 2.7% over the year and increased by 12.2% over the past four years.  The number of deferred members had increased by 976 or 3.7% over the year and increased by 16.5% over the past four years.

The actuary carried out the Fund’s latest triennial valuation, which looked at the Fund’s assets and liabilities as at 31 March 2022, during the year and the final report was published at the end of March 2023.  Headlines from the valuation were an increase of around £1 billion in assets from around £4 billion at the 31 March 2019 valuation to around £5 billion.  However, this was accompanied by an increase in the value of the Fund’s liabilities – primarily because the actuary increased their long-term inflation assumption and also became more pessimistic about the outlook for future investment returns.  Overall, the Fund’s funding level increased slightly from 115% to 116% but the estimated cost of providing future benefits increased as well, leading to contribution rate increases for some employers taking effect during the three year period starting 1 April 2023.

The Annual Report and Accounts presented were in draft form and, whilst the main numbers and outcomes were not expected to change in any significant way, changes might be needed as further review takes place. Some highlighted text from the previous year existed in the draft where further input was required.  In addition, the audit process for the Council’s accounts (which included the Pension Fund accounts) was not yet complete, and further changes might be required as a consequence.

Once finalised the Annual Report and Accounts would be published on the Pension Fund’s website.

Responding to a query regarding an exit payment to an Employer, the Head of the Pensions Governance and Investment explained that the Employer had exited the scheme as it no longer had any active members.  The Employer had been in the scheme for many years and had a surplus and that was the reason for the expenditure.

Members’ attention was drawn to the shortfall between the net spending of £68 million and the investment income of £58 million.  This shortfall was currently being met from the cash deposits held by the Fund.  The fund also sold equities to top up the cash balance.  The Fund Advisor confirmed that since the Fund was overweighted in equities it was acceptable to sell equities in order to get back to the weighting.

ORDERED that the information provided was received and noted.