Agenda item

A Teesside Pension Board Annual Report 2024-2025 was presented. The report was the ninth Annual Report of the Board, for the period 1 April 2024 to 31 March 2025.

Over the 11 months to the end of February 2025, global equity market performance had been volatile but positive overall. The US in particular had performed well, although as in the previous year US stock market growth was significantly dependant on a small range of technology stocks which had benefited from investor interest in artificial intelligence and its potential current and future applications. Market concentration in the US had continued to be a factor during the period, with the largest five stocks in the S&P 500 (Apple, Nvidia, Microsoft, Amazon and Alphabet) making up nearly a quarter of its total market capitalisation. Returns in Japan were negative over the period but were positive in the UK and Europe. The overall value of the Fund’s assets had improved and had been on course to remain over £5 billion. Interest rates were reduced three times by the Bank of England over the year from 1 April 2024 but remained at 4.5%, similar to rates seen before the 2007/2008 global financial crisis. This had influenced market views on long-term return rates which in turn reduced the value the actuary places on the Fund’s liabilities

Although the Board had no role in deciding how the Fund was invested, it did have a role in overseeing the Committee’s actions in this respect. As the global economy continued its progress to a more challenging, volatile and less benign period, the Fund’s investment approach was likely to face challenges and the Board’s oversight role would remain important during the coming months and years. Over the course of 2024/25 planned meetings were held although one was inquorate. The Board had been able to continue in its role and carry out its responsibilities to ensure effective governance. As well as continuing to receive minutes and verbal updates from the Pension Fund Committee, over the course of the year the Board had considered papers or had oral reports covering the following areas:

·        The Fund’s annual Business Plan

·        The Board’s own Annual Report

·        The Draft Annual Report for the Fund (containing the Fund’s accounts).

·        Board membership and training

·        Administration reports from XPS – these included performance against service level agreement targets, information on general administration activity, statistics on appeals cases and details of current and future issues impacting, or potentially impacting, on the administration of the Fund.

·        Pensions Regulator General Code of Practice Compliance Assessment and Review

·        Updates on work programme items which included; Internal controls and managing risks, Pension Dashboards, Pension Board conflicts of interest and Pension Board Statutory Responsibilities.

The Teesside Pension Board Annual Report also included details on the Board Membership and Meeting Attendance.

A Member praised the excellent performance of the fund but raised concerns about communication with Fund members, highlighting some recent issues experienced by his constituents.  Members were informed that the Fund’s administrator had an Engagement Strategy in place and that communication was delivered through various channels including annual benefits statements, surveys, FAQs and more.

A Member raised a query regarding the assumptions used by the Fund Actuary during the triennial valuation, as well as discussions held with S151 Officers.  It was explained that while S151 Officers were focused on achieving stability for local authority budgets, the actuary was taking a more prudent approach concerning contribution levels.  Although there was a delicate balance between these positions, the matter would be revisited during the next revaluation. Further information was expected from both Hymans Robertson and the S151 Officers.

AGREED that the information provided be noted.