By Katrina Ffiske
After many years of struggling, Wiltshire Pension Fund is doing extremely well.
Could this really be true? New Valley News wanted to find out more, so I met Cllr Tony Deane, Pension Committee Chairman at Wiltshire Council and councillor for the Tisbury division. I asked him who actually pays into the Wiltshire Pension Fund and how it was managed.
“About 186 member organisations pay into the scheme, on behalf of their employees. Wiltshire Council and Swindon are the largest,” Cllr Deane said. “Each person will be paid, on average, £5,200 a year, which is double the state pension.”
To guarantee each person gets paid, money has to be invested: who makes the financial decisions?
“The team organising the financing is overseen by the Chief Finance Officer of Wiltshire Council, and during the past eight years, they have been committed to taking good financial advice. The good news is that the funds have made steady progress, and from being 60% funded, the pension fund is now 99.6% funded. The portfolios we have are a mixture of high risk and low risk.”
Isn’t it dangerous putting people’s money into high risk investments?
“We need to take risks to increase the fund. The pension pot is not big enough meet the outgoings, so we have to have high risk funds that can reap more benefit. Investment returns are an important factor in being able to keep employer contributions stable.”
What costs are there to running a pension fund?
“There are administration costs. The Wiltshire Pension Team employs 35 people. Some are making financial decisions, many are doing day-to-day administration, paying out the pensions, dealing with individuals and day-to-day questions. The financial advisers used by the council charge fees and some take a percentage of the money they make.
“To save money on these fees, the Government recently set up pools. All money from the pension funds is transferred into nine pools. This meant the financial advisers investment managers’ fee rates were reduced to a more competitive level. Our Wiltshire Council Pension Fund Pool is called Brunel, based in Bristol.”
Do you follow what companies the shares Invested in?
“It’s too complicated to follow all the funds but we are proud to say that, in January, we moved more than £500 million of assets into Brunel’s low carbon passive equities portfolio. It is nice to know we are investing in a world worth living in, while protecting future investment returns.”
Cllr Simon Jacobs, Cabinet Member for Finance and Procurement said: “We have a statutory responsibility to provide the Local Government Pension Scheme to our staff, and the scheme design, is decided at a national level. Our pension funding position is not affected by the recent staffing changes and latest estimates suggest the council’s funding position has significantly improved over recent years. There is further detail on their website on the fund which administers the scheme on our behalf.”
Wiltshire Pension Fund is administered by Wiltshire Council for local authorities within Wiltshire and other local government associated organisations. It meets the cost of pension benefits due to current and former employees of the organisations. The membership at March 31, 2019 included 22,541 active members, 17,222 pensioners and 37,417 deferred members.
Funding Position at the last formal valuation
The most recent actuarial valuation was as at March 31, 2016. This valuation revealed the Fund’s assets, valued at £1,831 million, were sufficient to meet 82% of the liabilities (i.e. the present value of promised retirement benefits) accrued up to that date. The resulting deficit at the 2016 valuation was £415 million. The March 31, 2019, actuarial valuation was due to be signed off by the end of March 2020, and shows a marked improvement in the funding level. Assets as at December 31, 2019, were valued at £2,745 million.
The Wiltshire Pension Fund managers should be congratulated: nice to know that all those members of the 186 organisations can sleep well knowing their money is being looked after and relatively safe, compared with some other pension funds.