Agenda item

The Committee received the audited Statement of Accounts for Buckinghamshire Pension Fund for the year ended 31^st March 2022. Councillor Tim Butcher, Deputy Cabinet Member for Accessible Housing and Resources, attended to present the item along with Mr David Skinner, Section 151 Officer and Ms Julie Edwards, Pensions and Investments Manager. Prior to discussion the hard work of the pension team and the audit team was recognised, and the Deputy Cabinet Member, S151 Officer and Committee Members thanked officers for their diligent work. Members also thanked the Deputy Cabinet Member, who was the Chairman of the Pension Fund Committee for the positive performance of the Pension fund in what had been a difficult financial landscape.

The Pension Fund Accounts and Net Assets Statement showed that over the year the value of the Pension Fund increased by £275m to £3.913bn. The audit work was completed by Grant Thornton who had not identified any adjustments to the financial statements which had an impact on the Pension Fund’s reported financial position. The formal sign off for the Pension Fund accounts would take place at the same time as the formal sign off for Buckinghamshire Council’s accounts which was anticipated to be during 2024.

Four recommendations were identified because of issues identified during the audit. The recommendations related to IT deficiencies, investment management expenses, employer body changes and errors identified from member data controls testing. Details of the issues and risks and recommendations were documented on pages 19 to 21 of the Audit Findings Report. The management response to the draft Audit Findings Report for the Buckinghamshire Pension Fund for the year ended 31st March 2022 was attached as Appendix 3.

The audit work identified four issues in respect of the valuation of Level 3 investments. The 31^{st of} March 2022 value in the accounts was overstated by £2.623m compared to the value on the 31^{st of} March 2022 capital statements. The capital statements were provided by the investment managers quarterly in arrears. The 31^{st of} March 2022 value in the accounts was based on the 31^{st of} December 2021 valuation adjusted for any payments to the fund or distributions received. There was always a difference, however the 31^{st of} March 2022 difference was greater than usual reflecting the impact of the war in Ukraine on asset valuations. Although a large monetary amount, the £2.623m represented 0.07% of the Pension Fund net asset value and management proposed not adjusting the Statement of Accounts since the amount was not material. The Committee agreed with management’s proposed treatment of not adjusting the Statement of Accounts to reflect the £2.623m overstatement. The external auditor was comfortable with the recommendation not to change the accounts for the £2.6m. 

An updated set of recommendations was tabled at the meeting, with an additional recommendation to read:

To approve the Buckinghamshire Pension Fund Statement of Accounts 2021/22 and delegate final sign off of the Statement of Accounts to the Chairman of Audit & Governance Committee and the S151 Officer subject to:

·       No material changes in the accounts

·       Final sign off by the external auditors of Buckinghamshire Council accounts 2021/22.

The Chairman explained that this recommendation was suggested as the Pension Fund Accounts could not formally be signed off until Buckinghamshire Council’s corresponding year’s Statement of Accounts was signed off. Approving this recommendation would avoid the need for the Committee to re-consider the Pension Fund Accounts at a future meeting, unless there were significant material changes which arose before the audit of the main accounts was completed.

Points raised during further discussion included:

·       That the normal procedure was for the Pension Fund Accounts to be presented to the Pension Fund Committee prior to the Audit and Governance Committee, however due to the timings of the meetings the decision was made to present it to this meeting prior to the Pension Fund Committee. Should the Pension Fund Committee be uncomfortable with any significant aspect of the accounts, they would be brought back to the Audit and Governance Committee to be re-considered.

·       It was confirmed that the Pension Fund had no Liability Driven Investments (LDIs). These were a financial instrument offered to pension funds to aid liabilities being covered. As of the latest triennial valuation the market value was sufficient to cover 104% of the liabilities and the long-term view had been taken not to purchase LDIs. Should the Pension Fund Committee proposed to use LDIs or a similar instrument, the Pension Fund Committee Members would take appropriate advice prior to any decision being taken.

·       The IT system was provided by a third party for the administration of the pension fund; however, this was subject to the same stringent cyber security controls of any Council software.

·       The Committee requested that the accounts be checked for consistency of wording. In certain areas of the report there was reference to the Buckinghamshire Pension Fund, whilst in others it was referenced to as the Pension Fund. It was also requested that reference the Buckinghamshire Fire and Rescue Service be updated to Buckinghamshire and Milton Keynes Fire and Rescue Service.

ACTION: Ms J Edwards / Mr D Skinner to undertake a check of the wording used throughout the accounts and update it to ensure it is consistent throughout.

·       Attention was drawn to the Management responses outlined in appendix 3, with Members querying areas such as user access rights, member data controls testing, and delays associated with the list of scheduled and admitted bodies. Access rights had been reviewed and appropriate controls were in place. The procedure for identifying new starters was outlined in the appendix and there were controls in place to check starters were genuine. Where a record already existed, further controls were in place to reconcile this.

·       Assurance was provided that there was commitment to working more closely with the external auditors, and officers and the external audit team were looking at how to improve processes and make them run as efficiently as they could to avoid any delays in providing documentation in the future.

·       The Committee was advised that the Pension Fund Committee decided on asset allocation following each triennial valuation, taking into consideration the advice of Mercers and the projected forward returns required to cover liabilities. The triennial valuation was a requirement of Government legislation, and Members raised that with issues such as the war in Ukraine and US financial institutions this may not allow sufficient time to react. Assurance was provided that the Pension Fund Committee monitored returns closely and advice was taken from Mercer.

·       Following a query being raised, it was confirmed that Milton Keynes Council was an active contributor to the pension fund, and they had a representative, currently the Leader of Milton Keynes Council as a Member of the Pension Fund Committee.

RESOLVED:

1.      That the audited Statement of Accounts for Buckinghamshire Pension Fund for the year ended 31^st March 2022 be noted.

2.      That management’s proposed treatment of areas identified by the auditor be approved.

3.      That the Buckinghamshire Pension Fund Statement of Accounts 2021/22 be approved and final sign off of the Statement of Accounts be delegated to the Chairman of Audit & Governance Committee and the S151 Officer subject to:

·       No material changes in the accounts

·       Final sign off by the external auditors of Buckinghamshire Council accounts 2021/22.

·       Wording within the Pension Fund Statement of Accounts being checked for consistency as noted above.