Agenda item

To be presented by Grant Thornton and Julie Edwards, Pensions and Investments Manager, Buckinghamshire Council.

Grant Thornton presented the audited Statement of Accounts for Buckinghamshire Pension Fund for the year ended 31 March 2022 to the Committee.  

The audited Statement of Accounts for the Buckinghamshire Pension Fund for the year ended 31 March 2022 was attached as Appendix 1. The Pension Fund Accounts and Net Assets Statement showed that in the year to 31 March 2022 the value of the Pension Fund increased by £275m to £3.913bn. This was the net result of the contributions made (£169m) including transfers in from other pension schemes, employers’ and employees’ contributions; payments out £144m including pensions, commutations, lump sum retirement benefit and death benefits; management expenses £17m plus net returns on investments (£268m).

The draft Audit Findings Report for the Buckinghamshire Pension Fund for the year ended 31 March 2022 was attached as Appendix 2. The audit work was completed remotely by Grant Thornton. Grant Thornton’s work was substantially complete and they had not identified any adjustments to the financial statements that 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. On 10 May 2023, the Audit and Governance Committee approved the Buckinghamshire Pension Fund Statement of Accounts 2021/22 and delegated final sign off of the Statement of Accounts to the Chairman of Audit and 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.
• And, subject to the Pension Fund Committee endorsing management’s proposed treatment of not adjusting the Statement of Accounts to reflect the £2.623m overstatement.

The Committee noted the four recommendations which had been identified because of issues identified during the audit. 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 31 March 2022 was attached as Appendix 3.

The investment management expenses were recognised in the Statement of Accounts by journalling the total investment management expenses for each portfolio less the investment management expenses recognised in the Statement of Accounts from the custodian investment accounting information. A formula had been overwritten with a hard coded amount which resulted in an error in the investment management fees of £452k.

The audit work identified an issue in respect of the valuation of Level 3 investments. The 31 March 2022 value in the accounts was overstated by £2.623m compared to the value in the 31 March 2022 capital statements. The capital statements were provided by the investment managers quarterly in arrears. The 31 March value in the accounts was based on the previous 31 December valuation adjusted for any payments to the fund or distributions received. There would always be a difference, but the 31 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 therefore management had proposed not adjusting the Statement of Accounts since the amount was not material. The Audit and Governance Committee agreed to approve management’s proposed treatment of not adjusting the Statement of Accounts to reflect the £2.623m overstatement, subject to the Pension Fund Committee endorsing this approach. 

A member of the Committee questioned why the 31 March 2022 value in the accounts was based on the 31 December 2021 valuation and asked whether the valuation dates could be aligned in the future to ensure more accuracy.  In response, Grant Thornton explained that this was unavoidable as the Pension Fund’s accounts need to be prepared before the end of year figures become available. This was the same for all Pension Funds.  The Statement of Accounts would only be adjusted if the difference in the amount was deemed to be material.

Having considered the issue of the £2.623m overstatement, the Committee agreed to endorse management’s proposed approach of not adjusting the Statement of Accounts.

Grant Thornton confirmed that the 2021/22 Statement of Accounts had been updated to reflect the changes made to the 2020/21 Statement of Accounts.

Having reviewed the audited Statement of Accounts for Buckinghamshire Pension Fund for the year ended 31 March 2022, the Committee: -

RESOLVED:

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