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LPFA Fund Member Forum 2012

LPFA Fund Member Forum 2012. Welcome and Introduction. LPFA Chairman Anthony Mayer. Review of the year. LPFA Chief Executive Mike Taylor. Organisational Excellence - To enhance core administration competency whilst ensuring competitive levels of efficiency

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LPFA Fund Member Forum 2012

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  1. LPFA Fund Member Forum 2012

  2. Welcome and Introduction LPFA Chairman Anthony Mayer

  3. Review of the year LPFA Chief Executive Mike Taylor

  4. Organisational Excellence - To enhance core administration competency whilst ensuringcompetitive levels of efficiency Valuing Our People - To enhance our workforce capability and align incentives and workingpractices to the needs of the business Investment Returns - To actively manage investments to meet our liabilities – throughcontinual monitoring of investment performance and assessment of risks Corporate Social Responsibility - To manage LPFA’s investment and business processes to produce anoverall positive impact on stakeholders and society. Market Focused - To effectively communicate with the marketplace to ensure delivery of value to customers and positive return to the pension fund. Board Strategy –Key themes

  5. Agenda • A busy year in the press • A New Local Government Pension Scheme • Proposals for a Pan-London Fund • Investing in infrastructure • Improving our customer care • Improving service standards • New web site and social media strategy • Investment highlights • Administration • High Performance Administration • Controlling Costs • New business • New staff • What is on the horizon? • Conclusions

  6. Lord Hutton’s proposals Implemented from 1 April 2014 Career average CPI revaluation 1/49th accrual Retirement age link to State Retirement Age New 50-50 scheme New Local Government Pension Scheme

  7. Complexity • Pre 2008 membership • Final salary 1/80th plus lump sum • Post 2008, pre 2015 membership • Final salary 1/60th • Post 2014 membership • CARE, 1/49th accrual rate revalued by CPI

  8. Changes accepted by Trade Unions and Employers Still under discussion Final regulations Improving scheme governance Value for money Reducing complexity New Local Government Pension Scheme

  9. CPI continues to be less than RPI – around 0.5% per annum Judicial review by Trades Unions failed Likely changes to RPI components to bring closer into line July 2012 CPI 2.6%; RPI 3.2% Impact of inflation indexation change – RPI to CPI

  10. Proposal to merge and consolidate 34 schemes Better service to members More cost effective Better investment returns Creation of London infrastructure fund A Pan London Fund

  11. Infrastructure “Pension funds have not been investing the savings of British people in British infrastructure.” “We are hopefully going to change that.” George Osborne:Autumn statement: November 2011 LPFA Need for inflation linked, stable, long term returns Working with NAPF and large private sector funds

  12. Customer Care – Improving Service Standards • Reducing the time to undertake tasks • Better data security • New website • www.lpfa.org.uk • www.yourpension.org.uk • Self service • Social media strategy • YouTube • Twitter • LinkedIn • Facebook

  13. Volatile economic background Euro crisis Quantitative easing Global slowdown Investment principles and beliefs Long term responsible investor Fund grew to £4.2 billion Performance mixed Active sub fund below target Pensioner sub fund above target Investment Highlights

  14. Assets up by 2.7% (£110m) Active fund returned 2.2% Pensioner fund returned 6.5% Continual review of investment strategy Remained long term responsible investor Markets remain volatile Continued recovery from credit crunch

  15. LPFA taking the lead Ensuring we vote all our shares Engaging with companies through Robeco Ensuring fund managers understand our needs Highlights Remuneration strategies New energy sources Responsible Investment

  16. High Performance Administration Customer care and website initiatives Controlling Costs New business New staff Administration

  17. Actual achievement of savings on controllable costs 10% in 2010/11 (£460,000) 12% in 2011/12 (£580,000) 14% in 2012/13 (£708,000) Controlling costs

  18. Core business LPFA 80,000 members Third party administration Administration services to Hertfordshire CC, 4 Boroughs and LFEPA (160,000 members) Provide other services worth over £200,000 per annum Expanding Business

  19. Pensions Administration Strategy 98% of employer information received electronically Key Performance Indicators 99% of cases completed on time Reduction in time to complete cases Reduction in cases on hold Customer satisfaction – 97% Award winning service LGC Investment Quality of Service Award 2010 and 2011 Winner of Portfolio Institutional Best Pension Scheme 2012 High performance administration

  20. Regulations on new scheme Continual pressure to secure investment returns Continual improvements in administration Customer care More use of website, self service Further longevity improvements Next valuation - 2013 What is on the horizon?

  21. The facts – increasing longevity Increase in life expectancy – 3 years per decade

  22. The Scheme Valuation • Valuation every 3 years • Actuary assesses value of assets and liabilities • Sets employer contribution rates

  23. 2013 Valuation Expectations • Cost of future service reducing as result of increase in retirement age • Longevity • Pensioners are living a lot longer • Active fund • Solvency remaining at 83% • Investment strategy on track • Pensioner fund • Solvency increased from 77% to 79% • Funding strategy – further discussions with government

  24. LPFA continues to have a high profile Good happy workforce Busy LGPS pensions continue to be secure Conclusions Please complete the assessment forms

  25. Economic Review The Evening Standard Anthony Hilton

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