Leicestershire County Council Pension Fund

1. Leicestershire County Council Pension Fund Annual General Meeting Brian Roberts Director of Corporate Resources

2. Scheme Administration • Large increase in number of scheme employers as schools convert to Academies • Significant decrease in active members • Importance of accurate and timely data to be provided by employers • Monthly electronic returns been developed with employers help • Increasing reliance as new scheme beckons

3. Scheme Administration • Improvements and developments • Website accredited by the plain english campaign • Member on line services to be introduced this year • Improved reporting features to be developed to help data quality

4. Pension Reform – LGPS 2014 • Consultation document issued 21 December. • Closes 8th February 2013 • This covers membership, contributions and benefits. • Further consultation to follow on the remaining items of new scheme, plus cost control, governance and councillors’ pensions etc.

5. Investments • Considerable efforts have been made to diversify types of asset held over recent years, without impacting on long-term returns • Appointments since the end of 2011/12 year end have ‘completed’ the work in progress • A period of relative stability in terms of investment portfolios is now expected • But manager underperformance will still have to be dealt with!

6. Asset types held by the Fund • UK equities • Overseas equities • Property • Targeted return • Global index-linked bonds • Private equity • Commodities • Global Credit • Managed Futures • Infrastructure • Timberland • Currency

7. Strategic Asset Allocation Developed Market Equities 35-46% Emerging Market Equities 6-10% Private Equity 4% Alternative Assets 20-30% (including targeted return, global credit and special opportunities) Inflation-Linked 5-10% (including global index-linked bonds, infrastructure and timberland) Property 12.5% Commodities 2.5-5%

8. Investment returns 2011/12 • Fund return +0.7% • Market returns variable, for example; • UK equities +1.4% • European equities -11.4% • UK Property +6.6% • UK Index-Linked +18.1% • UK Government Bonds +14.5% LOW RISK ASSETS GENERALLY PERFORMED BEST

9. Medium-term investment returns • Over 5 years, the Fund’s return has been +0.4% p.a. • 0.8% below benchmark, due mainly to manager underperformance within markets • Manager underperformance has brought a number of dismissals • Return is well below that anticipated by the actuarial valuation (mainly because equity markets have performed poorly over this period) • This puts upward pressure onto employer’s contribution rates

10. Returns since year end • Equity markets were sharply down until mid-June, mainly on fears about Europe • Significant recovery since the low point • Returns from low point to end-of-December have been good • But still the return for the 9 months is only around 5%

11. Outlook for actuarial valuation • Still likely to be upward pressure on employer’s contribution rates • New slightly cheaper 2014 scheme is unlikely to change this • But there has been a big improvement since the position at the end of June • Still almost 3 months to go before valuation date, and things can change significantly over this timescale

12. Annual General Meeting • Any questions ?