2019/2020 Annual Report & Accounts - East Riding


2019/2020Annual Report & AccountsPensions Regulator Scheme Registration Number 10079121

East Riding Pension Fund Annual Report and Accounts 2019/2020contentsSectionPageForeword3The Local Government Pension Scheme4Scheme Management and Advisers7Risk Management10Financial Performance18Administrative Management Performance22Investment Policy and Performance24Scheme Administration Report33Report of the Actuary50Actuarial Valuation53Governance54Statement of Responsibilities61Accounts62Funding Strategy Statement90Investment Strategy Statement118Communication130Local Pension Board133Auditor Report137Contacts138contents2

East Riding Pension Fund Annual Report and Accounts 2019/2020forewordThe Fund was created on the reorganisation of local government in 1974 and East Riding of Yorkshire Council became theAdministering Authority on 1 April 1996.At 31 March 2020 the Fund was valued at 4,764.0m, having paid out 192.6m during the year for the benefit of Schememembers. This is a decrease in the Fund value of 293.1m from 31 March 2019, due to a significant capital depreciationacross all major equity markets in the final quarter of the year as the impact of the coronavirus epidemic became apparent.There was a substantial deterioration in investor risk sentiment together with an associated flight to safety. The strongestrelative returns were seen in the Alternatives Sector, in particular Private Equity, along with Corporate Bonds in the FixedIncome Sector. UK Government Bonds, Overseas Bonds and Infrastructure all contributed positive absolute returns despitethe difficult market conditions. In addition, sterling returns from overseas investments received a significant boost dueto the depreciation of the currency following the exit from the European Union and the coronavirus crisis. The Fund alsobenefitted from the strong performance of the internal manager and Border to Coast Pension Partnership (Border toCoast), the funds chosen pooling partner.Throughout 2019/20 the number of employers in the Fund with active members was 317 (31 March 2019: 321). The slightdecrease during the year was due to only counting employers with active members as opposed to the inclusion of thoseemployers with an interest in the Fund also.All employees, other than teachers, of the Administering Authority and the majority of the Scheme Employers are entitledto participate in the Scheme. Employees of Scheme Employers classed as designating bodies, such as town and parishcouncils, and employees of the 57 Admission Bodies may be nominated for membership by their employer. Teachers,police officers and firefighters have separate pension arrangements.Although membership is not compulsory, it is automatic for all employees who have a contract of employment that is forat least 3 months and who are under the age of 75. Employees have freedom of choice to leave the Scheme and makealternative pension arrangements.At 31 March 2020 the total membership records administered by the East Riding Pension Fund was 116,422, an increase of1.3% in the year (2019: 114,882). For active members, each separate employment contract is classed as a record where anindividual has multiple employments, and the number of active member records has decreased by 3.7% to 38,761 (2019:40,234). For pensioner members each pension entitlement is classed as a record where an individual is in receipt of morethan one pension and the number of pensioner member records, including the pensions paid to spouses and dependantsof the former scheme members, has increased by 5.5% to 33,194 (2019: 31,470). All the membership figures are based onthe up to date position recorded on the pension administration system, with all previous years restated on a consistentbasis. The average pension payment is 4,547.70 per annum, equivalent to a weekly payment of 87.22.The Fund generated a return of -4.5% for the year to 31 March 2020 compared to the strategic benchmark return of -7.3%.Over the three years to 31 March 2020 the Fund returned 2.0% per annum, compared to the strategic benchmark returnof 0.7% per annum and the long term investment objective of 6.0% per annum.The Fund continues to be managed in a cost effective manner with total pension administration, investment management,and oversight and governance costs equating to just 0.17% (2019: 0.14%) of funds under management.The key challenges for the Fund in the year ahead is to maintain the strong investment performance in an increasinglyvolatile market environment whilst continuing to manage the transition of assets to Border to Coast. The Fund isparticipating fully in the pooling process and will ensure that there is appropriate governance oversight of the activitiesof our pooling partner.Julian NeilsonHead of FinanceEast Riding of Yorkshire Council28 August 2020foreword3

East Riding Pension Fund Annual Report and Accounts 2019/2020the local government pension schemeLegal FrameworkThe Local Government Pension Scheme (LGPS) has been in existence since 1922 and has developed into a comprehensivescheme providing pensions for all members and their spouses, civil partners or eligible cohabitating partners and eligible children.The current scheme, LGPS 2014, is a Career Average Revalued Earnings (CARE) scheme. The scheme rules for LGPS 2014 arecontained within the LGPS Regulations 2013 (Statutory Instrument Number 2013 No. 2356) and subsequent amendmentsand the Local Government Pension Scheme (Transitional Provisions, Savings and Amendment) Regulations 2014 (StatutoryInstrument Number 2014 No 525). Amendments to LGPS 2014 are made under the Public Service Pensions Act 2013. Detailsof the main provisions of LGPS 2014 can be found at e Regulations specify the type and amounts of pension and other benefits payable in respect of scheme members who leave,retire or die, and also fix the member contributions rates payable on an ongoing basis. Employees have freedom to opt-out andmake their own pension provision.Employer contribution rates are set by the Fund’s Actuary every three years following the valuation of the Fund, in order tomaintain the solvency of the Fund. Following the 2019 Actuarial Valuation, the Actuary issued the new rates payable by schemeemployers for the period from 1 April 2020 to 31 March 2023.Whilst the Regulations are fixed on a national basis, the LGPS is managed by a designated Administering Authority, andthroughout England and Wales there are 89 such authorities. East Riding of Yorkshire Council is responsible for administering“The East Riding Pension Fund” for the benefit of its own employees and the employees of the scheme employers and admissionbodies. Full details of the employers participating within the Fund are shown on pages 113 to 115. Teachers, Police Officers andFirefighters are excluded from the LGPS, as they are members of separate statutory pension schemes.The Local Government Pension Scheme (Management and Investment of Funds) Regulations 2016 make the provision in relationto the management and investment of pension funds held by administering authorities required to maintain pension funds bythe Local Government Pension Scheme Regulations 2013.HM Revenues and Customs has granted the LGPS ‘exempt approval’ for the purposes of the Income and Corporation Taxes Act1988. Since April 2006, the LGPS has been classified as a registered public service pension scheme under Part 4 of Chapter 2of the Finance Act 2004. It complies with the relevant provisions of the Pension Schemes Act 1993, the Pensions Act 1995, thePensions Act 2004 and meets the Government’s new standards under the automatic enrolment provisions of the Pensions Act2008.The East Riding Pension Fund Local Pension BoardAs required under section 5 of the Public Service Pensions Act 2013 and regulation 106 of the LGPS Regulations 2013(as amended), the East Riding Pension Fund Local Pension Board (ERPFLPB) was established on 25 February 2015 and ismade up of three employer representatives and three member representatives. The ERPFLPB is responsible for assistingEast Riding of Yorkshire Council (as administering authority) in securing compliance with the LGPS regulations, overridinglegislation and guidance from the Pensions Regulator.Details of the activities of the ERPFLPB can be found on the East Riding Pension Fund website aterpf.eastriding.gov.uk/local-pension-boardthe local government pension scheme4

East Riding Pension Fund Annual Report and Accounts 2019/2020Fund MembershipThe 317 employers, including East Riding of Yorkshire Council, with an interest in the Fund are listed below::ADMINISTERING AUTHORITYEast Riding of Yorkshire CouncilSCHEDULE 2 EMPLOYERS (259)Adelaide Primary AcademyAinthorpe Primary AcademyAirmyn Park Primary SchoolAlderman Cogan Primary AcademyAll Saints Church of England Infant AcademyAll Saints Church of England Junior AcademyAnlaby Common Parish CouncilAppleton Primary AcademyArchbishop Sentamu AcademyAspire AcademyBarrow upon Humber Parish CouncilBarton upon Humber Town CouncilBeacon AcademyBellfield AcademyBeverley Grammar SchoolBeverley Town CouncilBiggin Hill Primary AcademyBishop Burton CollegeBottesford Town CouncilBricknell Primary AcademyBridgeview SchoolBridlington Town CouncilBrigg Town CouncilBroadacre Primary AcademyBroughton Town CouncilBuckingham Primary AcademyBude Park Primary AcademyBursar Primary AcademyBurton upon Stather Parish CouncilCambridge Park AcademyCanon Peter Hall AcademyCavendish Primary AcademyChiltern Primary SchoolChristopher Pickering Primary SchoolCleethorpes AcademyCleeve Primary AcademyClifton Primary SchoolCollingwood AcademyCompass AcademyConsortium Academy Trust - Winifred HoltbyAcademyCoritani AcademyCottingham Croxby Primary AcademyCottingham High SchoolCraven Primary AcademyCrowle AcademyDorchester Primary AcademyDriffield SchoolDriffield Town CouncilDunswell Primary AcademyEasington CE Primary AcademyEast Ravendale AcademyEast Riding CollegeEastfield Primary Academy (Immingham)Eastfield Academy (Hull)Edward Heneage Academythe local government pension schemeElliston Primary AcademyElloughton cum Brough Town CouncilEmergency Services Fleet Management(Humberside) LimitedEndike Primary SchoolEndsleigh Holy Child VC AcademyEnfield Academy of New WalthamEngineering UTC Northern LincolnshireEpworth AcademyEpworth Town CouncilEstcourt Primary AcademyFairfield AcademyFrancis Askew Primary SchoolFranklin CollegeFrederick Holmes AcademyGanton SchoolGilberdyke AcademyGillshill Primary AcademyGoole High SchoolGoole Town CouncilGreat Coates Primary AcademyGriffin Primary AcademyGrimsby Institute of Further & HigherEducationHall Road AcademyHavelock AcademyHealing Primary SchoolHealing Science Academy LimitedHedon Town CouncilHessle Community AcademyHessle Town CouncilHibaldstow AcademyHighlands Primary AcademyHolderness Academy and Sixth Form CollegeHook C of E Primary SchoolHornsea Town CouncilHowden SchoolHull CollegeHull Culture and Leisure LimitedHumber Bridge BoardHumberside Fire AuthorityHumberston AcademyHumberston Cloverfields AcademyHumberston Park AcademyHunsley Primary SchoolHuntcliff AcademyImmingham Town CouncilIngs Primary SchoolJohn Leggott CollegeJohn Whitgift AcademyKelvin Hall SchoolKeyingham Primary SchoolKingston upon Hull City CouncilKingstown Works LimitedKingswood AcademyKingswood Parks Primary AcademyKirk Ella and West Ella Parish CouncilLaceby AcresLisle Marsden AcademyLittlecoates Primary AcademyLonghill Primary AcademyMacaulay AcademyMalet Lambert AcademyMarfleet Primary AcademyMarket Weighton Town CouncilMaybury Primary AcademyMelbourne Community AcademyMelior Community College AcademyMersey AcademyMiddlethorpe AcademyMountbatten AcademyNeasden Primary AcademyNew Waltham AcademyNewbald Parish CouncilNewington AcademyNewland School for GirlsNewland St John’s CE AcademyNorth Cave Church of England PrimaryAcademyNorth Cave Parish CouncilNorth East Lincolnshire CouncilNorth Eastern Inshore Fisheries andConservation AuthorityNorth Ferriby Parish CouncilNorth Lincolnshire CouncilOasis Academy Henderson AvenueOasis Academy ImminghamOasis Academy NunsthorpeOasis Academy ParkwoodOasis Academy WintringhamOld Clee Primary AcademyOldfleet Primary Foundation Trust SchoolOrmiston Maritime AcademyOrmiston South Parade AcademyOur Lady and St Peter Catholic Primary SchoolOuse and Humber Drainage BoardOutwood Academy BrumbyOutwood Academy FoxhillsOutwood Junior Academy BrumbyPaisley Primary AcademyParkstone Primary AcademyPatrington CE Primary AcademyPearson Primary SchoolPHASEPhoenix Park AcademyPilgrim AcademyPocklington Junior SchoolPriory Primary AcademyQuay AcademyReynolds Primary AcademyRise AcademyRiston Primary Academy5

East Riding Pension Fund Annual Report and Accounts 2019/2020Rokeby Park AcademyRon Dearing UTCRowley Parish CouncilSt Anthonys Primary AcademySt Augustine Webster AcademySt Bede’s AcademySt Bernadette’s AcademySt Charles RC Primary AcademySt George’s Primary AcademySt James’ CE AcademySt John of Beverley Catholic Primary SchoolSt Joseph’s AcademySt Mary Queen of Martyrs VC AcademySt Mary and St Joseph (Pocklington) CatholicPrimary SchoolSt Mary’s AcademySt Mary’s Catholic AcademySt Marys CollegeSt Mary’s (Market Weighton)Catholic Primary SchoolSt Nicholas Primary AcademySt Norbert’s AcademySt Peter’s CE Primary AcademySt Richards RC Primary SchoolSt Thomas More AcademySt Vincents VC AcademyScartho Junior AcademyScawby AcademySevenhills AcademySidmouth Primary AcademySigglesthorne Primary AcademySignhills AcademySignhills Infants AcademySirius Academy NorthSirius Academy WestSouth Axholme AcademySouth Cave Parish CouncilSouth Hunsley School and Sixth Form CollegeSouthcoates Primary AcademySpring Cottage AcademySpringfield Primary AcademySproatley Endowed Primary AcademyStamford Bridge SchoolStepney Primary AcademyStockwell AcademyStoneferry Primary SchoolStrand AcademySullivan CentreSutton Park Primary AcademySwanland Parish CouncilSwanland Primary School Academy TrustThanet Primary AcademyThe Axholme AcademyThe Boulevard AcademyThe Boulevard CentreThe Chief Constable of Humberside PoliceThe Green Way AcademyThe Marvell CollegeThe Parks AcademyThe Police and Crime Commissioner forHumbersideThe St. Lawrence AcademyThe Snaith SchoolThe Vale AcademyThoresby AcademyThorpepark AcademyThrunscoe Primary AcademyTollbar Academy LimitedTrinity House AcademyTweendykes AcademyUlceby St Nicholas Primary SchoolUniversity of LincolnWaltham Leas Primary AcademyWansbeck AcademyWeelsby Primary AcademyWelholme Primary AcademyWelton Parish CouncilWestcott Primary AcademyWestwoodside AcademyWheeler AcademyWhitehouse Pupil Referral UnitWilberforce CollegeWillerby Parish CouncilWilliam Barcroft Junior AcademyWilloughby Road Primary AcademyWillows AcademyWinterton AcademyWinterton Town CouncilWithernsea Primary AcademyWithernsea Town CouncilWold AcademyWoldgate School and Sixth Form CollegeWolfreton School and Sixth Form CollegeWoodland Primary AcademyWoodlands Primary AcademyWorlaby AcademyWybers Wood AcademyWyke CollegeYarborough Primary AcademyCompass Contract Services UK Ltd(Winterton Community Academy)Compass Contract Services UK Ltd (WintertonJunior School)Compass Contract Services UK Ltd (WoldsLearning Partnership)Compass Contract Services UK Ltd (Wolfreton)ENGIE Services LimitedGreen Commercial CleaningHull and Goole Port Health AuthorityHull Charterhouse TrusteesHull Resettlement Project LtdHumber NHS Foundation Trust (ERYC)Humber NHS Foundation Trust (Hull)Humberside Independent Care AssociationIndependent Cleaning Services Ltd (Driffield)Independent Cleaning Services Ltd (Wolfreton)ISS Facility Services PFIKGB Cleaning Services LtdLincolnshire Housing Partnership LtdLincolnshire Partnership NHS Foundation TrustLincs Inspire LimitedMellors Catering Services Ltd (Cottingham)Mellors Catering Services Ltd(South Holderness College)Mountain Healthcare LtdNorth East Lincolnshire ClinicalCommissioning GroupNPS Humber LtdOngo Homes LtdPickering and Ferens HomesPinnacle Housing LtdRobertson Facilities Management LtdRobertsons Facilities Management Ltd PFISodexo Ltd (Beacon Academy)Sodexo Ltd NunsthorpeSodexo Ltd (Oasis Community Learning)T(n)S Catering Management Ltd(Delta - Melior)T(n)S Catering Management Ltd(Delta – Willoughby Road)Taylor Shaw Ltd (Frederick Gough)Taylor Shaw Ltd (St Bedes)Taylor Shaw Ltd (The St Lawrence Academy)The Deep (EMIH) LtdThe Riverside Group LtdUniversity of Lincoln Students’ UnionYour Community Hub CICADMISSION BODIES (57)Aspens Services Ltd (Tollbar MAT)Barnardo’sBulloughs Cleaning Services LtdCater Link Limited (Franklin College)Churchill Contract Services Ltd(Outwood Foxhills)City Health Care Partnership CICCivica UK LtdCompass Contract Services UK Ltd(Delta MAT)Compass Contract Services UK Ltd(East Ravendale)Compass Contract Services (UK) Ltd(Hessle Academy Community Trust)Compass Contract Services UK Ltd(Howden School)Compass Contract Services UK Ltd(Humberston Academy)Compass Contract Services UK Ltd(Lisle Marsden)Compass Contract Services UK Ltd(Old Clee)Compass Contract Services (UK) Ltd(The Vale)Compass Contract Services (UK) Ltd(Waltham Leas)the local government pension scheme6

East Riding Pension Fund Annual Report and Accounts 2019/2020scheme management and advisersFund ManagersDirector of Corporate ResourcesEast Riding of Yorkshire CouncilCounty HallBeverley HU17 9BASchroder Investment Management (UK) Limited1 London Wall PlaceLondonEC2Y 5AURiver and Mercantile30 Coleman StreetLondonEC2R 5ALPool ProviderBorder to Coast Pension Partnership Limited5th Floor Toronto SquareToronto StreetLeeds LSI 2HJSecretary to thePensions CommitteeDirector of Corporate ResourcesEast Riding of Yorkshire CouncilCounty HallBeverley HU17 9BACustodianState Street Bank and Trust CompanyQuartermile 310 Nightingdale WayEdinburgh EH3 9EGAVC ProviderPrudentialCraigforth, Stirling FK9 4UEActuaryHymans Robertson LLP20 Waterloo StreetGlasgow G2 6DBLegal AdviserDirector of Corporate ResourcesEast Riding of Yorkshire CouncilCounty HallBeverley HU17 9BABankerNatWest Bank60 Market Place,Beverley HU17 8AHFund Accountant/Director of FinanceDirector of Corporate ResourcesEast Riding of Yorkshire CouncilCounty HallBeverley HU17 9BAFund AuditorMazars LLP5th Floor3 Wellington PlaceLeeds LS1 4APscheme management and advisers7

East Riding Pension Fund Annual Report and Accounts 2019/2020Scheme AdministratorDirector of Corporate ResourcesEast Riding of Yorkshire CouncilCounty HallBeverley HU17 9BAFund AdviserMJ Hudson Allenbridge8 Old JewryLondonEC2R 8DNPerformanceMeasurementState Street GS Performance Services (to December 2019)Quartermile 310 Nightingdale WayEdinburgh EH3 9EGPortfolio Evaluation Limited (wef March 2020)Office 2RosemountBowcliffe Hall EstateBramhamLeeds LS23 6LPPIRC Limited8th Floor Suite 8.02 Exchange Tower2 Harbour Exchange SquareLondon E14 9GEOfficersDarren StevensDirector of Corporate ResourcesEast Riding of Yorkshire CouncilCounty HallBeverley HU17 9BAJulian NeilsonHead of FinanceEast Riding of Yorkshire CouncilCounty HallBeverley HU17 9BATom MorrisonHead of InvestmentsEast Riding Pension FundPO Box 164Church StreetGoole DN14 5YZGraham FerryPensions ManagerEast Riding Pension FundPO Box 118Church StreetGoole DN14 5YUscheme management and advisers8

East Riding Pension Fund Annual Report and Accounts 2019/2020Management Arrangements of FundThe arrangements for the management of the Fund are: The Pensions Committee meet at quarterly intervals to determine overall strategy, to review retrospectivelydetailed implementation of policy and to consider performance, with a further four meetings being held to considerother matters; The fixed income portfolio is managed by the Corporate Resources Directorate and Border to Coast PensionPartnership; The UK equity portfolio is managed by Border to Coast Pension Partnership; Overseas investments are managed by Schroder Investment Management and Border to Co

Teachers, Police Officers and Firefighters are excluded from the LGPS, as they are members of separate statutory pension schemes. The Local Government Pension Scheme (Management and Investment of Funds) Regulations 2016 make the provision in relation . Eastfield Primary Academy (Immingham) Eastfield Academy