1. 1004pensfund 1 North Yorkshire Pension Fund Employer Consultation 25th October 2004 John Moore Treasurer to NYPF

2. 1004pensfund 2 Agenda  Funding Strategy Statement (i) -principles  2004 Valuation results  Funding Strategy Statement (ii) -key issues for employers -impact of alternative investment strategies  Open Discussion John Moore Chris Hull (Mercer) Chris Hull & John Moore

3. 1004pensfund 3 Funding Strategy Statement (FSS)  key points  structure/content

4. 1004pensfund 4 Key Points to Address  compulsory for all LGPS schemes  consult with all relevant interested parties  be approved, and published, by Pension Fund Committee by 31/03/05  revised (and republished) whenever material change  Actuary have regard to FSS in Valuation process  CIPFA guidance published

5. 1004pensfund 5 Structure / Contents  purpose of FSS  aims/purpose of the Fund  responsibilities of key parties  solvency/target funding levels  links to Statement of Investment Principles  risks and counter-measures

6. 1004pensfund 6 Purpose of FSS  to establish a clear and transparent fund-specific strategy that will identify how employers’ pension liabilities are best met going forward  to support regulatory requirement to maintain as nearly constant employer contribution rate as possible  to take a prudent longer term view of funding these liabilities

7. 1004pensfund 7 Aim of Fund  keep employer contribution rates as nearly constant as possible  manage employers’ liabilities  ensure sufficient resources available to meet these liabilities as they fall due  maximise investment return within defined risk parameters

8. 1004pensfund 8 Purpose of Fund  To receive £contributions investment returns transfer values  To pay out £benefits transfer values costs/expenses

9. 1004pensfund 9 2003/04 Actuals Receipts£m Contributions Employee Employer 16.4 48.8 Inter Fund Transfers (net)5.6 Investment return12.5 ____ 83.3 Payments£m Benefits paid annual lump sum 34.2 6.9 41.1 Administrative Costs0.9 Investment costs 2.0 44.0 Net cash surplus in year39.3 83.3

10. 1004pensfund 10 Responsibilities of Key Parties  administering authority  individual employer  fund actuary -prepare Valuation -refer to FSS -to agree assumptions -set employer contribution rates via Protocol

11. 1004pensfund 11 Link to Statement of Investment Principles (SIP)  define investment strategy that (hopefully) will produce returns compatible with -FSS -triennial valuation assumptions

12. 1004pensfund 12 Risks and Counter Measures  Financial -investment returns -pay awards -pensions increase  Demographic -longevity -early retirements / ill health  Regulations -changes to LGPS regulations -changes to national Pension regime -changes to Inland Revenue rules

13. 1004pensfund 13 Solvency/Target Funding Levels Key assumptions re achieving 100% funding  Deficit recovery period  Investment returns Big Question?  Same assumption for all employers? local authority → Council Tax impact (the ultimate guarantee) non local authority → financial standing ?

14. 1004pensfund 14 ACTUARIAL VALUATION ‘er contribution rates Liability profile Solvency ANNUAL NYPF BUDGET Asset Liability Study Employers Budgets Risk Budget RewardTolerance FUNDING STRATEGY STATEMENT (wef 1/4/05) FUND OBJECTIVES Asset Classes INVESTMENT POLICY (  SIP) CUSTOMISED BENCHMARK Performance Monitoring FUND MANAGERS Balanced BGI BGHSL Niche x 4 additional income net positive cash flow Council Tax