Agenda item

Joint Report of Director of Corporate Services and County Treasurer

The Committee were informed that, under regulations, the Pension Fund had to publish an Annual Report and Accounts by 1 December each year. The external auditors are also obliged to issue an Independent Auditor’s Statement on the accounts. The Covid-19 pandemic and other extenuating factors at EY, mean that in 2020, this deadline had not been met. The Staffordshire Pension Fund was one of many Local Government Pension Schemes that found itself in this situation, and the Ministry of Housing, Communities and Local Government (MHCLG) had been made aware.

The Committee also received a short presentation from Suresh Patel of Ernst Young outlining the challenges which had been faced during the 2019/20 Audit, predominantly due to the Covid-19 pandemic

The Committee noted that Pension Fund’s accounts were included within the County Council’s Statement of Accounts.  As a result, EY reported the likely outcome, and several outstanding matters arising from their audit, to the County Council’s Audit and Standards Committee on 8 December 2020. Since then, EY had continued to work on the outstanding matters and after a final review of Staffordshire Pension Fund’s Annual Report and Accounts 2019/20 will be able to issue their final audit opinion. This was likely to be an ‘unqualified’ audit opinion, but there would be some caveats in relation to matters arising as a result of market uncertainties created by Covid-19. EY’s statement on the Pension Fund accounts was to confirm that they were consistent with those included within Staffordshire County Council’s Statement of Accounts for the year ended 31 March 2020. It also stated the accounts were properly prepared in accordance with accounting standards.

The Committee also noted that, with regard to the fee for the Audit, Ernst Young proposed to increase the scale fee for 2019/20 to £52,500 to cover the cost of additional work which was carried out.  They were also informed of a “Critical judgement in applying accounting policies” in relation to uncertainty around valuations for the Fund’s directly held property as a result of Covid-19.

The Director of Corporate Services submitted the draft Annual Report and Accounts 2019/20 for the Staffordshire Pension Fund and gave a short presentation which covered the following matters:

·       Staffordshire Pension Fund Accounts for year ended 31 March 2020 –

o   Contributions and Benefits

o   Management Expenses

o   Return on Investments

o   Net assets of the Fund

·       Staffordshire Pension Fund 2019/20 Investment Report

o   Percentage breakdown by asset class at 31 March 2020

o   Fund Performance at 31 March 2020

o   Performance versus inflation and earnings

o   Asset class returns for year ended 31 March 2019

o   Fund performance at 30 September 2020 (market value £5.6bn)

The Committee were requested to note that, following conclusion of the audit by EY, there may still be minor amendments required to the document, including the Independent Auditors Statement. It was therefore recommended that a final version of the Annual Report and Accounts be signed off by the Chair, as soon as this was available and prior to publication on the Staffordshire Pension Fund’s website.  Cllr Little requested that Members of the Committee be notified once Staffordshire Pension Fund Annual Report and Accounts 2019/20 had been finalised.

In response to a question from Mr Jenkinson with regard to the Fund’s cash flow position, the Director confirmed that the Fund was likely to show a negative cash flow over the next few years when comparing contributions with the benefits paid, but this did not take account of the income from the Fund’s investments.

RESOLVED – (a) That the draft Staffordshire Pension Fund Annual Report and Accounts 2019/20 be approved, noting the potential need for minor amendments, pending the conclusion of the external audit of the Pension Fund accounts by Ernst and Young (EY), including an updated Independent Auditor’s Statement, and that the final version of the Staffordshire Pension Fund Annual Report and Accounts 2019/20 be signed off by the Chair, prior to publishing the document on the Staffordshire Pension Fund’s website, following completion of the external audit. 

(b) That the contents of the separate Audit Results Report (ISA260) of the Staffordshire Pension Fund’s external auditors, Ernst and Young (EY) entitled; Staffordshire Pension Fund Audit Results Report for the Year ended 31 March 2020, be noted.

(c) That Members of the Committee be notified once Staffordshire Pension Fund Annual Report and Accounts 2019/20 had been finalised.