The report of the Director, West Yorkshire Pension Fund (Document “L”) will be submitted to Members on budget proposals, projections and pension administration costs for its members and employers.

Recommended –

1.    That the projected outturn of £5.09m against budget of £5.41m for 2021/22 be noted.

2.    That the proposed budget of £6.17m for 2022/23 be approved.

3.    That the WYPF total cost per member of £33.63 is the lowest LGPS cost per member, this is also supported by strong service performance and quality, be noted.

(Ola Ajala – 01274 434534)

The Director, West Yorkshire Pension Fund, presented a report (Document “L”) containing budget proposals, projections and pension administration costs for members and employers.

The report revealed a favourable outturn figure against the predicted budget for 2021/22 and continuing low costs to members.  Officers were congratulated for their impressive achievements.

Increased accommodation costs were reported in Document “L” and the rationale for those increases and the likelihood of their continuation in the future was questioned.

The Director explained that the fund, like every organisation, had seen a significant increase in fuel costs and a focus for the future would be in sourcing green energy.  It was reported that the building required regular maintenance and insurance costs had also risen.  Increases in rent had also occurred and although the fund owned the building it did pay itself a commercial rent. 

Clarification on the prediction that support services would increase was requested and it was explained that the increase in business from shared services required additional support services.   Increased regulation in investments and pension administration had also impacted on the support required.

Members discussed recruitment figures contained in the report and questioned if exit interviews were conducted with staff who resigned and if so what had been learnt.   In response it was explained that a large proportion of staff leaving had retired and others had left for career progression.  It was explained that currently there were many opportunities in other pension funds and hybrid working had enabled people to take up positions in other parts of the country without the need to relocate.  The administration side of the fund had a good level of staff retention and the fund had one of the lowest staff turnover rates compared with others.  A Member requested the fund be flexible on salaries to ensure that senior and specialist roles would attract and retain the highest calibre of staff.

The driver of increased investment management costs was queried and it was explained that these were because of challenges from increased regulations and an expanding asset base.  The report revealed that using basis points (bps) WYPF investment cost was between 3 and 5 bps of current investment asset value of £17.5 billion. Based on the Investment Association survey for 2021/22 the average cost of investment management was 18bps, that was 300% more than WYPF. That measure put WYPF in the top quartile in terms of investment management cost of the best performing investment management organisations. 

To address competition in attracting talent to the fund engagement had been made with local universities; staff training had been provided and apprentice posts had been developed to create a talent pool in the local area.

The impact of vacancies in the fund on service delivery was questioned and it was explained that staff were passionate about what they did and the quality of work had not suffered.  It was stressed that people were proud of their work but that if vacancies were not filled that would eventually have an impact on the service. A number of vacancies had recently been filled and whilst the fund carried out many initiatives which were recognised nationally there was a desire to do more. Members questioned if vacancies were artificially keeping costs low and it was explained that they made only a small difference.

In response to questions about the impact of separate investments costs it was reported that the asset value was now £17.5 billion compared to £8 billion in 2012-13.  There had been an increase in the value and diversity of markets together with increased legislation and regulation.  It was stressed that the fund employed specialist hard working staff but there is a need to create local talent to aid recruitment and maintain service performance standards.

Resolved –

1.    That the projected outturn of £5.09m against budget of £5.41m for 2021/22 be noted.

2.    That the proposed budget of £6.17m for 2022/23 be approved.

3.    That the WYPF total cost per member of £33.63 is the lowest LGPS cost per member, this is also supported by strong service performance and quality, be noted.

ACTION: Director, West Yorkshire Pension Fund