|
Pension Committee |
|
|
Date of meeting: |
30 November 2022 |
|
By: |
Chief Finance Officer |
|
Title: |
Quarterly budget report |
|
Purpose:
|
This report provides an update on the 2022/23 Forecast Financial Outturn |
RECOMMENDATION
The Committee is recommended to note the 2022/23 Q2 forecast financial outturn position
1. Background
1.1 The East Sussex Pension Funds (the Fund) business plan and budget sets out the direction of travel, objectives and targets to be achieved in the financial management for the administering authority to carry out its statutory duties in a structured way. The Pension Committee is charged with meeting the duties of the Council as administering authority in respect of the Pension Fund.
1.2 At its meeting on the 24 February 2022 the Pension Committee agreed a budget of £7.141m to support the business plan for 2022/23. The budget estimates do not incorporate any provision for investment fees earned by fund managers where these are deducted at source by asset managers, or payment of pension benefit’s as these are paid in line with statute and not a discretionary item.
2. Supporting information
2022/23 Outturn Report
2.2 The forecast outturn at the second quarter of 2022/23 is £6.393m, a decrease of £0.748m from the approved budget. The 2022/23 projected outturn against budget line items is shown in the table below. The underspend mostly relates to the current vacancies, that are actively being recruited to and the expected reduction in manager fees due to lower asset values. The main movements to the budget are detailed in Paragraphs 2.3 to 2.9.
2022/23 Outturn Report
|
2021/22 Outturn |
Item |
2022/23 Budget |
2022/23 Actuals to July |
2022/23 Forecast Outturn Q2 |
Variance to Budget |
|
£000 |
£000 |
£000 |
£000 |
£000 |
|
|
|
Pension Fund Staff Costs |
|
|
|
|
|
1,234 |
Staffing |
1,900 |
-72 |
1,510 |
390 |
|
2 |
Recruitment costs |
5 |
- |
- |
5 |
|
1,236 |
Sub Total |
1,905 |
-72 |
1,510 |
395 |
|
|
Pension Fund Oversight and Governance |
|
|
|
|
|
55 |
Actuarial |
200 |
24 |
155 |
45 |
|
57 |
Employer Actuarial work |
80 |
15 |
66 |
14 |
|
-38 |
Employer recharges |
-80 |
9 |
-66 |
-14 |
|
- |
Governance consultancy costs |
- |
27 |
55 |
-55 |
|
- |
Communications |
42 |
- |
5 |
37 |
|
8 |
Training Costs |
30 |
8 |
17 |
13 |
|
47 |
External Audit – Grant Thornton |
35 |
-28 |
22 |
13 |
|
279 |
East Sussex County Council recharges |
249 |
- |
202 |
47 |
|
56 |
Legal Fees |
78 |
14 |
43 |
35 |
|
70 |
Subscriptions and Other Expenses |
72 |
52 |
67 |
5 |
|
534 |
Sub Total |
706 |
121 |
566 |
140 |
|
|
Investment activities |
|
|
|
|
|
216 |
Investment Advice |
135 |
77 |
135 |
- |
|
21 |
ESG Advice |
50 |
24 |
50 |
- |
|
139 |
Custodian |
136 |
- |
166 |
-30 |
|
110 |
ACCESS |
125 |
1 |
125 |
- |
|
3,210 |
Investment Manager Fee Invoices |
2,872 |
663 |
2,667 |
205 |
|
3,696 |
Sub Total |
3,318 |
765 |
3,143 |
175 |
|
|
Pension Administration |
|
|
|
|
|
150 |
East Sussex County Council recharges |
281 |
- |
209 |
72 |
|
98 |
System Services and License |
346 |
305 |
378 |
-32 |
|
156 |
Consultancy & Service Providers - Benefits |
100 |
158 |
203 |
-103 |
|
- |
Other Administration projects |
150 |
10 |
100 |
50 |
|
218 |
Admin operational support services |
289 |
16 |
269 |
20 |
|
14 |
Other Expenses |
50 |
- |
35 |
15 |
|
-3 |
Other Income |
-4 |
-17 |
-20 |
16 |
|
633 |
Sub Total |
1,212 |
472 |
1,174 |
38 |
|
6,099 |
Total |
7,141 |
1,286 |
6,393 |
748 |
2.3 The budget for staffing was set at £1.900m assuming full establishment. At the beginning of the year the Fund had 12 vacant posts, recruitment to these posts is under way with 5 new starters since the beginning of the year, however there have also been 3 leavers. Vacancies has resulted in an underspend of £0.390m from the agreed budget. East Sussex County Council recharges are partly linked to the actual full time equivalents of Fund staff, so a vacancies also reduce the associated costs. This has contributed £0.054m to underspend. In addition, there is £0.065m underspend from a removal double counting within the Budget for project work that ESCC are undertaking for the Fund (under Other Administration projects) and for the postal charges that are paid through ESCC instead of directly charged to the Fund (Admin operational support services)
2.4 The movement on Actuarial costs and Governance Consultancy costs are linked. Historically the Fund used its Actuary to undertake consultancy work which was not specifically actuarial in nature and recorded all these costs under the Actuarial Work. This work is now shown separately to provide a better understanding of these costs. As a result, the Actuarial costs have reduced by £0.045m and Governance Consultancy costs forecast spend of £0.055m. Total movement from the budget results in an overspend of £0.010k
2.5 The planned spend on communications for a replacement website, new communications software and development resources have been delayed due to redevelopment of the existing website and prioritisation of work in liaison with the communications working group. This results in a £0.037m underspend to the budget.
2.6 Legal costs are reported as a £0.035m underspend due to a reduction in reliance of third party providers to undertake activities on its behalf.
2.7 Since the beginning of the year the value of the Fund’s investments have decreased. The fees the Fund pays managers are linked to the value of the assets under management. If these decrease the fees will also decrease, we have adjusted the expectation of the fee level down to match the downturn in markets. This is a reduction of £0.205m to the expected fees for the year.
2.8 Consultancy and Service Providers – Benefits represents spend on specific projects that are being run by third parties rather than the pension administration team. The Projects currently being run are the:
· Annual Allowance
· GMP
· National Fraud Initiative
· Mortality and address tracing
The Annual Allowance project is reflecting an overspend due to slippage of spend from 2021/22, resulting from a delay in data from employers, pushing the charges into the 2022/23 year and an overspend on the total project resulting from more complex cases than anticipated at the outset of the project.
2.9 There were 7 projects that were believed would take place during budget setting process for 2022/23. Analysis of the costs to date and work that has started anticipates that 4 of the projects will have started this year and that 3 will most likely slip into 2023/24 so the expected cost has been reduced reflect that this work is unlikely to place this year.
3. Conclusion and reasons for recommendation
3.1 The Committee is recommended to note the Q2 2022/23outturn position.
|
Chief Finance Officer |
||
|
|
|
|
|
Contact Officer: |
Russell Wood, Pensions Manager: Investments and Accounting |
|
|
Email: |
Russell.Wood@eastsussex.gov.uk |
|