Report to:

Pension Committee

Date of meeting:

16 November 2023

By:

Chief Finance Officer

Title:

Quarterly Budget Report

Purpose:

 

This report provides the Quarter 2 forecasted financial outturn of the ESPF for the 2023/24 financial year

 

 

RECOMMENDATIONS

The Pension Committee is recommended to note the report.

 

1.            Background

1.1          The East Sussex Pension Fund’s (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 Fund.

1.2          At its meeting on the 22 February 2023 the Pension Committee agreed a budget of £4.463m (£4.269m – 2022/23) to support the business plan for 2023/24. The budget estimates do not incorporate any provision for investment fees earned by the investment managers since there is limited scope for the Fund influence these costs. This is due to the nature of the fees being based on factors outside the control of the Fund such as market movements along with other decisions affecting these such as strategic asset allocation changes.

 

2.            2022/23 Quarter 2 Forecast Outturn Position

2.1          The forecast outturn at the second quarter of 2023/24 is £4.309m, a reduction of £0.154m from the approved budget. The 2023/24 outturn against budget line items is shown in the table below. The underspend relates to a reduction in staffing costs anticipated in the year and a reduction in actuarial invoices received to date, this is offset by increases on consultancy and investment advice costs discussed in more detail in paragraph 2.2 – 2.3

 

2023/24 Outturn Report

2022/23 Outturn

Item

2023/24

Budget

2023/24

Actual Outturn Q2

2023/24

Forecast

Outturn Q2

Variance to Budget

£000

£000

£000

£000

£000

 

Pension Fund Staff Costs

 

 

 

 

1483

Fund Officers

2,023

823

1,834

189

(1)

Recruitment costs

-

-

-

-

1,482

 Sub Total

2,023

823

1,834

189

 

Oversight and Governance Expenses

 

 

 

 

318

 Investment Advice

392

230

408

(16)

125

 Actuarial Fund Work

87

4

59

28

69

 Actuarial Employer Work

81

36

79

2

(76)

 Employer reimbursement

(81)

(19)

(79)

(2)

56

 Legal Fees

69

15

74

(5)

48

 Governance consultancy costs

70

16

68

2

96

  Audit 

71

(56)

71

-

636

 Sub Total

689

225

680

9

 

 Investment Expenses

 

 

 

 

101

 Custodian

97

(46)

97

-

101

 Sub Total

97

(46)

97

0

 

 Administration Expenses

 

 

 

 

438

 IT Systems licenses costs and Hardware

572

360

568

4

256

 Overheads

475

139

475

-

267

 Admin operational support services

279

78

279

-

13

 Improvement projects

100

3

100

-

235

 Consultancy

45

26

81

(36)

7

 Communications

47

1

48

(1)

13

 Training 

20

12

27

(7)

87

 Subscriptions

75

26

78

(3)

48

 Other Expenses

60

2

60

-

1,364

 Sub Total

1,673

647

1,716

(43)

 

Income

 

 

 

 

(15)

 Other Income

(19)

(4)

(19)

-

(15)

 Sub Total

(19)

(4)

(19)

0

3,568

 Total 

4,463

1,645

4,309

154

 

2.2          The outturn projection for Investment advice is reflecting an anticipated overspend due to the engagement and divestment work, coming in at £5,000 higher than anticipated. There is also a £11,000 increase being applied to take into account the activity that is resulting from the changes to strategic asset allocation which were not considered when the budget was being set.

2.3          The outturn for the consultancy and service providers costs line these are not investment related. The budget was set at £45,000 for these costs based on the information available at budget setting. The forecast outturn has increased by £36,000 to £81,000 there has been several projects that have seen additional costs arising from the information available now these include:

·                       the GMP reconciliation project where the Fund had to use Heywoods for data extraction in order to meet Mercer’s requirement which cost us an additional £15,000.

·                       there have been other issues identified during the work so far on the GMP Reconciliation although it is still unclear as to the final cost an additional £5,000 has been added for prudence.

·                       In addition, the decision has been taken to allocate an extra £10,000 covering all projects for work that the Fund will require the software provider Heywoods to perform, these have not been allocated yet but is expected to cover one-off projects or aspects linked to an on-going projects, such as GMP and McCloud.

·                       ITM address tracing is now in the next stage of the project status 2 and we now are able to quantify these costs and are expecting to come in at an additional £6,000 to complete this project.

3.            Conclusion and reasons for recommendation

3.1          The Committee is recommended to note the first quarter projected 2023/24 outturn position.

 

Ian Gutsell
Chief Finance Officer

Contact Officer: Russell Wood, Pensions Manager: Investments and Accounting
Email: Russell.wood@eastsussex.gov.uk