Report & Accounts 2011 Superannuation Fund

Transcription

1 Kent County Council Pensions Section Report & Superannuation Fund In association with Local Authorities and other bodies in Kent

2 Contents Report & Page No Members and Advisers 2 Scheme Documentation 3 Chairmans Introduction 4 Investment Report 6 Scheme Details 11 Pension Section Performance 14 Report of the Consulting Actuaries 15 Statement of Responsibility 17 Audit Opinion 18 Accounting Policies and other Procedures 20 Fund Account 22 Net Assets Statement 24 Notes to the 25 Risk Management 38 List of Employing Bodies 40 The Fund Profile - 5 Year Summary 45 Appendix 1: Major UK and Overseas Equity and Unit Trust Holdings by Value 46 Appendix 2: Property Valuation 48 Kent County Council Superannuation Fund 1

3 Members & Advisers County Council Members are appointed by the respective political parties. The District Council representatives are appointed by the respective District Council, in connection with the Association of District Councillors. Other representatives are nominated and appointed by the respective bodies. The same appointees are responsible for the removal of their representatives. Appointments and removals are noted at the Superannuation Fund Committee meetings. Enquiries and more detailed information on the Fund benefits and contributions can be obtained by contacting Pat Luscombe (Pensions Manager) at 2 nd Floor, Brenchley House, Week Street, Maidstone, Kent ( ). Enquiries regarding the Fund s accounting and investment activities should be made to Nick Vickers (Head of Financial Services) at County Hall. Sessions House County Hall Maidstone Kent ME14 1XQ ( ) Administering Authority Kent County Council Kent County Council Members as at 31 March Mr J E Scholes Chairman (Conservative) Mr D S Daley Vice Chairman (Liberal Democrat) Mr J A Davies (Conservative) Mr M Jarvis (Conservative) Mr J F London (Conservative) Mr R A Marsh (Conservative) Mr R J Parry (Conservative) Mr M V Snelling (Conservative) Other Local Authority Representatives Mr K Bamber (Conservative) (Medway Council) Mr J Burden (Labour) (Gravesham Borough Council) Mr P Clokie (Conservative) (Ashford Borough Council) Mr R Packham (Liberal Democrat) (Ashford Borough Council) Union Representative Mr S Richards Staff Representative Ms J De Rochefort Kent Active Retirement Fellowship Mrs A Dickensen Mrs M Wiggins Investment Managers and Advisers Baillie Gifford & Co Goldman Sachs Asset Management Limited GMO Harbourvest Partners Henderson Fund Management Impax Invesco Perpetual Partners Group Schroder Investment Management Limited State Street Global Advisers Limited YFM Equity Partners DTZ Investment Management Limited Investment Consultant Hymans Robertson LLP Consulting Actuaries Barnett Waddingham LLP Auditors Audit Commission Performance Measurers The WM Company Investment Property Databank Limited AVC Providers Equitable Life Assurance Prudential Assurance Company Standard Life Assurance County Officers Mr A Wood, Acting Corporate Director of Finance and Procurement Mr N Vickers, Head of Financial Services Mr G Wild, Director of Governance and Law 2 Kent County Council Superannuation Fund

4 Scheme Documentation Report & The Fund is required by the Department for Communities & Local Government to maintain certain formal documents, rather than reproduce them in this report they are on the website. The key documents are: Statement of Investment Principles Funding Strategy Statement Environmental, Social and Governance Investment Policy Statement Governance Compliance Statement Communication Policy Kent County Council Superannuation Fund 3

5 Chairman s Introduction The last year has been another highly positive one for the Fund. Overall the Fund increased in value by 316m and we received an encouraging actuarial valuation. The Fund is in good shape but there are still huge risks in financial markets and we will look to protect the gains that we have made and reduce risk by spreading our investments across a wider range of assets moving forward. I would now like to address some of the major issues for the Fund in the year: Actuarial Valuation The outcomes of the valuation at Fund level were highly satisfactory with the funding level increasing by 4% to 77% and at Fund level the employer contribution rate reducing by 2%-the actual rates paid reflect changes at individual employer level. Of the 16 local authority employers 15 saw a reduction in the rate the actuary was prepared to certify. The decision to appoint Barnett Waddingham as actuary in 2009 has been confirmed as providing a technically robust approach which reflects the reality of employer s financial positions as much as possible. Fund Managers This was a strong year for fund performance with a total return of +9% outperforming the fund benchmark of +8.1%. The largest equity mandates in the Fund; Schroders UK equities and Baillie Gifford overseas equities performed particularly strongly. The Fund removed Alliance Bernstein in August after a prolonged period of under performance in global equities. These monies were then placed in passive global equities funds managed by State Street. In April m was invested with Impax Asset Management, a global equity manager which invests in companies that derive over 50% of their revenue from environmental themes. Alternative Investments The Fund needs to spread its investments into different types of assets to reduce the exposure that the Fund has to Equities. The Fund has deliberately sought to do this as a relatively low risk way through the following investments: Private equity manager appointment Harbourvest was appointed to manage a 75m private equity fund of funds mandate in May 2010 and by the end of March 60m had been committed. Infrastructure manager appointment Partners Group was appointed to manage a 75m infrastructure fund of funds mandate in November 2010 and this was fully committed by March. Reflecting our very deliberate approach to where we take risk in March we decided not to proceed with the appointment of a currency manager. 4 Kent County Council Superannuation Fund

6 Treasury Management A separate bank account for the Superannuation Fund has been set up and cash is managed on a fully segregated basis using counterparties agreed by the Superannuation Fund Committee. The counterparties are Royal Bank of Scotland, NatWest Bank and the JP Morgan Sterling Liquidity Fund. Lord Hutton s Review of Public Sector Pensions All the public sector pension schemes are under review and the Government s response to Lord Hutton s review is due in the autumn. Inevitably there will be major changes to the Local Government Scheme in the next 2-3 years and the Fund will need to communicate well with scheme members and employers and be alert to what could be fundamental changes which may require a major revision of our investment strategy. Whilst we support change the funded position of the LGPS does put us in a much stronger position than unfunded public sector schemes and this seems to have been ignored in Lord Hutton s review. Development of the website The website has been fully updated and we want it to become much more central in how we communicate with scheme members and employers. James Scholes Chairman Superannuation Fund Committee Kent County Council Superannuation Fund 5

7 Investment Report Asset Allocation The strategic asset allocation of the Fund is: Equities: Benchmark Actual at 31 March % % % % UK Global Fixed Income Property 11 9 Cash/Other Assets The asset allocation is based upon detailed financial modelling undertaken by Hymans Robertson which evaluates return scenarios against measures of Prudence, Affordability, Stability and Stewardship. The actual allocation at 31 March reflects the strength of equity returns. The Superannuation Fund Committee meets 6 times a year and at each meeting considers whether any re-balancing is required. 6 Kent County Council Superannuation Fund

8 Market Returns to 31 March All equity markets other than Japan performed strongly during the year. Returns in the major asset classes were: 1 year 3 year 5 year % % % UK Equities North American Equities European Equities ex UK Japan Equities Pacific ex Japan equities Other International Equities UK Bonds UK Index Linked UK Property Cash The relative performance of the Fund for was: Kent Fund WM Local Authority Universe Average Return % % 1 Year Year Year This placed the Fund in the 22nd percentile over 1 year, 31st percentile over 3 years and 60th percentile over 5 years compared with other Local Authority Funds. Kent County Council Superannuation Fund 7

9 Investment Managers All assets of the Fund other than cash are under external management. All manager appointments are made through European Union public service tender processes, in a small number of cases direct investments are made in funds. The Manager Structure as at 31 March was: UK Equities Schroder Investment Management Invesco Perpetual State Street Global Advisors Global Equities Baillie Gifford & Co GMO Schroder Investment Management State Street Global Advisors Impax Asset Management Fixed Income Goldman Sachs Asset Management Schroder Investment Management Property DTZ Investment Management Alternatives Henderson Secondary PFI Funds Partners Group Global Infrastructure YFM Private Equity Harbourvest Private Equity More details of the mandates are contained in the Statement of Investment Principles and committee papers available at 8 Kent County Council Superannuation Fund

10 Performance to 31 March UK Equity Fund % 1 Year 3 Year Benchmark % Fund % Benchmark % Schroders UK State Street Invesco Overseas Equity Baillie Gifford GMO Impax n/a n/a n/a n/a Schroders State Street Fixed Interest Goldman Sachs Fixed Interest Schroders Fixed Interest Property UK Property Investment Manager Performance Overall in the year the Fund returned +9% against a benchmark of +8.1%. The Fund spreads its assets across a wide range of different type of asset and also across managers who are taking different approaches to adding value. No individual manager or style of management will always be successful. The main reason for the outperformance in the year was the strong performance of the 2 largest equity mandates, Schroders management of UK equities and Baillie Gifford s management of overseas equities. These managers 3 year track records are also very strong. The Invesco UK equity mandate is much more defensively positioned than our other equity mandates and we expect strong outperformance in this financial year. Kent County Council Superannuation Fund 9

11 The Fund removed Alliance Bernstein as manager of global equities last August after a period of poor performance where the Fund was not confident of out performance moving forward. Alliance Bernstein have since seen a very large outflow of funds and this was a well timed decision. The Fund has a significant element of passive equity exposure managed by State Street. This is in part a holding position until funds are actually invested in alternative areas such as Private Equity and Infrastructure, but also reflects an industry approach of getting some of our equity exposure very cheaply through a passive manager. Both our Fixed Income managers Goldman Sachs and Schroders added value compared with their benchmark. Commercial Property returns were good in the year but the recovery is stalling and Commercial Property values still remain well down from their peak. The Fund is looking to add to its property exposure but only in a well risk managed way. The fund s major equity holdings are shown in Appendix 1 page 46 and a complete list of properties owned is shown in Appendix 2 page 48. Custodian The Fund uses an independent custodian, JP Morgan, to safeguard its segregated financial assets. The custodian is responsible for the safe-keeping of those assets, the settlement of transactions, income collection and other administrative actions in relation to assets. 10 Kent County Council Superannuation Fund

12 Scheme Details Report & Kent County Council administers the Kent Pension Fund on behalf of its own employees and the other employing bodies. Scheme regulations are set by Central Government. From April 2008 major changes were made to the benefit structure by Central Government. Benefits The scheme is a defined benefit occupational pension scheme which provides a significant range of benefits to its members. Membership is open to all employees of qualifying employers who have a contract of employment of at least 3 months and are under the age of 75 and most are automatically admitted to membership of the scheme upon commencing employment. Scheme benefits are based upon the individual s length of period of membership and final salary which will generally be the final 12 months pensionable pay of the scheme member. For membership built up after 31 March 2008 members will receive an annual pension based on 1/60 th of their final year s pensionable pay and will have the option to take part of the pension as a tax free lump sum. For membership before 1 April 2008 they will receive an annual pension based on 1/80 th of their final year s pensionable pay and an automatic tax free lump sum of 3 times the pension. The amount that the employee contributes has been amended from April 2008, these contributions range between 5.5% and 7.5% of pay with the rate being determined by the level of the member s pay. If a member has to leave work at any age due to permanent ill health the scheme provides a tiered ill health retirement package. If the member is unlikely to be capable of gainful employment within a reasonable time after they leave they will receive increased benefits payable immediately. A scheme member needs to have total membership of at least 3 months to qualify for ill health benefits. Where a scheme member dies in service a lump sum is payable by way of a death grant equal to three years pay. Scheme members are able to make an expression of wish concerning to whom the grant should be payable in the event of their death. The scheme also makes provision in the event of death for the payment of pensions to surviving spouses, civil partners, eligible children and, subject to certain qualifying conditions, nominated co-habiting partners. Increasing benefits In addition to the scheme benefits members may, if they wish, pay extra to increase their retirement benefits. They can do this either by paying additional contributions to buy extra LGPS pension, by making payments to the scheme s Additional Voluntary Contributions (AVC) arrangements, or by making payments to a personal pension, stakeholder pension or Free-standing AVC scheme of their choice. Full details of the scheme are provided on the website. Kent County Council Superannuation Fund 11

13 Communications The Pension Section communicates with members and employers in a variety of ways. Newsletters are sent to both pensioners and existing scheme members. Pension forums are used to communicate with employers. Scheme members and pensioners have access to the Pensions Section to make written, or telephone enquiries. Scheme members receive an annual benefit illustration and each pensioner and deferred pensioner is advised annually of the indexation increase to their pension. The Kent Active Retirement Fellowship (KARF) has been established as a facility in which pensioners can become members and participate in a wide variety of activities. KARF has established groups throughout the County and would welcome new members. Internal Dispute Procedure The Kent Pension Scheme has a formal Internal Dispute Procedure to consider a member dispute over a decision made either by a scheme employer or Kent County Council acting as the administering body. An independent person is appointed to consider an appeal made by a scheme member. 2010/11 Disputes considered 2009/10 Appeals upheld 5 0 As at 31 March, scheme employers make up the membership as follows: Contributors Pensioners Deferred Pensioners Kent County Council 21,956 15,509 16,559 Medway Council 5,134 2,203 3,482 Kent Police Authority 2,731 1,369 1,495 Kent Fire Authority District Councils 4,737 7,515 4,805 Other Scheduled 6,658 2,584 4,473 Total Scheduled bodies 19,540 13,797 14,361 Admitted Bodies 1,912 1,243 1,698 Grand Total 43,408 30,549 32, Kent County Council Superannuation Fund

14 Member Age Profile As at 31 March, contributing membership is made up of the following age bands: Under , , , , , , , , , Over Kent County Council Superannuation Fund 13

15 Pension Section Performance 2010/11 The Pension section is subject to performance monitoring, both internally and externally against other Local Authority Pension Funds (CIPFA Benchmarking). The performance outcomes are shown in the tables below. Type of Case Target Time Number Processed Processed Within Target Calculation and payment of retirement award Calculation and payment of dependants benefit Provision of estimates 20 days from receipt of paperwork 15 days from receipt of paperwork 20 days from receipt of paperwork Correspondence Full reply within 15 working days 2,076 99% % 2,861 98% 1,705 99% CIPFA Benchmark Survey The Kent Pension Fund administration section participates annually in the CIPFA Benchmark survey. The survey compares the cost of administration with 63 other Local Authority Administering Bodies across the UK. The results contained in these accounts are in respect of the Kent Pension Section performance in the year ending 31 March Total cost of administration per scheme member Kent Pension Scheme All Scheme Average Payroll costs per pensioner (including staff) Staff costs per Scheme Member (ex Payroll) IT Costs per member Communication costs per member Actuarial costs per member Accommodation costs per member The results above place Kent at 17 th of 63 authorities in terms of the cost of administration per member of the scheme. 14 Kent County Council Superannuation Fund

16 Report of the Consulting Actuaries Report & Introduction As required by Regulation 36 of The Local Government Pension Scheme (Administration) Regulations 2008 ( the Regulations ) as amended, an actuarial valuation of the Fund was carried out as at 31 March Valuation The 2010 valuation certified a common contribution rate of 20.8% of pensionable pay to be paid by each employing body participating in the Kent County Council Pension Fund. In addition to this each employing body has to pay an individual adjustment to reflect its own particular circumstances and funding position within the Fund. Details of each employer s contribution rate are contained in the Statement to the Rates and Adjustment Certificate in the triennial valuation report. Employer Contribution rates Employers contributions rates, in addition to those paid by the members of the Fund, are set to be sufficient to meet: The ongoing annual accrual of benefits for active members in respect of each employer that build up each year within the Fund, allowing for future pay increases and increases to pension in payment when these fall due. Plus an amount to fund the difference between each participating employer s notional share of value of the Fund s assets compared with 100% of their liabilities in the Fund. Asset Value and Funding Level The value of the Fund s assets as at 31 March 2010 for valuation purposes was 2,780m which represented 77% of the Fund s accrued liabilities at that date allowing for future increases in pay and pensions in payment. The contribution rates were calculated using the Projected Unit Method. The liabilities were valued allowing for expected future investment returns and increases to benefits as determined by market levels at the valuation date as follows; Rate of return on investments 6.6% per annum Rate of increases in pay 5.0% per annum Rate of Increases to pensions in payment 3.0% per annum Kent County Council Superannuation Fund 15

17 Post Valuation Events Changes in market conditions Since March 2010, we estimate that investment returns are likely to have been slightly more than assumed at the 2010 valuation although expectations for future levels of inflation have increased. Overall, we estimate that the current financial position of the Fund will not be materially different to the position as at the 2010 valuation. The next actuarial valuation is due as at 31 March 2013 and results will be reported during 2013/14. Graeme D Muir FFA Partner 28 July For and on behalf of Barnett Waddingham 16 Kent County Council Superannuation Fund

18 Statement of Responsibilities for the Statement of Report & The Authority s Responsibilities The authority is required: to make arrangements for the proper administration of its financial affairs and to secure that one of its officers has the responsibility for the administration of those affairs. In this authority, that officer is the Corporate Director of Finance and Procurement. to manage its affairs to secure economic, efficient and effective use of resources and safeguard its assets. Corporate Director of Finance and Procurement s Responsibilities The Corporate Director of Finance and Procurement is responsible for the preparation of the pension fund s Statement of in accordance with proper practices as set out in the CIPFA/ LASAAC Code of Practice on Local Authority Accounting in the United Kingdom, and is required to present fairly the financial position of the Superannuation Fund at the accounting date and its income and expenditure for the year ended 31 March. In preparing this statement of accounts, the Corporate Director of Finance and Procurement has: selected suitable accounting policies and then applied them consistently; made judgements and estimates that were reasonable and prudent; complied with the Code. The Corporate Director of Finance and Procurement has also: kept proper accounting records which were up to date; taken reasonable steps for the prevention and detection of fraud and other irregularities. Acting Corporate Director of Finance and Procurement Kent County Council Superannuation Fund 17

19 Independent auditor s report to Members of Kent County Council Opinion on the pension fund accounting statements I have audited the pension fund accounting statements for the year ended 31 March under the Audit Commission Act The pension fund accounting statements comprise the Fund Account, the Net Assets Statement and the related notes. These accounting statements have been prepared under the accounting policies set out in the Statement of Accounting Policies. This report is made solely to the members of Kent County Council in accordance with Part II of the Audit Commission Act 1998 and for no other purpose, as set out in paragraph 48 of the Statement of Responsibilities of Auditors and of Audited Bodies published by the Audit Commission in March Respective responsibilities of the Corporate Director of Finance and Procurement and auditor As explained more fully in the Statement of the Corporate Director of Finance and Procurement Responsibilities, the Corporate Director of Finance and Procurement is responsible for the preparation of the pension fund s Statement of in accordance with proper practices as set out in the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom. My responsibility is to audit the accounting statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require me to comply with the Auditing Practices Board s Ethical Standards for Auditors. Scope of the audit of the financial statements An audit involves obtaining evidence about the amounts and disclosures in the accounting statements sufficient to give reasonable assurance that the accounting statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the fund s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the fund; and the overall presentation of the accounting statements. I read all the information in the annual report to identify material inconsistencies with the audited accounting statements. If I become aware of any apparent material misstatements or inconsistencies I consider the implications for my report. Opinion on accounting statements In my opinion the pension fund s accounting statements: give a true and fair view of the financial transactions of the pension fund during the year ended 31 March and the amount and disposition of the fund s assets and liabilities as at 31 March ; and have been properly prepared in accordance with the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom. 18 Kent County Council Superannuation Fund

20 Opinion on other matters In my opinion, the information given in the annual report for the financial year for which the accounting statements are prepared is consistent with the accounting statements. Matters on which I report by exception I have nothing to report in respect of the governance statement on which I report to you if, in my opinion the governance statement does not reflect compliance with the Local Government Pension Scheme (Administration) Regulations 2008 and related guidance. Darren Wells Officer of the Audit Commission 1st floor Millbank Tower Millbank London SW1P 4HQ 19th October Kent County Council Superannuation Fund 19

21 Accounting Policies 1. CIPFA Code of Practice on Local Authority Accounting in the United Kingdom 2010/11 The Pension Fund accounts have been prepared in accordance with the CIPFA Code of Practice on Local Authority Accounting in the United Kingdom 2010/11 based on International Financial Reporting Standards. The accounts are prepared on a going concern basis. The accounts for 2010/11 are the first to be prepared on the basis of IFRS. There were no material changes to the accounts as the result of the IFRS transition. 2. Investments Quoted investments are stated at market value based on the closing bid price quoted on the relevant stock exchange on 31 March. Unit Trusts and managed funds are valued at the closing bid price. Unquoted investments are valued by the fund managers at the year end at fair value. Derivatives with an initial purchase price are included in the accounts as purchases. Those that do not have an initial purchase price but require a deposit such as an initial margin to be placed with the broker are recorded at cost on purchase. Derivative contracts are included in the net asset statements at fair value. The industrial and commercial properties were valued at open market prices in accordance with the valuation principles laid down by the Royal Institution of Chartered Surveyors. The valuation has been undertaken by Colliers CRE, as at 31 December The results of the valuation have then been indexed in line with the Investment Property Databank Monthly Index movement to 31 March. 3. Currency Transactions Assets and liabilities in foreign currency are translated into sterling at exchange rates ruling at the year-end. Differences arising on the translation of investments are included in investment gains. All foreign currency transactions are translated into sterling at exchange rates ruling at the transaction date. 4. Contributions, Benefits and Transfer Values All contributions are accounted for on an accruals basis and are at rates as specified in the rates and adjustments certificate. Payment of pensions and pensions increases are accounted for on an accruals basis. Lump sum payments are accounted for on the date of retirement or on death. Transfer values into and out of the Fund, return of contributions and other intermittent transactions are not dealt with on an accruals basis but are included in the accounts when the transactions occur. 20 Kent County Council Superannuation Fund

22 5. Investment Income Dividends, rents and cash deposits have been accounted for on an accruals basis and where appropriate from the date quoted as ex-dividend (XD). Foreign income has been translated into sterling at the rate ruling at the date of the transaction. Income arising from overseas investments is subject to deduction of withholding tax unless exemption is permitted by and obtained from the country of origin. 6. Expenditure All expenses and benefits are accounted for on an accruals basis. Kent County Council Superannuation Fund 21

23 Fund Account For the year ended 31 March Contributions and Benefits Notes s 000 s Contributions Receivable from employers 4 180, ,531 from employees 4 48,866 48,849 Transfers in 5 13,929 14,876 Benefits Payable 243, ,256 Pensions 6 (126,220) (123,803) Lump Sums 6 (40,803) (33,353) Payments to and on account of leavers Refunds of contributions (24) (231) Transfers Out 7 (10,595) (18,678) Other payments Administrative & other expenses borne by the scheme 8 (2,868) (3,018) (180,510) (179,083) Net additions from dealings with Members 63,107 60, Kent County Council Superannuation Fund

24 Fund Account Report & Returns on Investments Notes s 000 s Investment Income 9 56,566 65,151 Change in Market value of investments , ,461 Loss on Icelandic Investment , ,486 Investment Management Expenses Investment Managers 8 (5,342) (5,116) Actuarial (Investment Consultancy) (115) (107) Performance Measurement (55) (50) Other Investment 8 (1,020) (610) (6,532) (5,883) Net Return on Investments 253, ,603 Net Increase in Fund during the year 316, ,776 Opening net assets of the scheme at 1 April 2,885,463 2,075,687 Closing net assets of the scheme at 31 March 3,202,442 2,885,463 Kent County Council Superannuation Fund 23

25 Net Asset Statement Net Asset Statement as at 31 March Investments at Market Value 10 Notes s 000 s 000 s 000 s Equities - UK 556, ,343 - Overseas 506,392 1,062, ,241 1,186,584 Index-Linked Securities - Public 34,731 30,540 Pooled Investment Vehicles - Managed Funds 194, ,859 - Unit Trusts 1,240, ,404 - Insurance Contracts 245, ,148 - Other 26,296 8,004 1,706,786 1,295,415 Property , ,511 Derivatives Cash Deposits 60,943 63,706 Other Investments 5,057 5,715 3,150,739 2,814,622 Investment Liabilities 11 0 (3,703) 3,150,739 2,810,919 Current Assets 11 60,261 80,926 Current Liabilities 11 (8,558) (6,382) Net Assets 3,202,442 2,885,463 During the Alliance Bernstein mandate was terminated and all derivatives were closed out. The fund no longer holds any derivatives. The accounts summarise the transactions of the Pension Fund and deal with the net assets available. They do not take account of obligations to pay pensions and benefits which fall due after the end of the Pension Fund year. The actuarial position of the Pension Fund, which does take account of such obligations is dealt with in the Actuary s Report included in the Annual Report and these accounts should be read in conjunction with that report. The full actuarial valuation is available on 24 Kent County Council Superannuation Fund

26 Notes to the Report & 1) Actuarial Valuation as at 31 March 2010 As required by Regulation 36 of The Local Government Pension Scheme (Administration) Regulations 2008 ( the Regulations ) as amended, an actuarial valuation of the Fund was carried out as at 31 March The market value of the Fund s assets at the valuation date was 2,780m and the liabilities were 3,623m. The assets therefore, represent 77% ( %) of the Fund s accrued liabilities, allowing for future pay increases. The main actuarial assumptions used were as follows Valuation of assets:- Rate of return on investments: Rate of general pay increases: Assets have been valued at a 6 month smoothed market value 6.6% p.a. 5.0% p.a. Rate of increases to pensions in payment (in excess of guaranteed minimum pension): 3.0% p.a. The actuarial valuation has been undertaken on: the projected unit valuation method where there is an expectation that new employees will be allowed to join an employer; or the attained age valuation method for employers who were closed to new entrants. These methods assess the costs of benefits accruing to existing members during: the year following valuation; or the remaining working lifetime, respectively allowing for future salary increases. The resulting contribution rate is adjusted to allow for any difference in the value of accrued liabilities and the market value of assets. 2) IAS 26 Disclosures as at 31 March IAS 26 requires the actuarial present value of promised retirement benefits to be disclosed and gives three options for disclosure: Option A in the Net Assets Statement, in which case it requires the statement to disclose the resulting surplus or deficit Option B in the notes to the accounts Option C by reference to this information in an accompanying actuarial report. Option B has been chosen for the purposes of the Pension Fund accounts. Kent County Council Superannuation Fund 25

27 Notes to the The actuary has calculated that as at 31 March based on the actual Fund Value, the Pension Fund had a net liability of 1,321m as follows: Net Pension Asset as at 31-Mar Mar Mar s 000 s 000 s Present Value of Funded Obligation 4,523,250 5,137,091 3,593,235 Fair value of Scheme Assets (bid value) 3,202,442 2,885,463 2,075,686 Net Liability 1,320,808 2,251,628 1,517,549 Note, the Present Value of Funded Obligation consists of 3,761,840,000 in respect of Vested Obligation and 761,410,000 in respect of Non-Vested Obligation. 3) Taxation The Fund is accepted by the Inland Revenue as a registered pension scheme in accordance with paragraph 1(1) of Schedule 36 to the Finance Act 2004 and, as such, qualifies for exemption from tax on investment income, underwriting commission and gains on selling transactions. By virtue of Kent County Council being the administering authority, VAT input tax is recoverable on all Fund activities including investment and property expenses. 26 Kent County Council Superannuation Fund

28 Notes to the Report & 4) Contributions Receivable From Employers s 000 s Normal 110, ,379 Augmentation - (Early Retirement recoverable costs) 9,173 4,219 Deficit Funding 60,772 60, , ,531 Analysis of Employers Contributions Kent County Council 80,525 80,214 Scheduled Bodies 89,668 85,125 Admitted Bodies 10,629 10, , ,531 From Members s 000 s Kent County Council 21,473 21,758 Scheduled Bodies 24,362 24,215 Admitted Bodies 2,729 2,839 Lump Sum Contributions ,866 48,849 Note: As at 31 March the comparative numbers of contributing members were: 2010 Kent County Council 21,956 22,945 Scheduled Bodies 19,540 19,628 Admitted Bodies 1,912 1,936 43,408 44,509 Kent County Council Superannuation Fund 27

29 Notes to the 5) Transfers In s 000 s Individual 13,929 14,876 6) Benefits Payable KCC Scheduled Admitted Bodies Bodies s 000 s 000 s 000 s 000 s Pensions Retirement pensions 39,840 41,478 4,194 85,512 80,231 Widows pensions 2,343 2, ,592 5,348 Children s allowances Pensions increase 18,159 20,048 1,169 39,376 42,582 Less benefits recovered directly from employing authorities (4,356) (122) (4,478) (4,577) 60,417 60,301 5, , ,803 Lump Sums Retirement Lump Sums 15,970 19,181 2,228 37,379 30,369 Death Benefits 1,505 1, ,424 2,984 17,475 21,089 2,239 40,803 33,353 The amount stated as pensions increase represents the year on year cumulative increase on the nominal retirement pension received at the start date of retirement. 7) Transfers Out s 000 s Individual 10,595 18, Kent County Council Superannuation Fund

30 Notes to the Report & 8) Expenses borne by the Scheme s 000 s Administrative and other expenses Internal Administration 2,423 2,511 Actuarial Fees Audit Fee Legal & Other Professional Fees Other miscellaneous expenses ,868 3,018 Investment Management Expenses Investment Managers 4,707 4,627 Property Advisors ,342 5,116 Other Investment Management Expenses Miscellaneous property expenses Insurance recoverable received 68 (127) Disbursements paid Property Income (328) (495) Custody Fees , Kent County Council Superannuation Fund 29

31 Notes to the 9) Summary of Income from Investments Notes s % 000 s % Fixed Interest - UK Public 1, UK Quoted 3, Overseas Index-Linked - UK Equities - UK 15, , Overseas 12, , Pooled Investment Vehicles Managed Funds - UK Overseas 4, , Unit Trusts - UK Public/Fixed Interest 7, , Overseas Public/Fixed Interest - UK 2, Overseas Insurance Contracts - UK Other - UK Overseas Property - Freehold 13 10, , UK Pooled Vehicles 4, , Overseas Pooled Vehicles Total Income From Investments 55, , Currency Deposits - Currency Deposit Sterling Cash Balances , Sub-Underwriting Commission/Other Stock Lending Total 56, , Kent County Council Superannuation Fund

32 Notes to the Report & 10) Analysis of Change in Market Value of Investments Market Purchases Sales Change in Market Value as at at Cost Proceeds Market Value as at Value s 000 s 000 s 000 s 000 s Equities - UK quoted 527,343 79,454 (101,377) 50, ,260 - Overseas quoted 659, ,810 (382,442) 22, ,392 Index Linked - UK Public 30,540 8,100 (4,594) ,731 Pooled Investment Vehicles Managed Funds - UK 2, ,215 3,248 - Overseas 179,826 5,286 (5,286) 11, ,490 Unit Trusts - UK Public/Fixed Interest 307,039 11,544 6, ,127 - Overseas Public/Fixed 67, ,967 71,287 Interest - UK 343,795 (2) (699) 31, ,767 - Overseas 193, ,360 (205,446) 44, ,561 Insurance Contracts - UK 194,148 30, , ,010 Other - UK 8, ,055 10,221 - Overseas 0 16,387 0 (312) 16,075 Property - Freehold 168,177 15,709 7, ,954 - UK Pooled Vehicles 46,802 22,814 2,259 71,875 - Overseas Pooled Vehicles 17, ,741 Derivatives - UK Equity future contracts (11) Overseas Equity future contracts (951) 0 Total 2,745, ,057 (700,784) 205,265 3,084,739 Cash Deposits 63,706 (1,427) 60,943 Other Investments - Debtors - Outstanding Sales 2, Creditor - Outstanding Purchases (3,682) 0 Purchases - Profit/(Loss) on Forward Currency (21) 0 - Investment Income Accruals 3,502 4,401 Total 2,810, ,838 3,150,739 Kent County Council Superannuation Fund 31

33 Notes to the The change in market value of investments during the year comprises all increases and decreases in the market value of investments held at any time during the year, including profits and losses realised on sales of investments during the year. Transaction costs are included in the cost of purchases and sales proceeds. Transaction costs include costs charged directly to the Pension Fund such as fees, commissions, stamp duty and other fees. Transaction costs incurred during the year amounted to 884,068 ( ,247,197). In addition to the transaction costs disclosed above, indirect costs are incurred through the bid-offer spread on investments within pooled investment vehicles. The amount of indirect costs is not separately provided to the Pension Fund. The following reflects the monetary and percentage split of the investments of the Fund at 31 March and previous year comparisons s % 000 s % Alliance Bernstein , Baillie Gifford 574, , DTZ 280, , GMO 191, , Goldman Sachs 244, , HarbourVest 1, Henderson 8, , Impax 26, Invesco 355, , JP Morgan 23, , Partners Group 14, Schroders 883, , State Street Global Advisors 537, , YFM 2, , ,145, ,808, The investment manager totals exclude investment debtors and creditors. 32 Kent County Council Superannuation Fund

34 Notes to the Report & 11) Current Assets & Liabilities s 000 s 000 s 000 s Investment Liabilities Outstanding Purchases 0 (3,682) Loss on forward currency 0 (21) 0 (3,703) Current Assets Contributions from: - Scheduled Bodies 30,200 23,424 - Admitted Bodies 1,464 31, ,274 Other current assets 863 1,327 Cash Deposits 27,734 55,325 60,261 80,926 Current Liabilities Unpaid Benefits (4,386) (4,369) Other current liabilities (4,172) (2,013) (8,558) (6,382) 12) Loss on Icelandic Investment At 31 March the Pension Fund is carrying a provision of 229,861 unchanged from 2010, in respect of cash investments in the Icelandic banks which collapsed in 2008, based on the assumption that KCC has priority creditor status. This is included in other current liabilities per note ) Property Valuation of Investment Properties The pension fund directly owns 26 investment properties, all of which are independently valued by Colliers CRE, an external firm of professional valuers. They valued the properties at fair value in accordance with the principles laid down by the Royal Institute of Chartered Surveyors as at 31 December The results of the valuation have then been indexed in line with the Investment Property Databank Monthly Index movement to 31 March. Kent County Council Superannuation Fund 33

35 Notes to the Property Income and Expenditure s 000 s Rental Income from Investment Properties 10,379 10,935 Direct Operating Expenses on investment properties (843) (434) generating rental income 9,536 10,501 14) Additional Voluntary Contributions Scheme members have the option to make additional voluntary contributions to enhance their pension benefits. In accordance with regulation 4(2)(b) of the LGPS (Management and Investment of Funds) Regulations 2009, these AVC contributions are not included within the Pension Fund. These contributions are invested separately from the Pension Fund, with either Equitable Life Assurance Company, Prudential Assurance Company or Standard Life Assurance Company. The AVC provides secure additional benefits on a money purchase basis for those members electing to pay additional voluntary contributions. Prudential Standard Life Equitable Life s 000 s 000 s 000 s 000 s 000 s Value at 1 April 3,906 3,265 2,082 1,586 1,222 1,195 Income Contributions Received 1, Transfer Values Received Interest & bonuses Total 1, Expenditure Retirement Benefits Paid (762) (255) (357) (105) (143) (119) Transfer Values Paid (16) (33) (8) (11) (3) Refunds of Contributions (37) (16) 0 0 Total (815) (304) (357) (113) (154) (122) Change in Market Value (10) (1) Value at 31 March 4,390 3,906 2,058 2,082 1,136 1, Kent County Council Superannuation Fund

36 Notes to the Report & 15) Related Party Transactions s 000 s Transactions between the KCC Pension Fund and Kent County Council - Transactions between the KCC Pension Fund and Kent County Council, in respect of Pensions administration costs, investments monitoring, legal and other services. 2,531 2,647 - in respect of cash held by KCC owing to the Pension Fund 1,580 55,325 - In respect of interest received on cash deposits 89 1,259 There were no related party transactions with members or senior officers. 16) Investment Commitments As at 31 March the Pension Fund had a future commitment to invest in the following Funds: Fund Total Commitment Invested Outstanding YFM Private Equity Fund 4m 3.2m 0.8m Aurora European Property Fund 30.1m 30.84m 150k ( 35m) ( 34.83m) ( 170k) Partners Group 75m 14.7m 60.3m HarbourVest 60m 1.6m 58.4m Kent County Council Superannuation Fund 35

37 Notes to the 17) Stock Lending In April 2010 the Pension Fund resumed the stock lending programme with the fund s Custodian JP Morgan. The amount of securities on loan at year end, analysed by asset class and a description of the collateral is set out in the table below. Loan Type Market Value Collateral Value Collateral type 000 s 000 s Equities 21,198 22,500 Securities Sovereigns Euro 4,566 4,782 Securities Sovereigns Sterling 3,982 4,081 Securities 29,746 31,363 18) Cash Balances With effect from 1 July 2010 the Pension Fund cash which is not required on a day to day basis to pay benefits or administrative expenses of the Pension Fund has been invested separately from that of KCC. This surplus cash is invested in the RBS liquidity account and JP Morgan Sterling Liquidity MMF. The remaining cash is split between the Investment Fund Managers, who hold it in the JP Morgan Sterling Liquidity MMF until required. 19) Investment Performance - The County Council uses The WM Company investment performance service which in conjunction with CIPFA and the Society of County Treasurers produces local authority statistics. - The rates are expressed as rates of return and the statistical measure of performance enables valid comparisons to be made between individual funds and against the aggregate performance (median) of all local authority funds participating in the service. - The property portfolio is subject to an independent review of performance by the Investment Property Databank. 36 Kent County Council Superannuation Fund

38 Notes to the Report & 20) Financial Instruments The investments disclosed in the Balance Sheet are made up of the following categories of financial instruments: Creditors Current 31 Mar 31 Mar s 000 s - Investment Creditors 0 3,703 - Other Creditors 8,558 6,382 Total Financial Liabilities 8,558 10,085 Available-for-sale financial assets 2,893,785 2,576,873 Derivatives Loans and receivables - Investment debtors 5,057 5,715 - Other debtors 32,527 25,601 Cash and cash equivalents - Held by Fund Managers 60,943 63,706 - Internally Managed 27,734 55,325 Total Financial Assets 3,020,046 2,727,371 Kent County Council Superannuation Fund 37

39 Risk Management The activities of the Kent Pension Fund (the Fund) expose it to a variety of financial risks: In respect of its investments the Fund is specifically exposed to the following risks: - Market risk the possibility that financial loss might arise as the result of changes in such measures as interest rates and stock market movements. - Credit risk the possibility that other parties might fail to pay amounts due - Liquidity risk the possibility that the Fund might not have funds available to pay benefits The over-riding risk to the Fund is a loss on financial investments which ultimately could mean the Fund could not pay benefits but more realistically that employer contribution rates would have to increase at the actuarial valuation. There are a number of ways in which the Fund seeks to minimise potential adverse effects on the resources available to fund benefits: Market Risk Diversified asset allocation - the Fund invests in a range of asset classes on a global basis to help guard against sharp falls in value of a particular asset class. The Fund has a high allocation to Equities at around 70% and this is typical of local authority funds. It does mean that returns are highly correlated with equity markets. Credit Risk Diversification in manager selection - in appointing managers the Committee is looking for types of manager which combine well. No manager can succeed in all market conditions and the Fund diversifies risk by appointing a number of managers with different investment styles for each asset class. In the last 12 months the Fund has terminated the contract of an active manager and transferred the funds into a passive equity manager. It has also made an investment in an environmental fund and made a commitment to invest in a Private Equity fund and Infrastructure fund of funds. With advice from Hymans Robertson, the Fund s investment consultants, the Fund appoints specialist managers to manage each asset class and then monitors investment performance. Each manager s performance is reviewed regularly and continued under-performance by managers will lead to their dismissal. Liquidity Risk With the exception of its property holdings the Fund s monies are invested in investments which may be converted to cash at short notice. In addition the fund holds a minimum of 15million in call accounts and Money Market Funds to ensure funds are available to pay benefits. 38 Kent County Council Superannuation Fund

40 Risk Management Report & Business Risk Officers of Kent County Council formally review and update the Pensions Risk Register (Register). The Register was last reviewed in April and the Top 10 Risks for the Fund and the controls in place are set out below. Risk Failure of governance arrangements Financial default by an employer Controls Committee meetings Liaison with Chairman, Vice Chairman, spokesman Advice from Legal & Democratic Services Enforce Guarantee Bond arrangements Review existing exposure 2010 Valuation Detailed timetable for process Pension Fund Cash Management Investment advice Investment under-performance & Investment Manager Complexity / Structure Disaster recovery for pensions data Recruitment & Retention of staff Not meeting Pensions KPI s KCC data quality Regular briefing for major employers Review of actuarial service Segregated cash management policy Quarterly monitoring reports Examine different options for investment advice Quarterly monitoring of managers Update of Investment Strategy Disaster recovery arrangements with Heywoods Regular testing of arrangements Ensure that both teams are properly resourced Ongoing training & development of staff Weekly reporting Monthly reporting Twice yearly reports to Committee Close liaison with KCC Personnel & Development staff Kent County Council Superannuation Fund 39

41 List of Employing Bodies Scheduled Bodies Local Authority and District Councils Ashford Borough Council Canterbury City Council Dartford Borough Council Dover District Council Gravesham Borough Council Kent County Council Maidstone Borough Council Medway Council Sevenoaks District Council Shepway District Council Swale Borough Council Thanet District Council Tonbridge & Malling Borough Council Tunbridge Wells Borough Council Schools Allington Primary School All Souls County Primary School Angley School Archbishops CE School Astor College of Arts Astor of Hever School Aycliffe CEP Aylesford School Barton Court Grammar School Barton Junior School Bennett Memorial School Birchington CEP School Borden Grammar School Borough Green Primary School Bredgar School Brockhill Park School Brookfield Junior School Charles Dickens High School Chatham Grammar School for Girls Chatham Grammar School for Boys Chaucer Technology School Crockenhill Primary Cranbrook School Dane Court Grammar School Dartford Grammar School for Girls Ditton Infant School Ditton CE Junior School Dover Grammar School for Boys Dover Grammar School for Girls Downsview Infants School East Borough Primary School Five Acre Wood School Folkestone School for Girls Gateway Community Primary School Gravesend Grammar School for Boys Gravesend Grammar School for Girls Greatstone County Primary School Halfway House County Primary School Harcourt County Primary School Hartsdown Technology College Herne Bay Junior School Hextable School High Firs Primary School Highsted Grammar School Hillview School for Girls Holy Family RC Primary Holy Trinity County Primary School, Dartford Holy Trinity County Primary School, Gravesend 40 Kent County Council Superannuation Fund

42 List of Employing Bodies Report & Homewood School, Tenterden Horton Kirby County Primary School Howard School Hundred of Hoo School Hugh Christie School John Wesley School Judd School Tonbridge King Ethelbert School Malling School Maplesden Noakes School, Maidstone Mascalls School Northfleet Technical College Northfleet School for Girls Oakwood Park Grammar School Our Lady of Hartley RC Primary School Parkway Primary Pent Valley Secondary School Queen Elizabeth Grammar School Riverview Infants School Riverview Junior School Robert Napier School Roseacre Junior School Sandling CP Shatter Locks Infants Simon Langton Grammar School for Boys Skinners School Snodland County Primary School St Anselm s RC Comprehensive School St Bartholomew County Primary School St Botolphs County Primary School St Edmund of Canterbury Comprehensive St Francis County Primary School St George s School, Broadstairs St George s School, Gravesend St Gregory s Catholic Comprehensive St Johns CEP School St John RC Comprehensive St Joseph RC Primary School St Mary s CEP St Peter s Aylesford St Simon Stock School Staplehurst School Stella Maris RC Primary School Sutton at Hone County Primary School Thamesview School The Norton Knatchbull Thomas Aveling School Tunbridge Wells Girls Grammar School Valence Special School West Minster CP Sheppey White Cliffs Primary Whitehill Primary School Willesborough County Primary Junior School Wilmington County Primary School Wilmington Grammar School for Boys Wilmington Grammar School for Girls Wilmington Hall Wrotham School Further Education Colleges Canterbury College Hadlow College Hilderstone College K College Mid Kent College North West Kent College Thanet College Kent County Council Superannuation Fund 41

43 List of Employing Bodies Other Scheduled Bodies Ash Parish Council Birchington Parish Council Borough Green Parish Council Broadstairs and St Peter s Town Council Chesterfield Parish Council Cranbrook Parish Council Darenth Parish Council Deal Town Council Ditton Parish Council Dover Town Council Downswood Parish Council Eastry Parish Council Edenbridge Town Council EK Arms Length Management Organisation EK Services (Thanet) Eynsford Parish Council Eythorne Parish Council Farningham Parish Council Faversham Town Council Folkestone Town Council Great Mongeham Parish Council Hartley Parish Council Hawkhurst Parish Council Hawkinge Parish Council Herne and Broomfield Parish Council Horton Kirby and South Darenth Parish Council Hythe Town Council Kent and Essex Sea Fisheries Committee Kent and Medway Fire and Rescue Authority Kent Police Authority Kent Probation Kent Valuation Tribunal Kings Hill Parish Council Leigh Parish Council Longfield and New Barn Parish Council Lower Medway Internal Drainage Board Margate Charter Trustees Minster on Sea Parish Council Otford Parish Council Otham Parish Council Pembury Parish Council Ramsgate Town Council River Stour Internal Drainage Board Romney Marsh Levels Internal Drainage Board Sandwich Town Council Seal Parish Council Sevenoaks Town Council Snodland Town Council Southborough Town Council Staplehurst Parish Council Stone Parish Council Sturry Parish Council Swanley Town Council Swanscombe and Greenhithe Town Council Tenterden Town Council Thanet Joint Computer Committee Upper Medway Internal Drainage Board Westerham Parish Council West Kingsdown Parish Council Woodnesborough Parish Council 42 Kent County Council Superannuation Fund

44 List of Employing Bodies Report & Academies Amherst School Academy Bishop of Rochester Academy Brompton Academy Canterbury Academy Castle Community College Academy Chatham House Grammar School Academy Clarendon House Grammar School Academy Cornwallis Academy Dartford Grammar School For Boys Academy Dover Christchurch Academy Duke of York Military Academy Folkestone Academy Fort Pitt Grammar School Academy Trust Fulston Manor School Academy Hayesbrook High School for Boys Academy Herne Bay High School Academy Highstead Grammar School Academy Highworth Grammar School Academy Isle of Sheppey Academy John Wallis Academy Kemnal Academy Trust: Orchards Academy Kemnal Academy Trust: Rainham School for Girls Knole Academy Leigh Technology Academy Longfield Academy Marlowe Academy Marsh Academy Meopham Community Academy New Line Learning Academy Rainham Mark Grammar School Academy Rochester Grammar School For Girls Academy Sandwich High School Academy Sir Roger Manwood School Academy Skinners Academy Spires Academy Strood Academy St Stephens Junior School Academy Tonbridge Grammar School For Girls Academy Weald of Kent Grammar School Academy Westlands Primary School Academy Westlands School Academy Wilmington Academy Kent County Council Superannuation Fund 43

45 List of Employing Bodies Admitted Bodies Community Admission Bodies Active Life Limited Ashford s Future Company Ltd Ashford Leisure Trust Limited The Avenues Trust Caldecott Community Canterbury and Rochester Diocesan Council Canterbury Archaeological Trust Christchurch College, Canterbury Connexions Partnership Kent & Medway Folkestone and Dover Water Company Gravesham Community Leisure Hope (Kent) Limited Hyde Housing Association Invicta Telecare Limited Kent College, Canterbury Kent College, Pembury Kent Community Housing Trust Kent Music School Knotley Hall School Maidstone Housing Trust Medway Community Living Services Medway Housing Society Mote House, Maidstone Museum of Kent Life Trust Orbit South Housing Association Remade South East Rochester Bridge Trust Russet Homes Sevenoaks Leisure Limited Sevenoaks School St Vincent s School, Tankerton Swale Housing Association Thanet Archaeological Trust Thanet Leisure Force Tourism South East Town & Country Group University Of Kent West Kent Housing Association West Kent Water Company Transferee Admission Bodies ABM Catering Limited APCOA Parking Limited Avenues Trust Community Support Service Brenwards Limited Compass Group UK & Ireland Fusion Lifestyle Mitie PFI Limited Mitie Cleaning & Support Services Northgate Managed Services Norwest Holst Orchard Theatre Dartford Limited Quadron Services Limited Reliance Task Management Shaw Healthcare (FM Services) Ltd 44 Kent County Council Superannuation Fund

46 The Fund Profile 5 Year Summary Report & Financial s 000 s 000 s 000 s 000 s Contributions 189, , , , ,688 Investment and other income 82,107 81,224 81,807 80,901 70,495 Sub Total 272, , , , ,183 Benefits and other payments (142,862) (153,485) (164,558) (184,966) (187,042) Total 129, , , , , March 31 March 31 March 31 March 31 March s 000 s 000 s 000 s 000 s Net Assets 2,573,640 2,489,098 2,075,687 2,885,463 3,202,442 Investments at Valuation 2,457,117 2,334,413 1,895,169 2,745,201 3,084,739 Membership 31 March 31 March 31 March 31 March 31 March Contributors 40,586 42,513 43,385 44,509 43,408 Pensioners 25,737 26,658 27,898 29,107 30,549 Deferred Pensioners 24,746 26,569 26,607 30,691 32,618 Kent County Council Superannuation Fund 45

47 Appendix 1: Major UK & Overseas Equity & Unit Trust Holdings by Value As At 31 March 000 s United Kingdom Invesco Perpetual Income Fund 355,861 MPF UK Equity Index Sub-Fund 245,009 BG Group 32,764 Vodaphone Group 30,615 Royal Dutch Shell 27,463 Anglo American Plc 26,960 Rio Tinto 24,256 Unilever Plc 22,281 HSBC Holdings 19,728 AstraZeneca 19, s North America Oracle 13,604 Altria Group Inc 13,455 Stericycle 12,217 Apache 11,688 Apple 9,200 Progressive Cp 8,786 Praxair 7,305 O Reilly Automotive 7,269 Pepsico Inc 7,232 EOG Resources 7,141 BP Amoco 19,563 Legal & General 15,463 Prudential 13,553 Standard Chartered 12,033 Lloyds TSB Group Plc 11,738 Carnival Plc 11,425 Schroder Recovery Fund Income 11,392 Centrica 10,853 Carillion 10,644 Spirax-Sarco 10,636 Japan Baillie Gifford Japanese Smaller Cos Fund 4,962 Mitsui & Co Ltd 4,093 Canon Inc 3,564 Japan Tobacco 3,438 Inpex Holdings 3,092 SMC Corporation 2,947 Olympus 2,729 Fast Retailing 2,194 Komatsu 2,173 Mitsui Sumitomo Insurance 1, Kent County Council Superannuation Fund

48 Appendix 1: Major UK & Overseas Equity & Unit Trust Holdings by Value Report & 000 s Europe Nestle 13,284 Svenskahandelsbank 12,276 Groupe Bruxelles 11,667 Investor B 11,363 Total 9,507 Roche Holdings 8,052 Atlas Copco 7,748 Heineken 6,378 Celesio 5,364 Essilor 5,361 Pacific/Other MPF International Equity 292,691 GMO Developed World Equity Investment Fund 185,559 Schroder GAV Unit Trust 149,993 Goldman Sachs Sterling Credit Fund 134,556 Goldman Sachs Global Corporate Fund 71,288 Impax Environmental Fund 26,877 OGX Petroleo On 9,872 Partners Group 9,499 Itau Unibanco 7,142 TKI Garanti Bksi 6,862 Vale Sa 6,494 Samsung Electronics 6,254 Kent County Council Superannuation Fund 47

49 Appendix 2: Property Valuation as at 31 March Location Market Type of Property Value Unit 1/13 Boyatt Wood Industrial Estate, Parham Drive, Eastleigh 3,150,456 Industrial Otterspool Way, Watford 2,650,384 Industrial Units 1/10 Stuart Close, Penarth Road, Cardiff 4,055,252 Industrial Units 6/13 Hawksworth Trading Estate, Bridgewater Close, 4,005,187 Industrial Swindon Capital Interchange, Brentford 7,501,087 Industrial Kings Park Units 100 and 200, Trafford Park, Manchester 6,711,692 Industrial Kings Park Units 300 and 400, Trafford Park, Manchester 4,928,382 Industrial 49/59 Battersea Park Road, London SW8 16,252,354 Industrial Hertsmere Industrial Estate, Borehamwood 12,251,775 Industrial Grey Street, Newcastle 4,784,241 Office The Tramshed, Walcot Street, Bath 4,255,157 Office 1 Castle Terrace, Edinburgh 5,657,145 Office Conduit Street, London W1 14,349,975 Office 3-5 Charing Cross Road, London W1 19,164,179 Office 22 St Ann s Road, Harrow 958,209 Retail Store 24 St Ann s Road, Harrow 1,765,122 Retail Store Cornhill & 1 Tavern St, Ipswich 3,530,244 Retail Store Bridlesmith Gate, Nottingham 7,724,556 Retail Store National House, 34/36 St Ann's Street and 42/46 Cross Street, 7,450,459 Retail Store Manchester Queens Drive, Nottingham 4,410,295 Retail/Warehouse Burton Road, Kendal, Cumbria 6,843,560 Retail/Warehouse Barker Road, Maidstone, Kent 5,829,700 Retail/Warehouse 217a Bath Road, Slough 10,392,073 Retail/Warehouse Wenvoe Retail Park, Culverhouse Cross, Cardiff 11,152,469 Retail/Warehouse Wardour Street London 10,590,731 Retail/Warehouse 63 George Street, Edinburgh 10,590,117 Retail/Office Henderson UK Shopping Centre Fund 4,217,383 Property Fund Legal & General Leisure Fund 7,130,547 Property Fund ING Central London Fund 746,886 Property Fund Unite Student Accommodation Fund 8,320,467 Property Fund Falcon Unit Trust 7,103,250 Property Fund Hercules Property Unit Trust 10,764,792 Property Fund Lothbury 7,577,305 Property Fund Quercus 7,778,804 Property Fund West End of London Property Unit Trust 9,049,212 Property Fund Airport Industrial Property Unit Trust 9,186,475 Property Fund Aurora European Property Fund 17,740,519 Property Fund Total Market Value 280,570, Kent County Council Superannuation Fund

50 Appendix 2: Property Valuation Report & During the year the following transactions were carried out within the property portfolio: Acquisitions Market Type of Property Value 63 George Street, Edinburgh 10,669,790 Retail/Office Units 300 and 400 Kings Park, Trafford Park, Manchester 5,039,029 Industrial Disposals There were no disposals during Kent County Council Superannuation Fund 49

51 Kent County Council Pension Section Fund benefits and contributions Pat Luscombe (Pensions Manager) 2nd Floor Brenchley House Week Street Maidstone Kent ME14 1RF Tel: Fax: Kent County Council Corporate Finance Fund accounting and investment Nick Vickers (Head of Financial Services) Sessions House County Hall Maidstone Kent ME14 1XQ Tel: Fax: Web: County Print & Design /TRH