West Midlands becomes first to use GIS
West Midlands Pension Fund has become the first pension fund to recruit HSBC Global Investor Services to measure its UK equity transaction costs.

And experts are predicting that other pension funds ‑ in light of the Myners principle to measure performance in a bid to keep a check on costs ‑ will follow West Midlands’ lead. GIS’s Transaction Cost Measurement Service compares execution costs on all UK equity transactions to a large universe of similar transactions.

Reports are produced for trustees that allows them to control administrative costs and comply with voluntary principles recommended by Myners. West Midlands Pension Fund’s Brian Bailey, said “As people take on this sort of service it potentially has the possibility of driving costs down”. Recent research by performance measurement solutions firm Inalytics has found that transaction costs can be up to three quarters of one per cent of a fund’s value each year. Chief Executive Rick Di Mascio said: “These costs are being borne by the fund and therefore the scale of them means they require monitoring. The costs can be equivalent to a performance target which is very actively monitored.  Pension Funds are starting to respond after Myners put this on the table”.

Professional Pensions
31 January 2002
 

LA's Want same sex rights as MP's
Local authorities are angry that they are not being given the same priority as MP’s regarding .. dependants pensions. Mike Woodall, Chief Pensions Officer at the West Midlands Pension Fund, said “MP’s have voted themselves in for having a dependants pension and the Local Government Pension Scheme (LGPS) is still waiting for its decision.”

Woodall said the public sector has waited for too long for a decision that could let scheme members pass pensions on to partners ‑ not just legal spouses as the law currently stands.

Woodall: “We welcome the decision for the parliamentary pension scheme to have a dependants pension and we hope it will be replicated for the LGPS.” He added: “The consultation process received overwhelming support from most local authorities.”

The Local Government Pensions Committee (LGPC) started work on dependants pensions over a year ago and the case was put forward to parliament last month. Terry Edwards, Pensions Consultant at the LGPC, said the decision had been expected by the end of July 2001. The change in the regulation will reflect the current lifestyle of scheme members. The LGPS argued the scheme needed to reflect social change and that the provision for a dependants would make the local authority pension scheme even more attractive and encourage membership.

The Teachers Pension Scheme already allows members to nominate a person other than a married partner as do many private sector schemes. There are some concerns that dependants pensions could lead to additional costs for some local authorities. However, the LGPC argued the introduction of dependants pensions will result in substantial savings in the long term. No date has been given for when parliament will give the go‑ahead for a change in the LGPS .. regulations, although MP’s have been put under pressure from local authorities and unions.

Councils are expecting news at the end of this month.
Pensions Week 13 August 2001

West Midlands first authority to offer employees TUC Stakeholder
West Midlands Pension Scheme is set to be the first local authority in England to offer its employees an additional pension through the TUC Stakeholder Scheme. The Scheme, which said it was in an “advanced stage” of consideration, is searching for a more appropriate staff AVC after many workers became disillusioned with the product following the Equitable saga.

The TUC stakeholder scheme ‑ run by Prudential ‑ is constituted as a trust, making it more suitable for local authorities who cannot officially designate a Stakeholder Scheme. TUC Co‑ordinator of the Stakeholder Pension Scheme John Calland said: “Local authorities ‑ either as administrators of the local government pension scheme or as employers of staff working within local government ‑ don’t have statutory powers to formally designate a Stakeholder Scheme for their staff.” To avoid this, administering authorities and employers allow the TUC to send and present information to local authority staff while not formally designating a scheme. The model is already successfully used in Northern Ireland where presentations are currently under way.

Professional Pensions
14 February 2002

West Midlands Scheme bucks trend and posts increased solvency rate
One of the largest local authority pension funds has bucked the markets and reported a 1.2% higher solvency rate in the latest round of triennial local authority valuations.

The £4.9bn West Midlands Pension Fund, administered by Wolverhampton City Council, achieved a funding level of 95.5% compared with 94.3% in the 1998 valuations. The Council is the first ‑ and likely to be one of the few ‑ to report a healthier valuation than three years ago.

Brian Bailey, Director for Resources and Support, Wolverhampton City Council, said the Council made robust assumptions in the 1998 valuations, taking into account that the market was highly priced at the time. As a result of the increased funding level the council said it will not have to increase employer contributions across the board. Other authorities have been forced to increase employer funding to fill funding gaps.

Bailey said: “We are very satisfied with the result and for the major employers there will be a standstill in contribution rates or even a lower rate.” “However, some of the smaller employers’ contributions are still very volatile and we will have to look at the levels for them,” he said. Employer contributions within West Midlands vary between 11.9% and 14.5%. The fund has also seen a good performance from its in‑house fund management team, Bailey said.

The Scheme employed William M Mercer for the valuation and used the market value approach. The method has proven to be popular among most local authorities as it is viewed as a realistic approach. Like most local authority schemes, the Council has been hit by volatile market conditions, although West Midlands is the first to have seen an improvement in its solvency rate.

Earlier this year, the £2.3bn South Yorkshire Pension Scheme reported a funding level of 90% and said it was looking to increase contributions because of the deficit. The £6bn Tameside Fund reported a valuation result of 106% compared with 107% in the last triennial valuations in 1998. Like West Midlands, Tameside said it did not expect to increase employer contributions and the positive valuation results were affected by prudent assumptions about market conditions. Tameside is so far one of the best funded. The London Borough of Newham is currently the worst  funded at 70.2%.

Pensions Week
4 February 2002

Funds back decision to launch Equitable Life enquiry
Pension Funds are backing the government’s decision to launch an independent enquiry into the ongoing problems at Equitable Life.
The enquiry ‑ to be headed by Lord Penrose ‑ is to investigate how the current situation at the life assurer arose and identify lessons to be learned for future conduct, administration and regulation of the industry.

The NAPF said: “Anything that sheds light on the events leading to Equitable’s present position and which identifies lessons to be learnt for the future is to be welcomed. Lord Penrose’s enquiry provides a vital opportunity to reduce the likelihood of another Equitable and to boost the long‑term confidence and security of UK pensions and savings.”

However, concerns are being voiced that the enquiry will take too much time and leave many .. policyholders waiting for a suitable resolution.

National Information Form Chairman and West Midlands Metropolitan Authorities Pension Fund’s Chief Pensions Officer, Mike Woodall, said: “Because this enquiry appears to stretch back to the 1950’s this is going to take some time to complete. That will have the implication that those people so affected have got a continuing significant period of uncertainty as to whether there will be some restitution offered to them by the Government.” And he stressed that the enquiry would not deflect the NIF from assessing whether there is support to take legal action. The NIF had already started to canvass support before the government’s announcement. Woodall added: “We are still proceeding to look at the level of support that is available to us from other LGPS administering authorities to seek our own legal opinion and to see if there are grounds for legal action. That will continue irrespective of this latest announcement".

Professional Pensions
6 September 2001

West Midlands Pension Fund wins top industry prize Click Here for Details (Page Added 24 May 1999)

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