Annual General MeetingChris Tambini Assistant Director, Ian Howe

Pensions Manager, Colin Pratt Investment Manager

The career average revalued earnings (CARE) scheme implemented from 1 April 2014

On-line system implemented

New pension administration system implemented

New 2014 career average revalued earnings “CARE” scheme implemented – aggregation rules still outstanding

Members feedback – satisfaction score of 96% who rated service as good or excellent

Benchmarking LCC cost £18.24 per member Local Authority average £26.62 per member

Auto enrolment completed for the larger fund employers and well underway for the smaller employers

Employer numbers continue to rise (now over 200 employers with active contributors)

New on line service fully implemented with our partner Hymans delivering savings in printing and postage

On line service is instrumental in scheme communications to scheme members

Members are able to see personalised impact of different variables under the new scheme e.g. retirement age, bigger lump sum and their annual benefit statement at March 2014

New pension administration system implemented Benefits are now more complex, final salary link to

pre April 2014 benefits and CARE benefits from April 2014

Communication exercise with employers has started and will continue

Additional requirements introduced by new scheme

Co-operation is needed with monthly and year end reporting

Consultation launched in June 2013 Public Sector Pensions Act 2013 (which covers all

Public Sector Schemes, not just LGPS) includes greater emphasis on governance arrangements

Local Pension Board to be in place from April 2015 (to assist the Scheme Manager)

Pension Board to include 50% staff representation Members have to have a certain levels of knowledge

and competence

Regulations not yet finalised, although consultation exercises mean that their content is clear

Consultation and draft regulations have been issued incredibly late, given the immovable date of 1st April 2015 to have a Local Pension Board in place

Leicestershire Board will have three member representatives and three employer representatives

Elections of member representatives will take place at today’s meeting

One currency mandate terminated during year, but one remains in place

Asset allocation mandate terminated during year January 2014 Annual Strategy Meeting agreed to ask

Investment Subcommittee to consider the merits of investing in direct lending and emerging market debt

Portfolios for these assets implemented during 2014/15 and currently partially funded

Fund’s sources of return are relatively well diversified, but equities remain the dominant asset class

Underperformance of benchmark by 1.5% in 2013/14 (3.9% vs. 5.4%), due to the underperformance of a number of individual managers

So far, returns (relative to benchmark) have been much better in 2014/15. Some of last year’s underperformers have produced very good returns this year

Annual returns over 5 years are in-line with benchmark and well above long-term assumptions

Aspect Capital have produced a return of c.40% in the nine months

Millennium have earned £15m from currency management Differentiation within markets – UK equities +2%, NA equities

+18%, European equities – 3%, Emerging Market equities – 2%

Currency does matter – US$ + 7%, Euro – 6%, Yen – 8% (all relative to sterling). Fund has hedged euro and yen exposure, but remains fully exposed to US$.

Despite recent wobbles, Fund size up c.£150m in 9 months, despite £50m payment out in respect of Probation

Launched in late June 2013, responses required by late September

Initial response from the Government is to encourage collaboration between funds, rather than go ahead with forced mergers

Possibility of the formation of Collective Investment Vehicles into which individual funds could invest. Particular prominence given to encouragement of more use of the passive (indexed) management for listed assets

Leicestershire’s response was anti-forced merger but in favour of greater levels of collaboration between Funds, which is capable of producing savings

Current Government thinking appears muddled and there are a number of practical issues that might make Collective Investment Vehicles unworkable, or at least less-than-optimal

Mergers are NOT off the agenda, but appear to have slipped down the list of priorities for Central Government

Aggregation rules to be clarified Future governance structure has to be in place by April

2015 to satisfy Public Sector Pensions Act Member training ahead of new governance structure

will be a priority Investment management arrangements will be kept

under review, with the Investment Subcommittee remaining pro-active

Expectation that investment markets will be volatile

Any Questions?