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West Yorkshire Pension Fund

Report and accountsFor the year ended 31 March 2010

ContentsForeword ............................................................. 5Management structure ................................ 6Pension administration review ................ 8Membership trends ..................................... 12Participating employers ............................ 14Quality management .................................. 16Policy statements .......................................... 18Investment report ........................................ 20Actuary’s report ............................................. 36Audit report ..................................................... 38Accounts ............................................................ 40Resolving complaints .................................. 52Further information and contacts ........ 54

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Foreword

Three years ago, when the fund exceeded £7 billion for the first time, I began my comments with the phrase ‘another steady year on stock markets saw the assets of the fund rise by £629 million’. I am pleased to say the fund is once again above £7 billion. In fact it is now valued at £7.9 billion, the assets having risen by 33%, almost £2 billion over the year. This reflects the very strong recovery in stock markets over the period, and although this demonstrates that volatility remains an issue for investors, many aspects of the financial crisis are behind us.

The continuing efforts of the in-house investment team mean that the fund has top quartile investment performance among its peer group over three, five and ten year periods, for which I would like to thank them.

As I indicated last year, I was very concerned about the ‘political’ risk to the future of the Local Government Pension Scheme (LGPS), and this has indeed now led to the appointment of the Hutton Commission on the future of public-sector pensions. I am satisfied that once the facts have been examined, the LGPS, which has been the whipping boy in the press due to its transparency and accountability, will prove to be part of the solution, whereas the unfunded schemes run by central government will be found wanting. We are awaiting the results of the actuarial valuation based on the valuation at 31 March 2010. Based on the policy of the fund not to vary the contribution rates if the valuation falls between 90% and 110% of liabilities, we do not expect to have to vary contributions significantly for the majority of employers.

I am very proud to say that the fund provides a first-class administration service for over 220,000 members. This year the quality of that service has been recognised by the award of the Best Benefit Statement (Public) award at the Pension Scheme of the Year Awards. In addition to adding my congratulations to the pensions administration staff, I would like to thank them for their hard work which results in such a creditable performance.

Finally, it would be remiss of me not to give the credit for the success of both the investment and administration teams described above to Stuart Imeson who retired as director during the year after a long and distinguished career of service to both this fund and the industry, which was publicly acknowledged during the year when he received the Investment Officer of the Year Award.

Councillor Ian GreenwoodChair of West Yorkshire Pension Fund Investment Advisery Panel and Joint Advisery Group

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Management structure 2009/2010

Members of the Investment Advisery Panel

Members of the West Yorkshire Pension Joint Advisery Group

Bradford

Councillor C Greaves Councillor C Greaves (Deputy Chair)

Councillor I Greenwood (Chair) Councillor I Greenwood (Chair)

Councillor H Middleton Councillor H Middleton

Calderdale

Councillor A Feather Councillor A Feather

Councillor B Metcalfe Councillor N Fekri

Councillor B Metcalfe

Kirklees

Councillor E Firth Councillor E Firth

Councillor D Ridgway from Sept 2009 Councillor B Smith

Councillor D Ridgway from June 2009

Leeds

Councillor P Davey Councillor B Cleasby

Councillor C Fox Councillor P Davey

Councillor C Fox

Wakefield

Councillor D Dagger Councillor B Denson

Councillor G Stokes Councillor G Stokes

Councillor C Tennant to June 2009 Councillor D Dagger from June 2009

Scheme Member Representatives

Peter Meer Sarah Moses

Robert Coleman Kenneth Sutcliffe

Trades Union Representatives

D Harper – UNISON One vacancy

S Morris – GMB S Morris – GMB

T Pearson (Deputy Chair) – UNISON T Pearson – UNISON

External advisers

Noel Mills

Robert Prance

Mark Stevens

Director – West Yorkshire Pension Fund

Stuart Imeson to November 2009

Rodney Barton from December 2009

Assistant Director of Finance – Bradford

Sue Mawson

Appointments made by West Yorkshire Pension Fund in the administration of the Local Government Pension Scheme

Actuarial services

Hewitt40 Queen SquareBristol BS1 4QP

AVC providers

Scottish WidowsPO Box 1703769 Morrison StreetEdinburghEH3 8WZ

Equitable Life Assurance SocietyPO Box 177Walton StreetAylesburyBuckinghamshireHP21 7YH

PrudentialAVC Customer ServicesStirlingFK9 4UE

Appointed Persons (IDRP Procedure)

Tony ReevesChief Executive City of Bradford Metropolitan District CouncilCity HallBradford BD1 1HY

Stuart Imeson to November 2009Rodney Barton from December 2009Director – West Yorkshire Pension FundCity of Bradford Metropolitan District CouncilBritannia HouseHall IngsBradford BD1 1HX

Auditors

Audit Commission3 Leeds City OfficeHolbeckLeeds LS11 5BD

Banking services

HSBCPO Box 4547 Market StreetBradfordBD1 1LW

Computer services

Heywood2 Victoria StreetAltrinchamCheshireWA14 1ET

Comino plcVanguard HouseDewsbury RoadLeedsLS11 5DD

Legal adviser Medical adviser (IDRP Procedure)

Suzan HemingwayAssistant Director Corporate Services (City Solicitor)City of Bradford Metropolitan District CouncilCity HallBradfordBD1 1HY

Dr. B Yew, AFOMConnaughtGreyfriarsCoventryCV1 3PJ

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Pension administration review

Overview and legal status of West Yorkshire Pension Fund

West Yorkshire Pension Fund (WYPF) is part of the Local Government Pension Scheme (LGPS).

The LGPS is a statutory scheme and the benefits are paid under the provisions of the LGPS Regulations 1997, the LGPS (Transitional Provisions) Regulations 1997, the LGPS Regulations 2008, and other applicable overriding legislation. The government issues the pension scheme regulations through the Department of Communities and Local Government. The Regulations have the force of law.

City of Bradford Metropolitan District Council is the administering authority for WYPF. Bradford Council’s administering authority responsibilities are met by WYPF’s in-house pensions administration and investment teams.

WYPF’s Pension Schemes Registry number is 10041078.

Contributing members are contracted out of the State Second Pension.

HM Revenue and Customs (HMRC) has granted the scheme exempt approval for the purposes of the Income and Corporation Taxes Act 1988. The scheme became a Registered Pension Scheme under Part 4 of Chapter 2 of the Finance Act 2004 with effect from 6 April 2006.

Achievements during the year

WYPF picked up another prestigious pension industry award in the year, recognising the fund’s position as one of the best large schemes in the UK. In September

WYPF’s 2009 benefit statement design gained the Best Benefit Statement (Public) award at the Pension Scheme of the Year Awards held in London.

Ninth annual meeting held

Max Ramirez, a Pension and Insurance Specialist with Goldman Sachs, gave the keynote address at our ninth annual meeting for members at the Queens Hotel in Leeds on 23rd October 2009.

The meeting was chaired as usual by Councillor Ian Greenwood, chair of WYPF’s Investment Panel and Joint Advisery Group. There were also presentations from Stuart Imeson, WYPF’s director, and from the fund’s external investment advisers.

Customer Services Week

Between 5th and 9th October, WYPF took part in the National Customer Services week and held a series of coffee mornings in the fund’s contact centre.

Visitors to our contact centre were invited to take part in a customer survey which showed that customers were extremely happy with the level of service they received.

Appointment of an additional AVC provider

In addition to Equitable Life and Scottish Widows, Prudential has been appointed as an additional AVC provider. This appointment will give our members more choice when deciding about paying extra contributions.

Investors In People review

During September 2009 WYPF underwent an Investors in People review as part of the City of Bradford Metropolitan District Council work, to determine whether the council as a whole continues to meet the standards to be recognised as an Investor in People. The review team found that the section met all 10 indicators and mentioned the following good practices:

• a fully embedded appraisal process

• use of supervisory journals, and

• an embedded culture of mentoring and coaching.

Training and development

WYPF continued its commitment to the training and development of all members of its staff, and to all representatives on the Investment Advisery Panel and Joint Advisery Group.

During the year WYPF supported a number of staff with their studies for vocational qualifications. These included:

• Pensions Management Institute (APMI)

• Institute of Payroll Professionals (IPP) Diploma

• Vocationally Related Qualification (VRQ) in Public Sector Pensions Administration (QPSPA)

In addition to the vocational training a number of other different training opportunities enabled staff to develop their management and leadership, pensions, technical and overriding legislation, and IT knowledge.

Employer workshops

During the year WYPF rolled out a series of one-day and half-day workshop sessions for employers. Four different workshops were held:

• Introduction to West Yorkshire Pension Fund (full day)

• Complete guide to administration (half day)

• Your responsibilities (half day)

• Contributions and year-end data (half day)

The workshops are delivered by WYPF staff and designed to give the employers a thorough understanding of the pension scheme.

Changes in benefits

Each year, WYPF pensioners receive an annual increase in accordance with pension increase legislation.

The increase is linked to movements in the Retail Price Index. The increase also applies to members who have left the scheme but who have deferred benefits in WYPF for payment later, usually at normal retirement age.

This year the increase was applied on 6 April 2009 and, for those who met the qualifying conditions, the basic increase was 5.0%.

Pension administration section

As in previous years, the workload of the pension administration section continued to expand, with an increase in the number of scheme members participating in the WYPF. Service delivery continues to be underpinned by WYPF’s accreditation to ISO 9001:2008, the Quality Management System.

WYPF staff are committed to providing the best possible service to customers, and will continue to work to ensure that WYPF’s service represents Best Value to all its stakeholders. The cost of the pensions administration service in WYPF, when compared with all other local authority pension funds, shows it to be well below national averages. In 2009/10, the cost for WYPF equated to £23.44 per scheme member, and compared with the average for all local-authority pension funds of £28.31 per scheme member.

LGPS review

Since July 2001 the framework of the Local Government Pension Scheme has been under review. The main areas that were covered included simplification, flexibility, sustainability, benefits and administration.

Phase one of the review was introduced to the scheme with effect from 1 April 2004 by the Local Government Pension Scheme Amendment Regulations 2004.

The main purpose of phase two was to remove the 85-year rule from the scheme. This was achieved with effect from 1 October 2006, however members of the scheme as at 30 September 2006 were given protection to 31 March 2008 and older members were given further protections.

The final phase of the review of the scheme commenced on 30 June 2006 when CLG published its consultation document Where Next? – Options for a new-look Local Government Pension Scheme in England and Wales. The new Local Government Pension Scheme came into force on 1 April 2008. One of the provisions of the new scheme was that CLG was committed to the introduction of

a cost-sharing mechanism by 31 March 2009. To this effect the LGPS (Amendment) Regulations were laid before parliament on 23 April 2009. The cost-sharing arrangements involve a national model fund being established which will be the tool used to benchmark the scheme costs relative to future service accrual, and will require administering authorities to supply certain data to CLG by 31 August 2010 and every third year afterwards. The cost-sharing arrangements are intended to both inform and take account of future actuarial valuation exercises for the scheme, and for individual fund actuaries to consider when setting new employer contribution rates following each fund’s valuation. The results of the cost sharing could also influence the future design of the overall benefit package or cost, which members may be required to bear in providing an affordable and viable defined-benefit pension arrangement going forward. Whilst the review of the scheme has now been completed, further amendments to the regulations are likely as a result of the cost-sharing exercise and/or the recommendations of the Independent Commission set up by the government to undertake a ‘fundamental structural review’ of public-service pension provisions.

During 2009/10 CLG also issued the following regulations and guidance:

• Guidance on publication of pension fund annual reports

• The LGPS (Management and Investment of Funds) Regulations 2009

• Guidance under Regulation 12(3) of the LGPS (Management and Investment of Funds) Regulations 2009 regarding publishing a Statement of Investment Principles

• Guidance on Admitted Body status provision in the LGPS when services are transferred from a local authority or other scheme employer

• Supplementary guidance for Independent Registered Medical Practioners. This guidance does not replace CLG’s statutory guidance issued in November 2008, but aims to further clarify several areas.

• The LGPS (Miscellaneous) Regulations 2009. These contain mostly technical and minor amendments, and largely originate from comments made by stakeholders in earlier consultations.

• The LGPS (Amendment) Regulations 2010, which contain special provision for members who transferred to local authorities from the Learning and Skills Council on 1 April 2010, and requirements where Probation Boards merge to form a Probation Trust and there is a change of administering authority.

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Membership trends Almost 224,000 members and beneficiaries, employed by 205 separate organisations, participate in the WYPF. The numbers shown for 31 March 2009 have been re-stated to reflect changes after the 2008/09 financial statements were finalised.

The number of active and pensioner members in WYPF continues to grow.

31 March 2010 31 March 2009

Active members 96,912 96,325

Beneficiaries

Current pensioners (including widows’ and children’s pensions in payment)

63,084 60,397

Deferred members

deferred pensioners 57,413 55,348

undecided leavers 2,828 2,376

frozen refunds 3,676 3,739

Totals 223,913 218,185

Admissions to the fundEmployees joining the fund were as follows.

2009/2010 2008/2009

Employees/councillors joining with no previous service 8,837 13,293

Employees with transfers from:

other local-government funds 71 57

other pension schemes 178 224

Totals 9,086 13,574

Withdrawals from the fundBenefits awarded to members leaving employment were as follows.

2009/2010 2008/2009

Members awarded immediate retirement benefits 2,491 2,370

Benefits awarded on death in service 90 88

Members leaving with entitlement to deferred benefits, transfer of pension rights or a refund.

5,878 8,451

Totals 8,459 10,909

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Participating employersAt 31 March 2010 WYPF had 205 participating employers as detailed below. New employers who joined WYPF during 2009/10 are shown in bold.

A ABM Catering Ltd Ackworth Parish Council Aire Valley Homes Leeds All Saints C.E. J.I. School Amey Community Limited IT Services Amey Community Limited FM Services Amey Infrastructure Services Limited (Calderdale) Amey Infrastructure Services Limited (Wakefield) Appleton Academy Aqumen Services Limited Arts Council England Aspire

B Barnados Bell Isle Tenant Management Organisation Bingley Grammar School Boston Spa School Bradford Academy Bradford City Centre URC Limited Bradford College Bradford District Care Trust Bradford District Credit Union Limited Bradford Trident Limited Brighouse High School Brooksbank School Bullough Contract Services Limited Bullough Contract Services (Guiseley School) Ltd Bullough Contract Services (Ilkley Grammar) Ltd Burley Parish Council Buttershaw Business and Enterprise College

C CAFCASS Calderdale & Kirklees Careers Service Partnership

Limited Calderdale Colleges Corporation Careers Bradford Limited Carr-Gomm Society Castle Hall School Catholic Care (Diocese of Leeds) City of Bradford Metropolitan District Council City of Wakefield Metropolitan District Council Clayton Parish Council Coalfields Regeneration Trust Commission for Social Care Inspection Community Accord Compass Contract (Buttershaw School) Compass Contract Services (UK) Ltd Craft Centre & Design Gallery

Creative Management Services Ltd Crescent Further Education Ltd Crossley Heath School

D David Young Community Academy Dearne Valley Leisure Trust Denby Dale Parish Council Dine Hospitality Ltd Dixons Allerton Academy Dixons City Academy

E East North East Homes Leeds Education Bradford Education Leeds English Basketball Association Enterprise Managed Services Limited

F First (Development Agency Wakefield MDC) Ltd First West Yorkshire Limited Fleet Factors Ltd FOCSA Services (UK) Ltd Foundation Housing - Leeds Foxhill Primary School

G Greenhead Sixth Form College Greenvale Homes Limited Groundwork Leeds Groundwork Wakefield

H Halifax Opportunities Trust Hanson School HBS Business Services Group Limited Hebden Royd Town Council Heckmondwike Grammar School Hemsworth Town Council Hill Top First School Hipperholme & Lightcliffe High School Hochtief Facility Management UK Ltd Hollingwood Primary School Holly Bank Trust Holme Valley Parish Council Holy Trinity C.E. Senior School Huddersfield New College

I IGEN Ilkley Parish Council Incommunities Initial Catering Services Limited Interserve Project Services

J Joseph Priestley College

K Keelham Primary School Keighley Town Council Kier Support Services Ltd (North West) Kier Support Services Ltd (South) Killinghall Primary School Kirkburton Parish Council Kirklees Active Leisure Kirklees College Kirklees Metropolitan Council Kirklees Neighbourhood Housing Limited

L Lady Elizabeth Hastings School Laisterdyke High School Leeds Citizens Advice Bureau Leeds City College Leeds City Council Leeds College of Art & Design Leeds College of Building Leeds College of Music Leeds Grand Theatre and Opera House Limited Leeds Housing Concern Leeds M.I.N.D. Leeds Metropolitan University Leeds Racial Equality Council Leeds Society for Deaf & Blind People Leeds West Academy Lightcliffe C.E. Primary School Longroyde Junior School

M Mellors Catering Service Meltham Town Council Metropolitan Borough of Calderdale Micklefield Parish Council Mirfield Free Grammar School Mitie Cleaning (North) Limited Mitie PFI Ltd Morley Town Council Myrtle Park Primary School

N Nab Wood School National Assembly for Wales National Coal Mining Museum For England New College, Pontefract Normanton Town Council North Halifax Grammar School North Kirklees Citizens Advice Bureau Northern School of Contemporary Dance Northorpe Hall Trust Notre Dame Sixth Form College NPS (North East) Ltd

O Oakbank School Oakworth Primary School OFSTED Open College Network West and North Yorkshire

Limited Ossett Trust Otley Town Council Outwood Grange Academy

P Pennine Housing 2000 Limited People in Action (Leeds) Limited Pinnacle Prospect Services Ltd (LCSC)

R R M Education plc Rastrick High School Rentokil Initial Management Services Rentokil Pest Control Ripon Diocesan C of E Council For Social Aid Ripon House Royds Community Association Russell Hall First School Ryburn Valley High School Ryhill Parish Council

S Salterlee Primary School Schools Linking Network Sea Fish Industry Authority SERCO Ltd Shipley College Skills for Care Limited Society for the Blind Dewsbury, Batley and District South Elmsall Town Council South Hiendley Parish Council South Leeds Academy Southern Electric Contracting Limited Southern Pennines Rural Regeneration Company

Limited St Anne’s Community Services St Catherine’s Catholic High School St Chad’s C of E Primary School St John’s C of E Primary School St John’s CE (VA) Primary School St John’s Hostel St Michael & All Angels C of E School

T Taylor Shaw Taylor Shaw Ltd – Bradford Academy The Anah Project Thornton Grammar School Todmorden Town Council Training for Bradford Ltd Trinity and All Saints College

U University of Bradford University of Huddersfield UPP Leeds Metropolitan University

W Wakefield & District Housing Wakefield College West North West Homes Leeds West Vale Primary School West Yorkshire Fire & Civil Defence Authority West Yorkshire Police Authority West Yorkshire Probation Service West Yorkshire PTA West Yorkshire PTE West Yorkshire Valuation Tribunal Service Wetherby Town Council William Henry Smith School Wilsden Parish Council Woodhouse Grove School

Y Yorkshire and Humberside Fire Control Yorkshire and Humberside Local Authorities Employers’ Forum Yorkshire Community Housing Limited Yorkshire Forward Yorkshire Purchasing Organisation

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Quality management

WYPF was reaccredited to the ISO 9001:2008 Quality Management System in June 2009.

The scope of the certification

The administration of the Local Government Pension Scheme (LGPS) on behalf of participating scheduled admitted bodies as defined in the LGPS regulations, and the administration of the Police and Fire pension schemes in accordance with Police Pension Regulations and the Firefighters’ Pension Scheme orders respectively.

We have now been accredited to a quality management standard for over 16 years (WYPF gained accreditation back in 1994 to BS5750 and then ISO 9002 prior to ISO 9001:2008).

As part of the Quality Management System, several systems and procedures have been put in place to ensure the service provided continually improves. These include:

• having procedures in place for dealing with customer complaints and faults and ensuring the appropriate corrective and preventative actions are taken

• conducting internal quality audits to ensure quality is maintained, and to identify improvements

• statistical monitoring of our processes, including calculating and paying pensions so we can ensure benefits are paid on time

• surveying customers about their experience of our service, and

• holding regular Management Review meetings to review quality issues.

Key Performance Indicators

WYPF has set several performance indicators against which we monitor our achievements. Bradford Council has also set several Customer Services Performance Indicators.

Performance

2007/08 2008/09 2009/10

Key Performance Indicator

The percentage of lump sum and first instalment of pension paid within three days from the later of receipt of notification of retirement or date of retirement

98.90% 95.82% 93.57%

The number of active members in the LGPS at 31 March each year as a percentage of the number eligible to join the LGPS

82.43% 81.16% 83.96%

The number of deferred benefit statements sent to members each year as a percentage of deferred members eligible to receive one

97.57% 97.80% 96.80%

Employers’ satisfaction with the service provided by WYPF 84.20% 83.30% 82.70%

Corporate Performance Indicators

The percentage of visitors waiting less than 7 minutes at a reception point

100%(3469 visitors)

100%(3245 visitors)

100%(3178 visitors)

The percentage of phone calls answered within 6 rings (20 seconds) 98.91% 98.49% 99.18%

(73569)

The percentage of letters responded to within 5 working days n/a n/a 99.57%

(5013)

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Policy statements

Local authority pension funds have a statutory responsibility under the regulations governing the scheme to prepare and publish five policy statements. For the full text of each statement please follow the links to our website.

Statement of Investment Principles

The Statement of Investment Principles describes the investment decision-making process, the types of investment to be held and the balance between them, the risk and expected return on investments, the realisation of investments, socially responsible investment, responsible ownership and the exercise of rights attached to investments and compliance with the Institutional Shareholders Committee principles, the latest development of the Myners principles. (www.wypf.org.uk/Members/WYPF/Investments/Principles.htm)

Funding Strategy Statement

The Funding Strategy Statement establishes a clear and transparent strategy for the fund, identifying how employers’ pension liabilities are best met while maintaining a stable contribution rate and taking a prudent long-term view of funding those liabilities. (www.wypf.org.uk/Members/WYPF/Admin/FundingStrategy.htm)

Pension Administration Strategy

The Pension Administration Strategy is concerned with ensuring that everything runs smoothly for members, employers and the fund, covering procedures for liaison and communication with employers, levels of performance for employers and the fund, and procedures to ensure that employers and the fund comply with statutory requirements. (www.wypf.org.uk/Members/WYPF/Admin/AdminStrategy.htm)

Communication Policy Statement

The Communication Policy is designed to provide members, representatives of members and employers with the information they need to understand their pension arrangements. (www.wypf.org.uk/Members/WYPF/Admin/CommunicationsPolicy.htm)

Governance Compliance Statement

The Governance Compliance Statement sets out the arrangements made by City of Bradford Metropolitan District Council for the administration of the fund. It has delegated responsibility to the Corporate Governance and Audit Committee, assisted by the Investment Advisery Panel and the Joint Advisery Group. (www.wypf.org.uk/Members/WYPF/Investments/GovernanceCompliance.htm)

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Investment report Review of the operation of the investment advisory panel 2009/10

In the previous report covering the activities of the investment panel, which covered the 2008/9 period, the predominant theme was one of extreme volatility and systemic failures across the investment landscape. The global financial credit crisis had played out over the preceding 18 months with virtually every asset class and region of the world delivering poor returns. The panel had for some time been avoiding placing new money into global stock markets and had sought to increase the diversification of the fund’s portfolio. This was achieved with a programme of investment in assets whose performance was expected to be far less dependent upon the performance of global stock markets. Investments had also been made in government fixed-interest stocks.

However, the extreme nature of the crisis and the virtual freezing of many financial markets caused many previously uncorrelated asset classes to perform in a similar fashion. Many of the alternative assets also produced negative returns although not of the same magnitude that was seen in the world’s stock markets. The 1st quarter of 2009 turned out to be the low point in terms of market levels for the year. The unprecedented easing put in place by governments of both a monetary and fiscal nature began to bring confidence back into markets as fears of financial Armageddon receded.

The unprecedented easing put in place by governments

of both a monetary and fiscal nature began to

bring confidence back into markets as fears of financial

Armageddon receded.

In the UK and US quantitative easing initially supported government bonds, but subsequently equity markets also began to benefit. Global equity markets rallied strongly moving sharply higher over the next six months. The strong rebound in markets continued into 2010 with the global economy returning to growth. However, the strength and sustainability of the recovery remains in doubt, particularly in economies where indebtedness of both the public and private sector remains high.

It is against this background that the quarterly meetings of the full panel took place and the asset allocation of

the fund was discussed. It is during these meetings that the allocation of new money from net contributions and dividend income is determined. The panel takes into consideration a wide range of factors when making these decisions. The panel will use information and views from a range of sources including both the internal fund managers and the external investment advisers to the fund. They take into account the global economic and financial picture and with reference to the fund’s own specific benchmark, the panel will agree the allocation of funds for the next quarter. In addition to the allocation of new funds the previous quarter’s investment transactions are monitored and adherence to the agreed plan reported.

As the new financial year began, the sharp decline in global stocks markets had opened up some good opportunities to allocate funds into equities for the first time in years. Investments were made into a number of overseas markets including areas that were moving strongly ahead of the western economies such as Asia and Latin America. The panel were also made aware of some attractive investment opportunities that had become available as a direct result of the financial crisis. One example of this was the emergence of investment funds offering attractive returns at very low risk by utilising the US Government’s Term Asset-Backed Securities Loan Facility or TALF. The panel moved swiftly to take advantage of these opportunities. As well as allocating to equities for the first time in a number of years, the continuing investment programme into assets that are not as dependent on stock market movements was to continue over the year with additional funds being allocated to active currency managers and fund of hedge fund managers. As the global recession continued, opportunities for Private Equity managers to realise investments diminished, resulting in a net call on funds. Within the equity portfolios the rebuilding of company balance sheets led to an increase in rights issues during the period and these were met from cash flow.

In addition to monitoring the investment activities of the internal managers at the regular quarterly meetings, the panel meets twice each year in London to question the managers of the other assets in which the fund has invested. The pension fund has investments in a wide spread of assets whose aim is to provide additional sources of return and increased diversification. These assets include areas such as commercial property, private equity, funds of hedge funds and active currency management. The meetings, which take place over several days, were held in September 2009 and March 2010. These face-to-face meetings provide the panel

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with an excellent opportunity to ask questions of the managers and to monitor the investment landscape in which these investments are performing. In addition to gaining an insight into the general outlook for the various investment types, the panel can monitor any changes to investment style and approach in the appointed managers. Each of the external managers appointed by the fund has been selected for their particular investment style and the extent to which they complement the other managers the fund invests in. Any changes to a manager’s investment approach, for whatever reason, is closely monitored and may result in the panel taking action and reallocating funds.

Since 2005 the investment performance of the fund has been measured against a fund specific benchmark in addition to the Local Authority benchmark. The benchmark is reviewed each year and takes into consideration the asset liability study carried out by Mercer in 2008. No major changes were made to the benchmark at the January review although 1% was added to the weighting of hedge funds reflecting the continuing investment programme in this area. It was noted that the triennial actuarial valuation that takes place in March 2010 will provide a good opportunity to undertake an in-depth review of the fund-specific benchmark.

As part of an ongoing programme, members of the panel have attended a number of conferences over the year and undertaken training in order to serve better on the panel. The fund has been represented at all the major conferences arranged by the Local Authority Pension Fund Forum (LAPFF) during the year. In addition, Councillors Greenwood and Greaves attended the Rights and Responsibilities of Institutional Investors conference in Amsterdam in March and Councillor Greaves represented the panel at a conference focused on protecting shareholder value in New York.

The fund continues to exercise responsible share ownership by using its voting rights. The panel continues to adopt the PIRC Shareholder voting guidelines in order to fulfil this function. The decision to subscribe to the extended service that was taken last year allows the fund to exercise its vote on any company held anywhere in the world. The fund continues to reserve the right to engage with any company management where there are specific areas of concern in terms of good governance and social responsibility. This engagement would normally be conducted via the LAPFF.

Over the year, the panel continued to be closely associated with and active in the work of the LAPFF. Councillor Ian Greenwood remains Chair. The LAPFF is a

leader in the field of socially responsible investment and has had a very successful year. One notable initiative carried out in the period was the tabling of a resolution at the Marks & Spencer annual general meeting aimed at ending the dual role of Chairman and Chief Executive, Sir Stuart Rose. The resolution, although not passed, presented Marks & Spencer with one of its largest shareholder rebellions in its 125 year history.

In October the panel responded to concerns over the proposed introduction of the European Directive on Alternative Investment Fund Managers by writing a letter to the Swedish Presidency of the EU and Minister for Financial Markets, Mats Odell. It is the panel’s view that the Directive as initially proposed would increase costs to managers, leading ultimately to reduced returns for investors. It would also limit the scope to which alternative investments could be used to diversify the assets of the fund, with possible negative impact for both tactical and strategic asset allocation.

During the period, two significant departures from the investment panel took place. Stuart Imeson, Director of West Yorkshire Pension Fund, who had worked with the fund for twenty-five years, retired in October. Stuart had been instrumental in maintaining the panel and fund at the highest levels of best practice and adherence to the principles laid out in the Myners’ report. Stuart was a well known and very well respected figure within the Local Authority investment world. The difficult task of replacing Stuart falls to Rodney Barton who emerged from a very strong field of candidates as the stand out individual. Rodney was previously Head of Investments at East Riding Pension Fund and brings with him a wealth of experience and deep investment knowledge. Several members of the panel including the external advisers were asked to assist in the recruitment process. Rodney came on board in December after a period of handover.

External adviser Bob Prance, who had worked with the panel for six years, retired at the April meeting. Bob had made a very valuable contribution to the work of the panel during this time. He was replaced by Mark Stevens who had been working with Bob and the panel since his appointment in the previous October when Bob had first announced his retirement. Mark will work alongside Noel Mills who has been with the fund for six years and continues as an external adviser. Over the period Bob and Noel had introduced a number of improvements and innovations to the information available to the panel, and to the monitoring and communication with the internal and external fund managers. Both Noel and Mark will continue to develop this process further.

Investment performance continues to be independently

measured by the WM Company. The panel takes a genuinely long-term investment view which is consistent with the long-term nature of the liabilities attached to the fund. It is however still relevant to monitor investment performance over the short term. Over the year to December the fund returned 17.6% compared with 17.7% for the local-authority average. This places the fund in the middle of the range over one year. However over longer periods the fund remains significantly ahead of the local-authority average. The performance, along with more detailed information about the fund, was presented at meetings held in October. The employers’ meeting in Bradford, and a second for employees and pensioners in Leeds, were both very well attended and provided a good opportunity to meet the panel and ask questions.

The in-house investment management costs continue

to be among the lowest of all local authority pension funds

The 2009/10 period was another busy year for the panel. The panel continued to meet its objectives set out in its business plan and continues to operate in accordance with best practice as laid out in the revised Myners’ principles. The coming year is, again, expected to be busy with the implications of a fragile global recovery and the triennial actuarial review expected to keep the panel occupied over the period.

Voting policy

The fund will vote on all Resolutions put to the Annual and Extraordinary General Meetings of all companies in which it has a shareholding. The basis of the voting policy is set out in the fund’s Statement of Investment Principles. Full details of the voting policy is also available for viewing on the fund’s website, as are details of the fund’s voting activity at companies’ Annual General and Extraordinary Meetings.

Custody of financial assets

The fund is a registered member of CREST in its own right, and the fund’s UK fixed interest and equity shareholdings are held on CREST in dematerialised form. Consequently, all custodial responsibilities relating to these assets are undertaken by the in-house Investments Section.

A custodian is appointed for the safe keeping of

the fund’s overseas assets, and for the settlement of transactions, income collection, overseas tax reclamation and other administrative actions in relation to these assets. Following a full tender exercise conducted in 2009, HSBC was reappointed as custodian.

Investment management and strategy

The fund’s entire investment portfolio continues to be managed on a day-to-day basis in-house, supported by the fund’s external advisers. Investment strategy and asset allocation is agreed at quarterly meetings of the Investment Panel. There are twelve professional investment managers and five administration/settlement staff in the in-house investment team.

In 2009/10, the fund’s in-house investment management costs equated to £7.97 per scheme member compared with the national average for all local-authority pension funds of £68.41 per scheme member.

The panel adopted a fund-specific benchmark commencing from 1 April 2005, which is reviewed and revised annually, and details of the benchmark currently being used are shown in the Statement of Investment Principles. The benchmark represents the optimal investment portfolio distribution between asset classes to deliver the WYPF back to 100% funding in accordance with the principles outlined in the Funding Strategy Statement. The panel does, however, make tactical adjustments around the benchmark for each asset class within a set control range.

Investment in funds of hedge funds commenced in April 2005 to implement a strategy of investing up to 5% of the total investment portfolio in this asset class. An element of the new money during 2009/10 continued therefore to be invested in funds of hedge funds. Other new money was invested predominantly in bonds. An allocation of new money to currency funds, which commenced in Quarter 1 of 2008, also continued during 2009/10.

The cash element of the investment portfolio was maintained during the year and stood at 3.4% as at 31 March 2010.

24

Investment performance

The fund performed well in 2009/10 with a return of 33.1% reflecting the sharp bounce in markets following the impact on the world economy and stock markets of the credit crunch in previous periods. The return of 33.1% in the year was marginally below both the return on the fund-specific benchmark of 34.9%, and the average return for all local authority pension funds of 35.2%. This positioned the fund in the 65th percentile of the local-authority universe.

The fund’s long-term investment performance compared with other local authority pension funds continues to be extremely good. The WYPF’s average annualised return over the last three, five and ten years was 2.8%, 8.4% and 4.6% respectively. These top quartile returns are well above the local authority pension fund averages of 1.7%, 7.1% and 3.8% respectively, which on a league table basis places WYPF in the 24th, 8th and 15th

percentile over these periods.

The out-performances against the local-authority average have been achieved through a combination of positive contributions from both asset allocation and stock selection. This demonstrates the excellent work of the Investment Panel, the external investment advisers on asset allocation, and the in-house investment management team through their discretionary work on stock selection.

Private equity

Private equity has undergone a turbulent two years. The last twelve months in particular have seen institutional investor appetite for new funds wane, and some investors selling their interests as they struggle to meet their existing commitments. Fund General Partners have also shifted their focus, with many now spending their time supporting portfolio companies and restructuring balance sheets to reduce leverage, rather than executing new deals. Very few underlying portfolio companies have been sold and the market is just beginning the process of de-leveraging the large inventory of peak-cycle leveraged buyouts. As a result, deal activity on WYPF investments slowed again for the year to 31 March 2010, but to a lesser extent than for the previous twelve months. Drawdowns on committed capital were down 27.0%, while realisations fell 22.4% compared to last year. This compares to falls of 25.0% and 47.3% respectively for the year to 31 March 2009. Reduced availability of debt for deals, rising borrowing costs and uncertainty over corporate earnings have dampened private-equity volume. Recapitalisations are still few and far between, given that banking covenants

are stretched in many cases.

The WYPF’s private-equity portfolio is well diversified across industry sectors, geographies, vintage years, financing stages and managers. After adjusting for cashflows and foreign-exchange movements, the values of the underlying portfolio of companies fell 3.5% and 5.4% in Q2 and Q3 2009 respectively, before recovering by 2.5% in Q4 2009 and 1.2% in Q1 2010. In aggregate, this resulted in a valuation fall at portfolio level of 4.9%. Including adverse foreign exchange movements, this fall was increased to 9.1%, mainly due to sterling’s strength in Q2 2009. 49.6% of the private equity is denominated in US dollars and 43.8% in euros.

Net investment into the private-equity portfolio for the year to 31 March 2010 was £36 million. The weighting of this portfolio as a proportion of the total was to 3.7%, down from 4.8% last year. This was mainly due to adverse currency effects and the time lag in private equity reported values at a time when the public equity markets performed strongly.

Commitments made during the year were via a mix of direct and fund-of-fund vehicles:

FundWYPF

commitment (£m)

Lexington Middle Market Investors II 23.300

Pantheon Global Infrastructure Fund 30.000

Key Capital Partners III 3.625

Elysian Capital 6.000

Goldman Sachs Infrastructure Partners II 15.600

Total 78.525

At 31 March 2010, net un-drawn commitments amounted to £301.6 million. Cumulative drawdowns to date equal £427.5 million, while realisations to date equal £225.2 million. The valuation of invested capital equates to £296.2 million.

The strategy and approach to this asset class remains unchanged, seeking to achieve a 5% exposure to private equity. Net investment will continue to be monitored closely, particularly given the economic changes of the last 24 months.

Currency funds

The WYPF programme of investing £200 million into six currency funds, managed by six different managers, will be completed by the beginning of December 2010.

Performance for all managers was positive for the year to 31 March 2010, with the best manager delivering 5.6% and the worst 0.3%. During the twelve months to 31 March 2010 a decision was taken to withdraw two of the managers from the programme. Following various progress meetings since investment, the panel is satisfied that the styles, models, holding periods and currencies employed by the remaining four managers are sufficiently diverse.

Fund of Hedge Funds

The hedge fund industry as a whole has recovered from the nadir of December 2008. As one might expect, those managers that performed poorly in the twelve months to 31 March 2009 rebounded the most and performed the best for the year to 31 March 2010, and vice versa. The WYPF’s allocation to FoHFs for the year to 31 March 2010 returned 14.25%, compared to -16.6% for the prior year. The best fund returned 23.0%, and the worst, 6.1%. The oscillating fortunes of the managers and strategies demonstrate the benefits of being able to diversify investments among a number of managers. This provides a degree of protection against manager-specific risk and also ensures a greater diversification of underlying manager and strategy risk.

Cumulatively, since inception in March 2005, the WYPF’s FoHF managers have performed, in aggregate, broadly in line with the industry average, delivering 3.7% p.a. This is well below the 7.5% benchmark set by the panel.

25

26

Property

All Property capital values (recorded by IPD) rose in August 2009 – the first month-on-month increase since June 2007 – and went on to deliver a capital return of 7.64% (offsetting prior monthly falls) and a total return of 16.34% for the year to 31 March 2010. The comparison with Gilt and UK Equity returns is detailed in the bar chart below. The positive returns from property were entirely driven by yield reduction. During this time, the attractive income yield offered by property relative to other asset classes drove a resurgence of interest from investors. Strong demand for stock saw a sharp rise in capital values and a consequential reduction in yields. Despite the strong investment market for property over this period, occupier markets generally remained fragile, with falling rental values and higher-than-average voids reflecting the underlying weakness in the UK economy.

To date, the much-feared flood of repossessed property coming to the market has not materialised because (i) lenders are aware of the weakness in transaction markets, and (ii) policy measures such as interest rate cuts and bank recapitalisations have lowered the carrying cost of debt for borrowers and lessened the pressure on banks to reduce their balance sheets. But these trends are at risk of reversal if occupier markets deteriorate further, adding pressure on asset values and bank balance sheets. The market expects that the banks will begin off-loading some of the

£100–200 billion of stock held as the property markets recover in 2010.

For the 12 months to 31 March 2010 (as measured by IPD), All Property has seen rental values decline by 5.94%. This again has been most pronounced in the office sector, particularly City and West End Offices, where rental values have fallen by 8.7% (prior year fall, 15.6%) and 10.1% (prior year fall, 19.9%).

The worst performing sub-sectors during the 12 months to 31 March 2010 were Shopping Centres (8.2%), the rest of South-East Offices (8.9%) and the rest of UK Offices (11.3%). WYPF is underweight in Shopping Centres but overweight in rest of South-East and rest of UK Offices.

The best performing sub-sectors during the 12 months to 31 March 2010 were All Retail Warehouses (26.3%) and West End Offices (19.9%), where the WYPF is marginally underweight.

As recorded in last year’s report and accounts, the strategy over the medium to long term is to move to an 80:20 geographical split between UK and non-UK property on the fund’s Property Unit Trust investments. The current split is approximately 92:8 in favour of UK property. Net investment during the year was directed towards the UK market given the relative attractiveness of risk and reward compared to other geographies.

AVC investments

WYPF has three AVC providers: Equitable Life, Scottish Widows, and Prudential who became a provider in 2009. In line with Regulation 5(2)(b) of the Local Government Pension Scheme (Management and Investment of Funds) Regulations 1998, AVCs are not included in WYPF’s Fund Account and Net Assets Statement.

The scheme values and membership information at 31 March 2010 are as follows.

Equitable Life

Scottish Widows Prudential

Scheme value £ 4,369,500 13,597,998 170,933

Scheme members with an AVC policy

At 31 March 2010 1,104 2,049 75

At 31 March 2009 1,211 2,170 0

Members still contributing 87 668 70

%

30.00

20.00

10.00

0

–10.00

Total return Capital return Income return Rental value growth

Retail 19.20 10.58 7.85 -5.69

Office 13.43 4.82 8.24 -7.84

Industrial 14.16 5.13 8.62 -4.24

Sector results for the 12 months to 31 March 2010

%

60

50

40

30

20

10

0

–10

All property Gilts (5–15 years) Equities (all-share)

Total return 16.34 –0.39 52.30

Capital growth 7.64 –4.97 46.67

Key results for the 12 months to 31 March 2010

27

28 29

Commentaries on world stockmarkets

In the report and accounts at March 2009 we speculated that we may be somewhere approaching the bottom of the cycle, having experienced a severe fall in markets over the previous two years. It is therefore particularly pleasing to report that the UK equity market did recover from a low in March 2009, and very significantly. The All Share return over the 12 months ended 31 March 2010 was a phenomenal 52.3%. However, some perspective should be provided to give a more enlightened view.

The graph below illustrates the volatility experienced in the market over recent years. The FTSE100 Index rose from 3926 to 5679 over the year, to almost the same level it had been in March 2008. The top of the last cycle in June 2007 saw the FTSE100 exceed 6700. Therefore the market has recovered two thirds of that loss.

Markets behave in a forward-looking manner. During the market sell off, analysts had slashed forecast earnings. Market pessimism then valued these reduced forecast earnings cheaply.

At the beginning of the fiscal year the view was bleak, the credit crunch had plunged most western economies into recession and there was a much talked of fear that a 1930s style depression could occur. The UK government, along with most other western governments, had suffered a massive increase in public finance deficit as a result of bailing out the banks. The bail-out was justified in that it will never be known how close to a total collapse of the banking system we came, but it was undeniably close. The short-term fix for banks triggered a recovery of the markets but weighed heavily on the economy.

Once the immediate financial crisis was over and emerging market growth looked resilient, markets began to recover, both in forecast earnings and in valuations. These two factors pushed the FTSE100 steadily upwards over the year.

In addition to the recovery of the bank sector from rock bottom, the mining sector also enjoyed a phenomenal performance. The FTSE All Share Mining sector returned 102.38% in the period having fallen nearly 49% in the previous financial year. Commodity prices were buoyed by demand from developing countries such as China, which showed enduring industrial growth aided by government stimulus in the developed markets. The mining sector’s out-performance persisted as investors sought hard assets and fled sterling exposure. The proportion of the FTSE All Share in the mining sector has doubled over the last four years, therefore the impact of such an out-performance of the sector has been huge.

However, the real economy remained fragile even as markets recovered.

By March 2009 a package of economic stimuli had been implemented. The Bank of England had just made its final cut in UK base rate, bringing it to a historic low of 0.5%. Quantitative easing had begun with an initial £125 billion limit, and during the year this limit increased to £200 billion adding further liquidity to the banking system. Other government-led schemes included the UK car scrappage scheme and the temporary reduction in VAT from 17.5% to 15%. These economic stimuli were designed to reduce the severity of falling GDP, and avoid mass unemployment.

By the end of this fiscal year some signs of economic recovery were apparent. Quarter on quarter GDP figures had reached a low of minus 2.6% in early 2009; by the final quarter of this financial year, GDP was back in positive territory at 0.3%. The level of unemployment has also recovered or at least stabilised, although the basis of measurement is not consistent over time. The UK headline jobless rate is now 7.8% compared with 10% in the eurozone, 9.5% in the US and 5.2% in Japan. However, the number of part-time workers has reached an unprecedented high of 27%.

The Bank of England kept the base rate at 0.5% throughout the year and this has stimulated the housing market. Although first-time buyers have the hurdle of up to 20% deposits to find, those already on the housing ladder have had the advantage of low mortgage payments. Research from the Halifax found that the cost of owning and running a home fell by 6% over the last two years. Average mortgage rates reduced from 5.8% to 3.67% over that time.

For those still in work, this has meant an increase in disposable income, and many have sensibly taken the opportunity to pay down debts. For those made redundant, the government’s majority ownership in both Lloyds and RBS has put pressure on banks not to repossess quite so swiftly.

The effect of such low interest rates has increased the fear of inflation. After the temporary reduction in VAT came to an end in January 2010, inflation spiked. It has been reducing slightly since but is still a risk for the Bank of England, and will be the factor most likely to change the policy and increase interest rates.

The oil price, having collapsed from record highs in 2008, started the year at a low level of $47.74. The price steadily climbed over the following 12 months to end the financial year at $81.30. Within the Oil Exploration and Production sector, the smaller stocks out-performed strongly whilst the majors under-performed the FT All Share index. The Oil Equipment and Services sector had a very strong year, buoyed by increasing demand from the oil producers who upped production as a result of the stronger oil price. There was also an increase in corporate activity, with a number of smaller companies being taken over, pushing share values higher still.

In the final quarter of the year the markets experienced some volatility as the UK general election loomed. A potential change in government and therefore uncertainty of government policy was compounded by the risk of a hung parliament.

Looking forward there is a risk that a double dip will occur, plunging the country back into recession. The new coalition government’s priority is understandably to reduce the deficit. However, in order to do this a severe austerity plan is proposed. This has the potential to kill off the fragile recovery.

The UK equity market remains good value, even after the extraordinary performance over the last year, and the yield of over 3% adds to the attraction. An illustration of this is the takeover of Cadbury by Kraft which was completed in the final quarter of the year. Kraft clearly considered the valuation of this stock as too cheap. The UK equity market continues to be a target for takeovers due to valuation levels. Given that approximately 70% of earnings in FTSE100 companies originate overseas, it remains a good way to gain cheap

Apr 07 Jul 07 Oct 07 Jan 08 Apr 08 Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09 Jan 10

7500

7000

6500

6000

5500

5000

4500

4000

3500

3000

FTSE 100 index March 2007 to March 2010 (£)

90

80

70

60

50

40

30April 09 June 09 August 09 October 09 December 09 February 10

Brent crude oil price 2009/10 (USD)

30

exposure to more exciting earnings growth than the UK domestic economy can deliver.

Overseas stock markets performed in a very similar fashion to the UK, which is hardly surprising since the underlying problems started in America. The developed markets of Europe, America and Asia had extremely similar graphs to the UK FTSE Index, the degree of fall and recovery varying by a few percent. Emerging markets were the exception due to an extremely strong performance by Latin America, especially Brazil where the recovery was so strong that they ended the year at an all-time high, having bounced 135% from the bottom in late 2008.

The strength of commodity prices has been referred to already, unusual given a global recession, but due to huge stimulus spending by China in particular. This kept demand for Brazilian exports strong and continued progress by their government has caused a re-rating of their stock market and prospects to Asian levels, whereas Latin America had generally been seen as an also-ran in the emerging market growth story due to lax fiscal and debt policies.

The result of this was that the MSCI World Equity Index rose 43% in sterling terms after falling 22% the year before. After weakening substantially in the prior year, sterling recovered a little: 6% against the US dollar and 4% against the euro although with considerable volatility. The starting rate was $1.43, which rose to $1.70 in August, spending much of the second half of 2009 around $1.65 before falling back in 2010 to finish at $1.52. The emerging market index, however, rose 75% in sterling terms with Brazil more than doubling.

US and Japan rose 36%, Europe rose 40% and Asia rose 62% over the year. Emerging markets were strongest with Latin America up 88% due to its exposure to commodity prices, and Eastern Europe up a similar 86% with Russia more than doubling for similar reasons.

While Asia was a good performer, Hong Kong and China were only up around 40%. Although China was the driver behind Asia decoupling somewhat from the Western recession, its own markets did not benefit as much. There was a fear that the $586bn budget stimulus in China, and the even larger but unquantified amount lent by the banks, was not entirely well spent. It did its job in maintaining GDP growth at 8.7%, but there are worries of speculative construction lending, and fears that a banking crisis may be about to occur in China. Beijing has subsequently curbed property lending and raised the deposits required on second properties to try to stop a property bubble.

On this subject, governments kept interest rates at record lows. In Europe only Norway raised rates by 0.5%, but they are very much an oil economy so are doing very well. Other commodity-related countries began to raise official interest rates as well: Australia has moved from 3% to 4% since last October, and India and Malaysia raised in March. So far China has not lifted rates but has tightened reserve and lending standards substantially. In the UK, US and Europe however there has been no move and none seems likely for many months yet as economic recovery remains weak.

Government bond yields generally remained low. In Germany they started at 3%, rose to 3.4% then fell to 3%. The mid-year rise was due to fears of long-term inflation caused by the extremely loose monetary and fiscal policies around the world. UK yields rose from 3.3% to 3.9%, US from 3% to 3.6%. The exception was Greece, and to a lesser extent Spain, Portugal and Italy. These countries are seen as the weaker ones in the euro with poor budget control and high debts. After a change of administration in Greece the new government announced that the previous government’s budget was hopelessly optimistic and the budget deficit was in fact 12% of GDP. This panicked the markets and Greek bonds went from a 4.4% yield late in 2009 to 7.2% in January. This also dragged out the yields of other ‘Club Med’ countries although most are in better condition than Greece. Italy has a high debt but lower deficit (it has been working on that since it joined the euro). Spain has a high deficit but a low starting point of 40% debt to GDP. Interestingly, Ireland had this type of crisis the previous year. It had to effectively nationalise all its banks and has had a severe austerity budget. The bond markets approved of it so much that Irish bonds started the year at 5.3% (from a January 2009 trough of 6%) and came in to 4.4% in late 2009, but then improved even further to finish the year at 4%. America does of course have similar issues but economic recovery has started earlier so bond markets are more forgiving.

In sector terms the best performers over the year were those related to the growing recovery, the cyclical areas such as autos, capital and consumer goods, mining and metals companies, and a recovery in the financial sectors as recapitalisation programs proceeded. There are still worries over both long-term inflation arising from all the cash washing around the world (although this seems to be staying within the financial markets and not being lent out to end-consumers) and a possible double dip in the short term, caused by austerity budgets in Greece, Spain and the UK, which will slow European recovery. An interesting point in terms of double dip is that gold has continued to rise (21% last year), which is usually an indicator of inflation worries, rather than recession.

01.04.07 01.07.07 01.12.07 01.01.08 01.04.08 01.07.08 01.10.08 01.01.09 01.04.09 01.07.09 01.12.09 01.01.10

550

500

450

400

350

300

250

200

FTSE emerging markets March 2007 to March 2010 (£)

31

Analysis of investments held at 31 March 2010

Book cost Market value

£m £m %

United Kingdom

Quoted

Fixed interestPublic-sector bonds 346.2 359.4 4.6

Corporate bonds 165.0 162.7 2.1

Index linkedPublic sector 308.1 386.6 4.9

Corporate 34.2 42.7 0.5

Ordinary and convertible shares (equities) 1,670.7 2,828.3 36.0

Unit trustsProperty 184.2 248.4 3.2

Other 36.5 81.3 1.0

Fund of hedge funds 320.0 344.3 4.4

Currency funds 123.3 128.1 1.6

Unquoted

Cash deposits 265.9 265.9 3.4

Private equity 63.9 76.4 1.0

Sub-total UK 3,518.0 4,924.1 62.7

Foreign

Quoted

Fixed interestPublic-sector bonds 112.2 136.6 1.7

Corporate bonds 51.3 52.9 0.7

Index linkedPublic sector 50.6 67.8 0.9

Corporate 0.8 1.0 0.0

Ordinary and convertible shares (equities) 1,285.1 2,029.5 25.7

Unit trustsProperty 21.7 20.8 0.3

Other 176.3 412.9 5.2

Unquoted

Private equity 184.0 219.8 2.8

Sub-total foreign 1,882.0 2,941.3 37.3

Total 5,400.0 7,865.4 100.0

Analysis of UK equity investments as at 31 March 2010

Cost Market value Number of companies£m % £m %

Oil and gas producers 235.5 14.0 522.6 18.5 12

Oil equipment and services 11.9 0.7 17.5 0.6 7

Chemicals 2.1 0.1 10.1 0.4 3

Industrial metals and mining 3.5 0.2 3.4 0.1 2

Mining 132.2 7.9 367.5 13.0 16

Construction and materials 6.9 0.4 8.1 0.3 4

Aerospace and defence 27.4 1.6 55.6 2.0 8

General industrials 14.0 0.8 20.3 0.7 6

Electronic and electrical equipment 9.4 0.6 10.8 0.4 9

Industrial engineering 12.4 0.7 24.7 0.9 15

Industrial transportation 3.3 0.2 3.5 0.1 3

Support services 58.1 3.5 87.6 3.1 25

Automobiles and parts 3.5 0.2 4.9 0.2 1

Beverages 25.1 1.5 83.7 3.0 2

Food producers 10.6 0.6 54.9 1.9 5

Household goods 20.3 1.2 57.7 2.0 7

Personal goods 0.9 0.1 5.5 0.2 1

Tobacco 37.6 2.3 118.8 4.2 2

Healthcare equipment and services 2.8 0.2 11.7 0.4 4

Pharmaceuticals and biotechnology 74.6 4.5 199.7 7.1 5

Food and drug retailers 27.3 1.6 85.9 3.0 4

General retailers 24.3 1.5 44.3 1.6 16

Media 84.7 5.1 72.2 2.6 14

Travel and leisure 55.6 3.3 71.0 2.5 20

Fixed-line telecommunications 51.1 3.1 26.0 0.9 5

Mobile telecommunications 141.8 8.5 148.1 5.2 2

Electricity 14.3 0.9 31.1 1.1 3

Gas, water and multiutilities 31.9 1.9 69.4 2.5 5

Banks 291.1 17.4 337.4 11.9 5

Non-life insurance 23.1 1.4 25.3 0.9 8

Life insurance 73.8 4.4 71.8 2.5 7

Real-estate investment services 2.6 0.2 1.7 0.1 2

Real-estate investment trusts 28.1 1.7 34.3 1.2 10

Financial services 45.1 2.7 42.5 1.5 16

Equity investment instruments 42.0 2.5 59.9 2.1 28

Software and computer services 23.3 1.4 26.8 0.9 9

Technology hardware and equipment 18.5 1.1 12.0 0.4 10

Totals 1,670.7 100.0 2,828.3 100.0 301

32 33

Analysis of overseas equity investments as at 31 March 2010

CountryBook cost Market value Number of

companies£m £m

Australia 54.6 132.2 47

Austria 3.9 5.8 8

Belgium 1.5 0.8 2

Canada 24.1 35.4 6

China 34.6 58.9 24

Denmark 9.1 18.0 8

Ireland 13.9 16.9 14

Finland 18.3 25.2 12

France 57.0 114.0 30

Germany 45.8 92.7 32

Greece 6.4 4.9 13

Hong Kong 40.7 66.1 37

India 6.8 14.2 4

Indonesia 4.2 10.6 7

Italy 46.4 48.7 38

Japan 259.1 292.2 94

Korea 35.0 84.4 23

Malaysia 13.0 21.2 13

Netherlands 26.9 43.8 16

Norway 18.2 35.6 20

Philippines 9.3 13.3 9

Portugal 6.7 9.3 9

Singapore 26.1 47.8 22

South America 26.4 63.1 18

Spain 53.7 96.3 22

Sweden 31.1 56.1 32

Switzerland 34.4 103.3 19

Taiwan 31.9 39.3 23

Thailand 13.4 28.9 14

United States 268.1 354.5 92

Other Asian 1.8 7.3 4

Other Eastern European 8.1 16.3 3

Other Western European 26.6 33.2 12

Other International 28.0 39.2 19

Totals 1,285.1 2,029.5 746

List of 20 largest equity holdings at 31 March 2010

Company/stock Market value Percentage of total fund£m %

BP 260.5 3.3

HSBC 163.8 2.1

Royal Dutch 145.4 1.9

Vodafone 141.9 1.8

Glaxosmithkline 122.6 1.5

Rio Tinto 108.9 1.4

BHP Billiton 103.9 1.3

British American Tobacco 80.9 1.0

Astrazeneca 71.0 0.9

BG Group 68.2 0.9

Tesco 64.8 0.8

Anglo American 62.9 0.8

Barclays 61.5 0.8

Standard Chartered 60.3 0.8

Jupiter India Unit Trust (India) 51.1 0.7

Diageo 49.6 0.6

Xstrata 49.3 0.6

Reckitt Benckiser 44.7 0.6

Unilever 44.6 0.6

Threadneedle Latin America 43.9 0.5

22.9

34 35

36 37

Actuary’s report

Statement of the actuary for the year ended 31 March 2010

Introduction

The Scheme Regulations require that a full actuarial valuation is carried out every third year. The purpose of this is to establish that the West Yorkshire Pension Fund (the Fund) is able to meet its liabilities to past and present contributors and to review employer contribution rates. The last full actuarial investigation into the financial position of the Fund was completed as at 31 March 2007 by Mercer Limited, in accordance with Regulation 77(1) of the Local Government Pension Scheme Regulations 1997.

Actuarial position

1 Rates of contributions paid by the participating Employers during 2009/10 were based on the actuarial valuation carried out as at 31 March 2007.

2 The valuation as at 31 March 2007 showed that the funding ratio of the Fund had improved since the previous valuation with the market value of the Fund’s assets at that date (of £7,306m) covering 90% of the liabilities allowing, in the case of current contributors to the Fund, for future increases in pensionable remuneration.

3 The valuation also showed that a common rate of contribution of:

• 13.2% of pensionable pay per annum was required from employers. The common rate calculated as being sufficient, together with contributions paid by members, to meet the liabilities arising in respect of service after the valuation date.

Plus

• 2.6% of pensionable pay to restore the assets to 100% of the liabilities in respect of service prior to the valuation date, over a recovery period of 22 years.

This would imply an average employer contribution rate of 15.8% of pensionable pay in total.

4 In practice, each individual employer’s position is assessed separately and contributions are set out in Mercer Limited’s report dated 31 March 2008. In addition to the contribution rate shown, payments to cover additional liabilities arising from early retirements (other than ill-health retirements) will be made to the Fund by the employers.

5 The funding plan adopted in assessing the contributions for each individual employer is in accordance with the Funding Strategy Statement (FSS). Different approaches adopted in implementing contribution increases and deficit recovery periods were as determined through the FSS consultation process. For certain employers, in accordance with the FSS, an increased allowance has been made for assumed investment returns on existing assets and future contributions, for the duration of the employer’s deficit recovery period.

6 The valuation was carried out using the projected unit actuarial method, and the main actuarial assumptions used for assessing the funding target and the common contribution rate were as shown in the table above.

The assets were valued at market value.

Further details of the assumptions adopted for the valuation were set out in the actuarial valuation report.

7 The valuation results summarised above are based on the financial position and market levels at the valuation date, 31 March 2007. As such the results do not make allowance for changes which have occurred subsequent to the valuation date.

8 Contribution rates will be reviewed at the next actuarial valuation of the Fund as at 31 March 2010 which is currently underway. The formal actuarial valuation report and the Rates and Adjustments Certificate setting out the employer contribution rates for the period from 1 April 2011 to 31 March 2014 are required by the Regulations to be signed by 31 March 2011.

9 This Statement has been prepared by the current Actuary to the Fund, Hewitt Associates Limited, for inclusion in the accounts of the Fund. It provides a summary of the results of the actuarial valuation which was carried out as at 31 March 2007 by Mercer Limited, based on the information provided in their report, dated 31 March 2008, and previous such Statements. The valuation provides a snapshot of the funding position at the valuation date and is used to assess the future level of contributions required.

This Statement must not be considered without reference to the formal valuation report which details fully the context and limitations of the actuarial valuation.

Hewitt Associates Limited does not accept any responsibility or liability to any party other than our client, City of Bradford Metropolitan District Council, the Administering Authority of the Fund, in respect of this statement.

Hewitt Associates Limited20 July 2010

For past service liabilities For future service liabilities

Rate of return on investments:• Pre retirement • Post retirement

6.90% pa 5.40% pa

6.50% pa 6.50% pa

Rate of pay increases 4.85% pa 4.50% pa

Rate of increases in pensions in payment (in excess of Guaranteed Minimum Pension) 3.10% pa 2.75% pa

38 39

Audit report

Independent auditor’s report to the Members of City of Bradford Metropolitan District Council

Opinion on the West Yorkshire Pension Fund accounting statements

I have audited the pension fund accounting statements for the year ended 31 March 2010 under the Audit Commission Act 1998. The pension fund accounting statements comprise the Fund Account, the Net Assets Statement and the related notes. The pension fund 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 West Yorkshire Pension Fund in accordance with Part II of the Audit Commission Act 1998 and for no other purpose, as set out in paragraph 49 of the Statement of Responsibilities of Auditors and of Audited Bodies published by the Audit Commission in April 2008.

Respective responsibilities of the Strategic Director: Corporate Services and auditor

The Strategic Director: Corporate Services’ responsibilities for preparing the pension fund accounting statements, in accordance with relevant legal and regulatory requirements and the Code of Practice on Local Authority Accounting in the United Kingdom 2009: A Statement of Recommended Practice are set out in the Statement of Responsibilities for the Statement of Accounts.

My responsibility is to audit the pension fund accounting statements and related notes in accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland).

I report to you my opinion as to whether the pension fund accounting statements give a true and fair view, in accordance with relevant legal and regulatory requirements and the Code of Practice on Local Authority Accounting in the United Kingdom 2009: A Statement of Recommended Practice, of the financial transactions of the pension fund during the year and the amount and disposition of the fund’s assets and liabilities, other than liabilities to pay pensions and other benefits after the end of the scheme year. I read other information published with the pension fund accounting statements and related notes and consider whether it is consistent with the audited pension fund accounting statements. This other information comprises the Explanatory Foreword and the content of the Annual Report. I consider the implications for my report if I become aware of any apparent misstatements or material inconsistencies with the pension fund accounting statements and related notes. My responsibilities do not extend to any other information.

Basis of audit opinion

I conducted my audit in accordance with the Audit Commission Act 1998, the Code of Audit Practice issued by the Audit Commission and International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the pension fund accounts and related notes. It also includes an assessment of the significant estimates and judgments made by the Authority in the preparation of the pension fund

accounting statements and related notes, and of whether the accounting policies are appropriate to the Authority’s circumstances, consistently applied and adequately disclosed.

I planned and performed my audit so as to obtain all the information and explanations which I considered necessary in order to provide me with sufficient evidence to give reasonable assurance that the pension fund accounts and related notes are free from material misstatement, whether caused by fraud or other irregularity or error. In forming my opinion I also evaluated the overall adequacy of the presentation of information in the pension fund accounting statements and related notes.

Opinion

In my opinion the pension fund accounting statements and related notes give a true and fair view, in accordance with the Code of Practice on Local Authority Accounting in the United Kingdom 2009: A Statement of Recommended Practice, of the financial transactions of the Pension Fund during the year ended 31 March 2010, and the amount and disposition of the fund’s assets and liabilities as at 31 March 2010, other than liabilities to pay pensions and other benefits after the end of the scheme year.

Paul Lundy

District AuditorSeptember 2010

Audit Commission3 Leeds City Office ParkHolbeckLeedsLS11 5BD

Accounts

The Statement of Accounts

The City of Bradford Metropolitan District Council (Bradford Council), as administering authority for West Yorkshire Pension Fund, 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 Strategic Director (Corporate Services).

The Strategic Director (Corporate Services) is responsible for the preparation of the Statement of Accounts, which is required to present fairly the financial position of the fund at 31 March 2010 and its income and expenditure for the year ended 31 March 2010.

In preparing this Statement of Accounts, the Strategic Director (Corporate Services) has issued a Code of Practice for all finance officers employed by the council, and a manual on the practices to be adopted in the preparation of the year-end accounts. These documents set out arrangements for ensuring the accounts are prepared in a consistent and prudent manner in line with suitable accounting principles.

Statement of Accounting Policies

The financial statements have been prepared in accordance with the revised Code of Practice on Local Authority Accounting in the United Kingdom 2009: A Statement of Recommended Practice published by the Chartered Institute of Public Finance and Accountancy, which requires that the fund’s accounts should conform with the Statement of Recommended Practice: Financial Reports of Pension Schemes (revised 2007) as approved by the Accounting Standards Board.

The financial statements summarise the transactions of the scheme and deal with the net assets at the disposal of West Yorkshire Pension Fund. They do not take account of obligations to pay pensions and benefits which fall due after the end of the scheme year. The actuarial position of the fund, which does take account of such obligations, is dealt with in the statement by the actuary in this report, and these financial statements should be read in conjunction with it.

Investments

Listed investments are shown at Bid Prices. The Bid Value of the investments is based on the Bid Market quotation of the relevant stock exchange.

Property Funds are valued at closing bid price. Property valuations are normally undertaken by the Property Trusts’ own valuers. The values disclosed in the financial statements are extracted from valuation statements issued by the Property Trusts. Valuations are performed in accordance with RICS (Royal Institution of Chartered Surveyors) Valuation Standards (The Red Book).

The values of investments in private equity are based on valuations estimated by the general partners to

the private equity funds in which WYPF has invested. These valuations are prepared in accordance with the International Private Equity and Venture Capital Valuation Guidelines, which follow the valuation principles of IFRS and US GAAP. Valuations are performed annually and mainly as at the end of December. Cash flow adjustments are used to roll forward the valuations to 31 March as appropriate. The ultimate return on these investments may be materially different from that indicated by the estimated valuation in the balance sheet.

The values of investments in Hedge Funds are based on the net asset values provided by the fund managers as at 31 March 2010. Assurance over these valuations is gained from fund managers in the form of SAS70 reports and audited accounts which are prepared in accordance with appropriate accounting standards. Values are normally received by West Yorkshire Pension Fund 30 days after the month end to which they relate. The values reported in the financial statements are therefore based on February month-end values, adjusted according to estimates of fund performance in March, as informed by fund managers.

Investments in Currency Funds are valued using net asset values provided by fund managers as at 31 March 2010. Assurance over these valuations is gained from fund managers in the form of SAS70 reports and audited accounts which are prepared in accordance with appropriate accounting standards.

Additional Voluntary Contributions (AVCs)

In line with Regulation 5(2)(b) of the Local Government Pension Scheme (management and Investment of Funds) Regulations 1998, AVCs are not shown in the Fund Account and Net Assets Statement. Details of AVC investments are, however, included in the commentary in the Investment report and in the Notes to the accounts (note 4).

AVC investments are valued by the Equitable Life Assurance Society, Scottish Widows and Prudential. Those AVC funds that relate to the with-profits fund are valued at contributions. The value of the unit-linked fund element is based on the bid price of the relevant fund at the year-end date.

Currency translation

Assets and liabilities in foreign currency are translated into sterling at exchange rates ruling at the financial year-end. Any gains or losses arising are treated as part of the change in market value of investments.

Transfers

Transfer values represent amounts received and paid during the period for individual and bulk transfers that came into or out of the fund.

Investment income

Investment income is accounted for when received except that interest due on fixed-interest securities, index-linked securities and short-term investments is accounted for on an accruals basis, and income from UK equities is accounted for on the date when stocks are quoted ex-dividend.

Contributions

Contributions are accounted for when due.

Employers have met the indirect costs of early retirement. The costs have been recharged and the income received is made up of both one-off lump sum payments and instalments where the employer has chosen to spread the cost.

AVCs are accounted for when due, in the same way as other contributions.

Expenditure

No account is taken of long-term liabilities to pay benefits.

Accruals have been included for lump-sum benefits arising but not paid until the following year.

40 41

42 43

Fund account for the year ended 31 March 2010

Note 2009/10 2008/9

£’000 £’000

Contributions and benefits

Contributions receivable 1 357,738 327,820

Transfers in 2 38,629 35,292

Other income 1 68

Non-statutory pensions and pensions increases recharged 3 19,058 18,681

415,426 381,861

Benefits payable 5 342,398 302,964

Non-statutory pensions and pensions increase 3 19,058 18,681

Leavers 6 32,184 24,214

Administrative and other expenses borne by the scheme 7 5,095 5,214

398,735 351,073

Net additions from dealings with members 16,691 30,788

Returns on investments

Investment income 8 198,308 226,365

Change in market value of investments – realised and unrealised 9 1,770,493 (1,535,923)

Stock lending 10 1,641 1,509

Underwriting commission 24 1

Investment management expenses (1,733) (1,585)

Net return on investments 1,968,733 (1,309,633)

Net increase/(decrease) in the fund during the year 1,985,424 (1,278,845)

Opening net assets of the fund 5,931,486 7,210,331

Closing net assets of the fund 7,916,910 5,931,486

Net assets statement at 31 March 2010

Note 2009/10 2008/09 £’000 £’000

Investments 9

Fixed-interest securities 711,601 643,160

Equities (including convertible shares) 5,154,025 3,497,591

Index-linked securities 498,100 483,530

Pooled funds 1,235,760 936,180

Other – sterling deposits 265,889 320,289

Other investment balances 24,682 23,870

Investments at market value 31 March 7,890,057 5,904,620

Current assets and liabilities

Debtors 11 45,484 29,966

Cash balance (repayable within 12 months) (9,286) 5,404

Creditors (9,345) (8,504)

Net current assets and liabilities 26,853 26,866

Net assets of the fund at 31 March 7,916,910 5,931,486

Becky Hellard

Strategic Director – Corporate Services City of Bradford Metropolitan District Council

Notes to the accounts

1. Contributions receivable

2009/10 2008/09£’000 £’000

Employers’ contributions

Normal 182,789 163,895

Deficit funding 38,276 35,862

Augmentation 854 1,270

Other 26,691 21,995

248,610 223,022

Employees’ contributions 109,128 104,798

Total contributions received 357,738 327,820

Employers are required to pay contributions at a rate set by the fund’s actuary at three-yearly intervals.

The employers’ contributions for 2009/10 reflect the rates set for the three financial years 2008/2009 to 2010/11 arising from the 2007 actuarial valuation.

Employees’ contributions are as set out in the new LGPS from 1 April 2008, and there are several tiered employee contribution rates. For 2009/10 the rates start at 5.5% payable by employees with salaries up to £12,600 a year, and the highest rate is 7.5% to be paid on salaries over £78,500 a year.

The fund has made provision for employees to make additional voluntary contributions (AVCs) under AVC schemes with Equitable Life, Scottish Widows and Prudential (which became a provider in 2009/10). All contributions by employees to the AVC schemes are made direct to Equitable Life, Scottish Widows and Prudential, further details of which are shown in note 4.

2. Transfers in

2009/10 2008/09£’000 £’000

Individual transfers in from other schemes 38,629 27,281

Bulk transfers in from other schemes 0 8,011

38,629 35,292

3. Non-statutory pensions and pensions increase recharged

2009/10 2008/09£’000 £’000

Pensions 19,058 18,681

Lump Sums 0 0

19,058 18,681

The costs of added years granted by participating employers for early retirement together with associated inflation-proofing costs are reimbursed to the fund by the employer out of current revenues.

Costs of annual inflation-proofing for non-participating employers are also recharged.

4. AVC scheme with Equitable Life, Scottish Widows and Prudential

Details of AVC transactions are as follows.

2009/10 2008/09£’000 £’000

Income

Contributions received 860 896

Transfer values 92 239

Internal transfers from other policies 11 0

963 1,135

Expenditure

Life assurance premiums 4 5

Retirement benefits 775 864

Leavers (transfers and withdrawals) 1,472 1,147

Deaths 19 50

Refunds/surrenders 5 1

2,275 2,067

44 45

5. Benefits payable

2009/10 2008/09

£’000 £’000

Pensions

Retired employees 223,847 206,113

Dependants 20,930 19,783

244,777 225,896

Lump sums

Lump sums on retirement 90,331 70,503

Lump sums on death 7,290 6,565

97,621 77,068

Total benefits payable 342,398 302,964

For participating employers, all basic pensions plus the costs of annual inflation-proofing are met from the assets of the fund.

Details of AVC Benefits are shown in note 4.

6. Payments to and on account of leavers

2009/10 2008/09£’000 £’000

Refunds of contributions 44 78

Individual transfers 29,746 24,136

Bulk transfers 2,394 0

32,184 24,214

All transfer values paid during the year were calculated either in accordance with the provisions of the Local Government Pension Scheme Regulations, or where applicable, in the manner required by Chapter IV of Part IV of the Pension Schemes Act 1993. Where both methods of calculation could be applied, the higher amount was paid in all cases.

Details of AVC refunds and transfers are shown in note 4.

7. Administrative expenses

2009/10 2008/09 £’000 £’000

Administration and processing 4,761 4,936

Actuarial fees 257 209

Audit fee 71 69

Legal and other professional fees 6 0

5,095 5,214

8. Investment income

2009/10 2008/09£’000 £’000

Income from fixed-interest securities 34,751 33,432

Dividends from equities 142,167 158,087

Income from index-linked securities 8,728 9,893

Income from managed and unitised funds 12,506 12,979

Interest on cash deposits 2,893 15,577

201,045 229,968

Irrecoverable withholding tax (2,737) (3,603)

198,308 226,365

46 47

9. Investments

Opening value at 1 April 2009 Purchases cost Sales proceeds Change in MV Closing value at

31 March 2010£’000 £’000 £’000 £’000 £’000

Fixed-interest securities 643,160 276,791 (246,858) 38,508 711,601

Equities 3,497,591 471,275 (274,693) 1,459,852 5,154,025

Index-linked securities 483,530 82,173 (92,750) 25,147 498,100

Managed and unitised funds 936,180 107,434 (54,840) 246,986 1,235,760

Cash deposits 320,289 0 (54,400) 0 265,889

Other investment debtors 33,017 0 (3,195) 0 29,822

Other investment creditors (9,147) 4,007 0 0 (5,140)

Totals 5,904,620 941,680 (726,736) 1,770,493 7,890,057

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 the sale of investments during the year.

2009/10 2008/09£’000 £’000

Fixed-interest securities

UK public sector quoted 359,404 412,928

UK other quoted 162,700 94,313

Overseas public sector quoted 136,605 95,985

Overseas other quoted 52,892 39,934

711,601 643,160

Equities

UK quoted 2,828,259 1,869,462

UK unquoted 76,396 72,250

Overseas quoted 2,029,532 1,341,833

Overseas unquoted 219,838 214,046

5,154,025 3,497,591

Index-linked securities

UK public sector quoted 386,593 352,040

UK other quoted 42,710 28,001

Overseas public sector quoted 67,775 102,919

Overseas other quoted 1,022 570

498,100 483,530

Managed and unitised funds

Currency funds 128,132 90,031

Fund of Hedge Funds 344,275 292,198

Property 269,215 232,885

Other 494,138 321,066

1,235,760 936,180

Cash deposits

Sterling 265,889 320,289

AVC investments

The fund provides an AVC scheme for its contributors, the assets of which are invested separately from the main fund. The scheme providers are Equitable Life Assurance, Scottish Widows, and Prudential (who became a provider in 2009/10). Additional benefits are secured on a money purchase basis for those contributors electing to pay Additional Voluntary Contributions. The aggregate amounts of AVC investments are as follows.

2009/10 2008/09£’000 £’000

Equitable Life 4,369 4,749

Prudential 171 0

Scottish Widows 13,598 11,697

18,138 16,446

10. Stock lending

2009/10 2008/09 £’000 £’000

Stock-lending income

Fixed interest 134 105

UK equities 475 418

International equities 1,240 1,164

1,849 1,687

Less costs 208 178

1,641 1,509

As at 31 March 2010, £1,028 million of stock was on loan to market makers, and this was covered by collateral totalling £1,081 million (which includes an appropriate margin) comprising bonds (£196 million), government bonds (£257 million) and stocks and shares (£628 million).

11. Debtors

2009/10 2008/09£’000 £’000

Contributions due from employers 25,935 24,002

Other debtors 19,549 5,964

45,484 29,966

48 49

12. Related Party Transactions

In accordance with FRS 8 ‘Related Party Disclosures’, material transactions with related parties not disclosed elsewhere, are detailed below.

In 2009–10, City of Bradford Metropolitan District Council charged West Yorkshire Pension Fund £568,356 in respect of support services provided (£565,306 in 2008–09). The charge included accommodation, financial, legal and information technology services.

Under legislation introduced in 2003/04, eligible councillors are entitled to join the scheme.

No senior officers responsible for the administration of the fund have entered into any contract, other than their contract of employment with City of Bradford Metropolitan District Council, for the supply of goods or services to the fund.

The fund has an investment in Montanaro European Smaller Companies Fund plc, which at 31 March 2010 was valued at £12.1m, and has an original cost of £4.9m. There has been no investment activity with the fund during 2009/10. Rodney Barton, Director of West Yorkshire Pension Fund, is a non-executive director of Montanaro European Smaller Companies Fund plc, for which he is paid a fee.

13. Contingent liabilities and contractual commitments

At 31 March 2010 West Yorkshire Pension Fund had investments in private equity funds valued at £296.2m; however the fund has un-drawn commitments to invest in private equity amounting to £301.6m.

50 51

52

Resolving complaints

Internal Dispute Resolution Procedure

Pensions are a complicated issue at times so it’s inevitable that disagreements occasionally arise between members, employers and WYPF.

When disagreements do happen we do all we can to try to resolve them informally and reach an agreement.

But this isn’t always possible. And the scheme provides a formal way for disagreements to be resolved: the Internal Dispute Resolution Procedure.

The Internal Dispute Resolution Procedure is a two-stage process.

From June 2004, stage 1 gives scheme members a chance to have a disagreement reviewed by either the employer or WYPF, depending on who the dispute is against. The review will be undertaken by the person specified by the body that was responsible for making the original decision being appealed against. The member must apply for a review under Stage 1 within six months of the disagreement coming to light.

If the scheme member or their employer is not happy with the outcome of the Stage 1 review, they can refer the matter to the administering authority for review under stage 2 of the procedure.

Further help needed?

The Pensions Advisery Service (TPAS) can also help with resolving disputes if both stages of the Internal Dispute Resolution Procedure have not provided an agreement.

The Pensions Ombudsman settles disputes and investigates complaints that TPAS has not been able to settle. The Ombudsman’s decision is final and binding on all the parties to a dispute.

Policing pension schemes

The Pensions Regulator was set up following the 1995 Pensions Act, replacing the Occupational Pensions Regulatory Authority (OPRA). Its main role is to protect pension scheme members’ interests and it can step in and run schemes when employers, professional advisers, trustees or administrators have failed in their duties.

53

Further information and contacts

Senior management team

Director – West Yorkshire Pension FundRodney Barton Phone: 01274 432317 Fax: 01274 437700E-mail: rodney.barton@bradford.gov.uk

WYPF Administration

Development Manager – QualityCaroline BlackburnPhone: 01274 434523Fax: 01274 437658E-mail: caroline.blackburn@bradford.gov.uk

Development Manager – StrategicYunus GajraPhone: 01274 432343Fax: 01274 437658E-mail: yunus.gajra@bradford.gov.uk

Service Centre Group ManagerGrace KitchenPhone: 01274 434266Fax: 01274 437678E-mail: grace.kitchen@bradford.gov.uk

Operations Group ManagerAnne TurleyPhone: 01274 437721Fax: 01274 437624E-mail: anne.turley@bradford.gov.uk

WYPF Investments

Chief Investment Officer (UK)Debra Hopkins/Joanna Wilkinson (job-share)Phone: 01274 432318/01274 432038Fax: 01274 308016E-mail: debra.hopkins@bradford.gov.ukE-mail: joanna.wilkinson@bradford.gov.uk

Chief Investment Officer (Overseas)Andrew BraidPhone: 01274 434219Fax: 01274 308016E-mail: andrew.braid@bradford.gov.uk

A Minicom text service is available for people with hearing difficulties on 01274 724472.

Our offices at Argus Chambers, Britannia House, Hall Ings, Bradford are open Monday to Friday between 8.45am and 4.30pm.

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West Yorkshire Pension FundPO Box 67BradfordBD1 1UPwww.wypf.org.uk and www.wypfemployers.org.uk November 2010