Westminster Council's Pension Fund performance was recently reviewed at the Audit and Performance Committee meeting, where councillors examined the audited Statement of Accounts and Audit Findings Report for the Pension Fund. The Accounts and Audit Findings Report Pension Fund 202425 was a key document discussed.
The committee, which included Councillors Regan Hook, Patricia McAllister, Alan Mendoza, Ian Rowley, and Aziz Toki, along with Independent Person Mark Maidment, scrutinised the fund's financial health and future prospects. Investment consultants and actuaries were present to provide context to the Pension Fund accounts.
According to the report, the fund has surpassed £2 billion in net assets. Phil Tates noted that the audit process went smoothly with good communication between the council and Yvonne Compton, and the process was completed within the stated timetables. The implementation of IFRS 16, concerning lease accounting, was also a focus during the audit, and proceeded relatively smoothly despite the challenges it posed.
However, Councillor Mendoza raised questions about asset ceilings and their impact on the accounts. He also inquired about the discrepancy between the fund being 181% funded in the audit paper and 140% funded in the report's latest estimate.
It was clarified that the asset ceiling is a regulation that caps the amount of surplus that can be presented in the accounts under IS 2019 regulation. This regulation limits the amount of surplus that can be presented, even if the fund has performed well. The way that's calculated is to look at the present value of future reductions in the contribution rent. In effect, this locks any surplus into the pension fund.
Regarding the funding level discrepancy, it was explained that the actuarial valuation had been adjusted to take a more prudent view of actuarial assumptions, resulting in the lower 140% figure. Specifically, the discount rate was adjusted slightly to arrive at this figure. This adjustment is intended to better prepare the pension fund for any major valuation corrections or stock market downturns in the future.
Concerns were raised about an unadjusted misstatement of £4 million within the accounts. The committee agreed to approve the 2024-25 pension fund statement of accounts, including a letter of representation acknowledging the unadjusted misstatement and an ongoing issue regarding records for members pre-2000. The auditors are satisfied that this misstatement is not material and will not adjust the financial statements accordingly.
The ongoing issue regarding records for members pre-2000 is being addressed with a representation from the auditors, who are satisfied that it cannot result in a material misstatement.
Jo, from Rathbunton, confirmed that they would issue an unmodified audit opinion. She also thanked the finance team for their hard work in producing the accounts, especially given the complexities of IFRS 16 implementation. She noted that Westminster's investment of time in this area was a credit to the finance team, as many local authorities have struggled with producing IFRS 16 information.
