Wiltshire Pension funding level on the rise amid 'strong' investment growth

The value of the Wiltshire Pension Fund increased to £3.2bn as at 31 March 2022, with a funding level of 103 per cent, according to the scheme's latest Annual Report and Accounts.

The report stated that the first half of the year had seen "strong" investment growth following Covid-19, revealing that valuations dipped and recovered in the autumn following news of the Omicron variant.

Overall, the scheme achieved an 8.5 per cent net return on investments, 0.4 per cent ahead of its investment managers' combined benchmarks, with an average per annum investment return of 7.3 per cent over the past five years.

It also confirmed that over 70 per cent of the scheme's assets are now managed through the Brunel Pension Partnership, which scheme officers suggested will help to ensure the delivery of fee savings and investment performance in a cost effective way.

The scheme was also one of a number of funds in the Brunel pool that collaborated to develop a Paris-Aligned benchmark, with this work highlighted as a key "investment milestone" for the scheme.

This is also in line with broader decarbonisation activity underway by the scheme, having previously committed to achieving a whole fund carbon reduction target of 50 per cent by 2030, and a listed equities carbon reduction target of 69 per cent by 2030.

The scheme also confirmed that it is looking to allocate 35 per cent of the fund to sustainable/low carbon green assets by 2030, and to expand its specific net zero target setting for other asset classes over 2022.

The scheme, which has has more than 84,000 members, received a total of £125m in contributions over the past year, and paid out benefits totalling £102m.

It reported a £3m cost to run the fund, including administration, oversight and governance costs, which is equivalent to around £33 per member.

However, it acknowledged that there is work to be done to improve the delivery of its administration service, as it is still resolving historical issues involving the pensioner payroll, and dealing with significant backlogs of low-priority cases.

Indeed, the scheme previously commissioned an independent review into its administration function in 2021, to help identify key areas to focus on, and to assess whether it has sufficient resource in this area.

Following this, the committee has now approved a one-off spend for the 2022/23 budget to support achieving these improvements, via outsourcing projects which will commence during 2022/23.

This includes a £350,000 one-off budget to resolve the pensioner payroll issues and a £450,000 one-off budget for outsourcing the operational backlogs.

Commenting in the foreword, Wiltshire Pension Fund Committee chair, Richard Britton, said: "The fund has continued to evolve, developing its robust approach to responsible investment, taking advantage of opportunities to deliver sustainable risk-adjusted investment returns.

"Investment milestones during the year have included making a dedicated allocation to sustainable equities, collaborating with other funds in the Brunel pool to develop a Paris-Aligned Benchmark, and portfolio that tracks this.

"Allocations were also made to UK affordable housing and renewable infrastructure. Engagement with scheme employers and members has been a key theme.

"The business plan and budget for 2022/23 aims to drive improvements in administration for our scheme members, fitting the new vision for the fund: “to deliver an outstanding service to our scheme employers and members”.

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