Appendix 7

Hampshire Pension Fund - 2003/04 accounts

1 Introduction

1.1 This report presents the Pension Fund accounts for 2003/04.

2 2003/04 accounts

2.1 A summary revenue account for 2003/04 is shown below with equivalent figures for the previous year.

2.2 Employees' contributions rose by 8.7% compared with the previous year. Pay increased generally by 4.5% from 1 April 2003. Contributor numbers rose during 2003/04 by 3.7%, from 42,403 to 43,980, most being part-time workers.

2.3 Employers' contributions increased by 13.9%. After excluding early retirement charges of £2.1m in 2002/03 and £2.8m in 2003/04, employers' contributions rose by 13.3% from £69.3m in 2002/03 to £78.5m in 2003/04. These are assessed as a proportion of employees' contributions which rose by 8.7%. The remaining difference is explained by the fact that employers' contribution rates rose between 2002/03 and 2003/04 from 205% of employees' contributions to 215% (an increase of 4.9%) for scheduled bodies.

2.4 Transfer values received rose by 24.0% or £3.5m. The number of receipts rose during 2003/04 by 2.7% but the average value of each receipt rose by 20.7%.

2.5 Pensions paid increased by 5.0%. Pensions were increased by 1.7% from April 2003. The number of pensions in payment rose in 2003/04 by 3.3% from 22,547 to 23,297.

2.6 There was a 11.5% increase in lump sums and benefits paid. These include deferred benefits going into payment, retirements and death grants. These are based on final year's pay which rose in 2003/04 by an average of 4.5%. The number of payments rose in 2003/04 by 1.5%. Steps taken in 1998 to reduce the level of early retirements are also increasing the average length of service at retirement.

2.7 Transfer values paid rose by 45.6m. The number of payments fell in 2003/04 by 4.1% but the average payment rose by 53.1%.

2.8 Costs of administration rose by 6.7%. The main factor was an increase in administrative costs associated with a 4.8% increase in the number of scheme members from 83,375 to 87,418.

2.9 Investment income rose by 4.6%. This was a result of increased dividend levels on both UK and overseas equities. Dividends on UK shares rose by 11.4% over 2002/03. Dividends also increased on European and US equities by 14.9% and 8.7% respectively.

3 Net assets statement

3.1 The net assets statement (or fund balance sheet) is summarised below:

3.2 The market value of investments rose during 2003/04 by 26.8%. The overall fund balance rose by 24.3%. This reflects a recovery in markets after three years of poor performance by most equity markets. Index returns in 2003/04 in the UK, US, Japanese and European equity markets were 31.0%, 16.5%, 46.4%, and 36.4% respectively. The index return on UK index-linked stocks was lower at 6.7%.

3.3 Annex 1 provides a detailed analysis of fund holdings as at 31 March 2004. Annex 2 contains a series of graphs showing trends in pension activities since 1977.

Recommendation

1 That the accounts for 2003/04 be approved.

Annex 1 of Appendix 7

Pension Fund investments

Summary of holdings on 31 March 2004