Appendix 8

Hampshire Pension Fund - 2005/06 accounts

1 Introduction

1.1 This report presents the Pension Fund accounts for 2005/06.

2 2005/06 accounts

2.1 A summary revenue account for 2005/06 is shown below with equivalent figures for the previous year.

2.2 Employees' contributions rose by 6.0% compared with the previous year. Pay increased for all contributors by 2.95% from 1 April 2005. Average contributor numbers rose by 1.4% from 45,164 during 2004/05 to 45,808 in 2005/06.

2.3 Employers' contributions increased by 18.2%. These are assessed as a proportion of employees' contributions which rose by 6.0%. The remaining difference is explained by the fact that employers' contribution rates for scheduled bodies rose between 2004/05 and 2005/06 from 225% of employees' contributions to 250%, an increase of 11.1%. There was also a 14.3% increase in employers' contribution rates for admitted bodies from 210% of employees' contributions to 240%.

2.4 Transfer values received rose by 38.1% or £6.4m. The number of receipts actually fell between 2004/05 and 2005/06 by 12.7% from 1,286 to 1,123, but the average value of each receipt rose by 59%.

2.5 Pensions paid increased by 6.9%. Pensions were increased by 3.1% from April 2005. The number of pensions in payment rose during 2005/06 by 2.9% from 23,786 to 24,470.

2.6 There was a 9.7% increase in lump sums and benefits paid. These include deferred benefits going into payment, retirements and death grants. The number of lump sums paid rose by 16%. However, a rising share of these are smaller value payments to former employees reaching retirement age rather than current staff.

2.7 Transfer values paid rose by 66%. The number of payments rose between 2004/05 and 2005/06 by 42% from 428 to 624. Over £1m was paid for bulk transfers to OFSTED on a nationally agreed basis.

2.8 Investment income rose by 22.2%. This was a result of increased dividend levels, particularly on UK and US equities.

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 2005/06 by 26.4%. The overall fund balance rose by 25.7%. This reflects a continued recovery in equity markets following three years of poor performance up to March 2003. Index returns in 2005/06 in the UK, US, Japanese and European equity markets were 28.0%, 24.2%, 48.1%, and 35.5% respectively. The index return on UK index-linked stocks was 9.0%.

3.3 Annex 1 provides a detailed analysis of fund holdings as at 31 March 2006. Annex 2 contains a series of graphs showing trends in pension activities since 1977.

Recommendation

1 That the accounts for 2005/06 be approved.

Annex 1 of Appendix 8

Pension Fund investments

Summary of holdings on 31 March 2006