The London Pensions Fund Authority has released its 2013 Annual Report, announcing that the fund grew by £427m during 2012-13, to £4.6bn.
Despite challenging market conditions, both the soon-to-be-merged Active and Pensioner Sub-Funds saw strong growth during 2012-13. The Active Sub-Fund returned 12.6% and the Pensioner Sub-Fund 9.6%, outperforming their set benchmarks over 1 and 3 years.
The performance was positively impacted by a strategic decision, informed by an environment of continuing interest rate stability, to remove an interest rate hedge, which harvested a benefit of £178m.
Other performance indicators of note include gross and net return on investments, which have both improved significantly in 2013 - by 12.95% (2012 5%) and 12.35% (2012 4.2%) respectively. At the same time we continue to reduce fund costs both as a percentile of net assets and in absolute terms per fund member. Fund management costs as a percentile of assets under management also have been reduced and it is our intention to reduce those further. Finally, the net increase in net assets available for benefits during the year improved from £88m to 481m.
In addition to a strong financial performance, the LPFA has also cemented its reputation as an international centre of excellence in pension administration. During 2012-13, 99% of customer queries were answered on time, and 99% of members now identify themselves as satisfied with the service provided to them.
As part of LPFA’s development strategy, it has undergone significant restructuring at Board level since the announcement of Edmund Truell as Chairman and Chair of Investment Committee earlier this year and Sir Merrick Cockell, former Leader of the Royal Borough of Kensington and Chelsea and current Chairman of the Local Government Association as Deputy Chairman. Top tier industry experts who have joined the Board include Dermot “Skip” McMullan as a Member of both the Investment Committee & Business and Administration Committee, Kerry Adby as a Member of Investment Committee and Stephen Brooker as Chair of the Audit Committee & a member of the Risk Committee and Remuneration Committees.
The LPFA continues to innovate and invest in improved systems to further improve satisfaction levels. During the past year, the organisation has been awarded the Engaged Investor Best Trustee Training Initiative, as well as receiving accreditation from the Institute of Customer Service and in Information Technology (ISO 27001) and Environmental Management (ISO 14001).
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