However, the overall market value of the Northumberland County Council Pension Fund increased from £1.34billion to £1.4billion in 2018-19.
A report to Wednesday’s a meeting of the authority’s audit committee explained that this growth was due to the fact that payments made from the fund have been less than the annual return plus what was paid into the fund during the year, with the investment return being 6.9%.
The net withdrawal last year was just under £30million, up from £2.7million in 2017-18, but this figure is skewed by the asset transfer of almost £26million in relation to Northumberland College exiting the fund in March.
This was because, upon its merger with Sunderland College that month, the Ministry for Housing and Local Government substituted South Tyneside Council as the administering authority for Northumberland College, leading to a transfer to the Tyne and Wear Pension Fund.
Northumberland College also represented approximately 2.6% of the fund’s membership, so its removal had an impact on this front as well.
Nonetheless, the net withdrawal in 2018-19 without the college’s transfer of about £4million still represented a significant rise on the previous year, an increase of £1.3million.
The report explains that this ‘reflects the increasing number of pensioners and the fact that the increased contributions from active members were not matching the increased value of benefit payments, as the fund matures’.
It goes on to say that fund maturity in this context is the proportion of active to non-active liabilities, with the greater the proportion of non-active liabilities, the greater the maturity.
In Northumberland, the fund membership had a proportion of 51% actives to 49% non-actives at the end of the 2003-4 financial year and was 50-50 three years later.
But by March 31, 2016, however, there were 38% actives to 62% non-actives.
The report says that increasing fund maturity ‘in theory should not in itself be a concern’, but it is a worry when a fund is significantly under-funded, because the deficit can only be collected based on the active membership of the fund.
The Northumberland County Council Pension Fund involves around 40 employers in total, although the county council makes up the bulk of the membership – 85% at March 31, 2016.