Pensions Fund Annual Report 2011-12 , item 18. PDF 4 MB
Pensions Fund Annual Report 2011-12 , item 18. PDF 4 MB
Pensions Fund Annual Report 2011-12 , item 18. PDF 4 MB
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F i n a n c i a l s t a t e m e n t s<br />
Credit risk (continued)<br />
Foreign exchange contracts are subject to credit risk in relation to the counterparties of the<br />
contracts. The maximum credit risk exposure on foreign currency contracts is the full amount of<br />
the foreign currency the fund pays when settlement occurs, should the counterparty fail to pay<br />
the amount which it is committed to pay the fund.<br />
Another source of credit risk for the fund is the cash it holds to meet short term commitments.<br />
The cash is managed by the Staffordshire County Council Treasury and Pension <strong>Fund</strong> team in line<br />
with the fund’s <strong>Annual</strong> Investment Strategy which sets out the permitted counterparties and limits.<br />
In <strong>2011</strong>/20<strong>12</strong> investments were made with:<br />
Staffordshire County Council’s banker, the Co-operative Bank (up to £5m - maximum one week).<br />
AAA rated sterling Money Market <strong>Fund</strong>s with same day access (lower of £30m or 50% of cash<br />
held).<br />
Banks and building societies that met the funds credit criteria (lower of £15m or 25% of cash<br />
held - maximum <strong>12</strong> months).<br />
At 31 March 20<strong>12</strong>, £25.452m was held in this way.<br />
Liquidity risk<br />
Liquidity risk represents the risk that the fund will not be able to meet its financial obligations as<br />
they fall due. To manage this risk the fund holds an allocation of its assets in cash to meet short<br />
term commitments.<br />
The majority of the stocks held by the fund’s investment managers are quoted on major stock<br />
markets and may be realised quickly if required. Less liquid investments such as property, private<br />
equity and hedge funds currently make up a modest proportion of the total fund assets.<br />
In the short-term we can borrow money on the money markets to cover any shortfall that may arise.<br />
Overall there is very little risk that we will not be able to raise funds to meet our commitments.<br />
DRAFT<br />
Statement of Director of Finance and Resources<br />
responsibilities<br />
In preparing this pension fund report, the Director of Finance and Resources has;<br />
selected suitable accounting policies and then applied them consistently<br />
made judgements and estimates that were reasonable and prudent<br />
complied with the Code of Practice on Local Authority Accounting<br />
kept proper accounting records which were up to date<br />
taken reasonable steps for the prevention and detection of fraud and other irregularities.<br />
Director of Finance and Resources certificate<br />
I certify that the pension fund report presents fairly the financial position of the pension fund as<br />
at 31 March 20<strong>12</strong> and its income and expenditure for the year ended 31 March 20<strong>12</strong>.<br />
Andrew Burns BSc (Hons), CPFA, <strong>MB</strong>A<br />
Director of Finance and Resources<br />
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