NORTH YORKSHIRE COUNCIL

PENSION FUND COMMITTEE

21 November 2025

BUDGET, CASHFLOW AND ANNUAL REPORT

Report of the Treasurer

1.0 PURPOSE OF THE REPORT

1.1 To report on the following:

(a) the 2025/26 budget and the cost of running the Fund (see section 2)

(b) the cashflow projection for the Fund (see section 3)

2.0 2025/26 BUDGET - THE COST OF RUNNING THE FUND

2.1 The forecast outturn position against the 2025/26 budget is presented in Appendix 1. It shows an estimated total running cost of £40.6m for the Fund against a budget of £40.7m. The forecast underspend for the year is £116k.

2.2 The forecast underspend relates to a reduction in performance fees payable to Baillie Gifford. Disinvestments have been required to take the investment down to its target allocation, which was reduced as part of the investment strategy review earlier this year. Monies have been reallocated to Border to Coast’s Index-Linked Bond fund were there are no performance fees payable.

2.3 There are bound to be some variances at the end of the year, but at this stage nothing material is predicted. Investment fees could be the exception to this, as in some cases they are related to asset values, which can be volatile. However, this relationship is weaker than it was, as investment management provided by Border to Coast is on a fixed cost basis. Therefore, a particular variance for investment base fees is not currently predicted.

3.0 3 YEAR CASHFLOW PROJECTION

3.1 The cash position of the Fund is presented in Appendix 2. The table shows the outturn for 2024/25 and the projected cash flows of the Fund for the current financial year and the following two years. This includes the contribution income and benefits payable, being the main inflows and outflows of the Fund, which are the two key determining factors for when the Fund will turn cash flow negative.

3.2 The forecast for pension benefits payments is based on revised assumptions on annual increases in pensioner numbers and inflation. The assumptions including inflation will continue to be reviewed and updated regularly to reflect any new information that becomes available. The CPI figure for September 2025 was 3.8% and the forecast reflects the impact this will have on benefits from April 2026.

3.3 The forecast for contribution income is based on the employers’ current contribution rates and takes into account active member numbers and any expected changes in this regard. Assumptions on pay awards are in line with confirmed 2025/26 and 2026/27 pay agreements for the Fund’s largest employer, North Yorkshire Council. Future year assumptions are aligned with NYC’s budget and medium-term financial strategy.

3.4 The 2025 Valuation is expected to have a significant impact on the amount of income receivable from April 2026. The new employer contribution rates have not been finalised yet, and have not been reflected in the table in Appendix 2, but the current estimate is approximately £40 million per annum from 2026/27. This is currently being reviewed, along with options to receive income from the Fund’s investments with Border to Coast so that the necessary changes will be made by that time.

4.0 NYPF ANNUAL REPORT AND ACCOUNTS 2024/25

4.1 The Draft 2024/25 Statement of Accounts for both the North Yorkshire Pension Fund and North Yorkshire Council were published on the Council’s website on 27 June 2025.

4.2 There have been a number of issues delaying the completion of the audit of North Yorkshire Council’s Statement of Accounts for 2024/25. Some are national issues affecting many local authorities. Others relate to LGR (Local Government Reorganisation), and yet others relate to the short tenure of the Council’s auditors Forvis Mazars.

4.3 Work is ongoing to bring the audit to a conclusion. It is not clear when this will happen, but it is expected to happen by the backstop date of 27 February 2026 at the very latest. The Council’s Audit Committee will approve the Accounts at the appropriate time.

4.4 As the Fund’s Accounts are part of the Council’s Accounts, the delay has impacted on NYPF. The issue for this Committee is that the deadline for the publication of the Annual Report and Accounts for 2024/25 is 1 December. It is the Committee’s responsibility to approve this document.

4.5 However, the audit work on the Fund is close to completion, and no changes to the Accounts are expected. Similar to last year, the Committee is therefore asked to approve the draft Annual Report and Accounts for 2024/25 (attached as Appendix 3) so that it can be published on the Fund’s website by the deadline.

4.6 Once the audit has been completed, a finalised Annual Report and Accounts for 2024/25 will be published. In the unlikely event that any material changes are required, Committee members will be informed.

5.0 RECOMMENDATIONS

5.1 Members to note the contents of the report.

5.2 Members to approve the draft Annual Report and Accounts 2024/25 for publication on the Fund’s website.

GARY FIELDING

Treasurer to North Yorkshire Pension Fund

North Yorkshire Council

County Hall

Northallerton

12 November 2025

Appendix 1

Appendix 2