West Yorkshire Pension Fund Councillor Ian Greenwood Chair of West Yorkshire Pension Fund Joint Advisory Group and Investment Advisory Panel

West Yorkshire Pension Fund – Funding Levels

Factors Affecting Valuation Outcome Liabilities Gilt Yields Inflation Increase in Earnings Mortality AssumptionsAssets Expected Investment Returns Employers’ Contributions Future Service Assumptions Deficit/Surplus Position Recovery Period Phasing-In of Changes in Level of Contributions

Valuation March 2008 October 2008 £m Assets4,6664,5637,3067,2725,700 Liabilities4,3535,5558,1029,5189,100 (Deficit)/Surplus313(992)(796)(2,246)(3,400) Funding Level107%82%90%76%63% West Yorkshire Pension Fund Assets and Liabilities

2007 Actuarial Valuation The analysis of the change in deficit between 2004 and 2007 is as follows: Analysis£m Deficit as at 31 March Investment Gain versus valuation assumptions 1,359 Change in gilt yields-618 Change in assumptions (e.g. mortality) -393 Impact of smoothing and phasing of contributions -202 Other factors (e.g. membership movements) +50 Deficit as at 31 March

2007/082006/072005/062004/05 £m Contributions Employers Employees Benefits Payable Pensions Lump Sums Investment Income Positive Cash Flow West Yorkshire Pension Fund Positive Cash flow

7 Mercer

8

9

10 Mercer

UK Equity Risk Premium

Valuation of the US Stock Market

2001 Valuation2004 Valuation2007 Valuation Future Service Recover (Surplus)/Deficit(2.7) West Yorkshire Pension Fund Average Employers’ Contribution Rate