Corporate report

FCDO overseas superannuation annual report and accounts 2022 to 2023

Updated 25 January 2024

Presented to the House of Commons pursuant to Section 6(4) of the Government Resources and Accounts Act 2000.

Ordered by the House of Commons to be printed (25 January 2024).

HC 421

Section A: Accountability report

Corporate governance report

Report of the managers

Introduction

This Annual Report and Accounts report the activities of the Overseas Superannuation Schemes (the Schemes). The financial statements have been prepared in accordance with the relevant provisions of the 2022 to 2023 Government Financial Reporting Manual (FReM).

The Schemes (listed in Appendix A) are the responsibility of the Foreign, Commonwealth and Development Office (FCDO) led by the Secretary of State for Foreign, Commonwealth and Development Affairs.

The FCDO’s Overseas Pensions Department (OPD), on behalf of the Schemes, has responsibility for the administration and payment of pensions and related benefits to former expatriate colonial civil and public servants and their dependants, including those who served in a civil or military capacity in former British India and the Sudan public service. Other than HM Treasury, OPD are not reliant on any other UK Government Department to pay the pensions. OPD are also responsible for the formulation of the UK Government’s policy on overseas pensions and UK pension increase supplements.

The activities reported in these Accounts mainly derive from 2 policy initiatives by the UK Government: a 1962 agreement to supplement the pensions paid to certain former colonial civil servants, and a 1970 announcement that the UK Government would assume responsibility from overseas governments for the payment of pensions due to expatriate colonial civil servants who had mainly been appointed by or on behalf of the Secretary of State for the Colonies.

The element of these pensions arising from service after independence, together with certain widows’ pensions, derive from the capital sums which were paid over to the UK Government on assuming responsibility from the overseas governments, or by funded pension schemes which have been wound up to cover their future liabilities. The UK Government meets the cost of the pre-independence element and the cost of those widows’ and dependants’ pensions that do not derive from a previously funded scheme. The UK Government does not hold any dedicated assets in respect of these pension obligations.

The Accounts include beneficiaries and former beneficiaries of the Cordoba Agreement and Gibraltar Social Insurance Fund (GSIF) administered by Crown Agents Bank (CAB) on behalf of the UK Government. Whilst these schemes are fully funded by FCDO Overseas Superannuation, overall responsibility for the GSIF scheme lies with the Government of Gibraltar.

All payments have been agreed under HM Treasury classification to be Annually Managed Expenditure (AME). AME is used to reflect costs which are volatile in a way that cannot be controlled by OPD.

The Minister with responsibility for Overseas Superannuation Schemes for the financial year ending 31 March 2023 was Minister Rutley. The Schemes’ Manager, with responsibility for the operation of the Overseas Superannuation Schemes, is William Hunter. Sir Philip Barton is the Permanent Under-Secretary and the Accounting Officer of the Schemes.

Management commentary

Pensions and related benefits included in these Accounts and administered by OPD are all paid in sterling. All pensions are originally awarded in the currency of the country of service. Most pensions are paid at a fixed rate of exchange, but some are paid at a current rate of exchange. The foreign exchange liability is limited by the supplement and/or safeguard caps. This is considered by the Government Actuary’s Department in their actuarial valuation, see Table 7.

These Accounts relate to 109 pension schemes, and their updates, that are covered by the following Acts of Parliament:

• the Overseas Pensions Act 1973
• the Pensions (Increase) Act 1971 (as amended)
• the UK Police and Firemen Acts 1997 and
• the Hong Kong (Overseas Public Servants) Act 1996

Change in member numbers

The Schemes managed directly by OPD are closed to new members and the number of pensioners falls each year. Table 1 shows the number of pensioners, number of pensions payable and the total number of payments made under these pension obligations during the last 3 years. These figures are based on the actual position at 31 March each year. Note the figures in Tables 1 to 3 and all the statistics relate only to pensions administered directly by OPD and do not include pensions administered by CAB which are set out separately in Tables 4 and 5.

Table 1	2022 to 2023	2021 to 2022	2020 to 2021
No. of service pensioners	2,286	2,579	2,872
No. of dependants	3,359	3,711	4,040
Total no. of pensioners	5,645	6,290	6,912
Total no. of pensions [footnote 1]	11,364	12,705	14,024
Total no. of payments	51,436	60,300	67,533

Pensioners are often in receipt of more than one pension, reflecting their service in different territories covered by different individual pension schemes, however each individual payment they receive will include an element for each relevant pension. The total number of payments cannot be directly related to the number of pensioners at a given time. A pensioner’s entitlement can be negated in any payment period due to exchange rate movements ^{[footnote 2]}, periodic suspensions and death.

Table 2 shows the percentage change in pensioner numbers and payments in the last 3 years.

Table 2	2022 to 2023 % change	2021 to 2022 % change	2020 to 2021 % change
No. of service pensioners	-11.4%	-10.2%	-12.6%
No. of dependants	-9.5%	-8.1%	-8.6%
Total no. of pensioners	-10.3%	-9.0%	-10.3%
Total no. of pensions	-10.6%	-9.4%	-10.8%
Total no. of payments	-14.7%	-10.7%	-9.4%

Of the current 5,645 pensioners:

• 39% are male
• 65% live in the UK; the remainder in 72 other countries
• 87% have chosen a monthly payment frequency; 13% quarterly, bi-annually, or annually. Regardless of the frequency, payments are not always due because of exchange rate movements, periodic suspensions and death
• the average age of Hong Kong service and dependent pensioners is 79
• the average age of all other service pensioners is 90 years
• the average age of all other dependent pensioners is 89 years
• the oldest pensioner is 107, and there are 93 other centenarians in receipt of pensions at 31 March 2023

Projections of pensioner numbers estimate that the remaining payments relating to existing pensioners will be fully realised by the middle of the century, at which point the Schemes will cease.

Service standards

A key measure of OPD performance is the service it provides to pensioners. Standards are set through a Service Level Agreement (SLA) between the FCDO and OPD. The SLA defines the required performance standards and efficiencies, which are subject to regular monitoring and review. OPD’s aim is that its service should always be:

• prompt
• efficient
• accurate
• helpful and courteous
• responsive to those with special needs.

Table 3 shows performance against service standards.

Table 3	SLA % target	2022 to 2023 achieved %	2021 to 2022 achieved %
Accuracy of initial payment calculations	97.50	99.85	100.00
Accuracy of initial calculation of new and revised awards	95.00	100.00	100.00
Number of new awards put into payment within 2 weeks	97.50	97.99	100.00
Timeliness of payments by due date	99.00	100.00	100.00
Response to enquiries within 2 weeks of receipt	99.00	99.66	99.20
Response to complaints within 2 weeks of receipt [footnote 3]	95.00	100.00	100.00

OPD measure customer service satisfaction through a questionnaire issued to existing members whose entitlement to pension has recently commenced. During 2022 to 2023 OPD issued 79 (2021 to 2022: 116) questionnaires, of which 47 (59%) (2021 to 2022: 44 (38%)) were returned. The main conclusions were that:

• 63% (2021 to 2022: 72%) of respondents rated OPD’s service as excellent, 29% (2021 to 2022: 26%) as good, 4% (2021 to 2022: 2%) as satisfactory, and 2% (2021 to 2022: Nil) as poor
• 81% described OPD staff as helpful (2021 to 2022: 85%)
• 83% described OPD staff as efficient (2021 to 2022: 80%)

Questionnaire results are used in reviewing processes and to identify improvements.

Members Under the Cordoba Agreement and GSIF Schemes Administered by CAB

The pensions of the members under the Cordoba Agreement and GSIF Schemes, administered by Crown Agents Bank, are also closed to new members and the number of pensioners falls each year. The tables below reflect the change in the numbers over the last 3 years and the actual position at 31 March each year.

Note, the figures in Tables 4 and 5 relate only to pensions administered by CAB.

Table 4	2022 to 2023	2021 to 2022	2020 to 2021
Total no. of pensioners	1,079 [footnote 4]	9614 [footnote 4]	1,469

Table 5	2022 to 2023 % change	2021 to 2022 % change	2020 to 2021 % change
Total no. of pensioners	12.3%	-34.6%	-15.0%

CAB operates its own service delivery standards. OPD hold quarterly performance reviews with CAB where any errors or delays in payments are noted. CAB have confirmed that there were no errors or delays in payments during 2022 to 2023.

An independent verification of CAB payments during 2022 to 2023 was completed by BDO in July 2023. BDO confirmed pensions were delivered accurately and recorded only minor recommendations for improvements to processes and controls. (Further detail is provided in the Governance Statement)

Information assurance

A large quantity of personal and sensitive data is kept for the Schemes. A governance structure is in place to ensure information security and to manage the associated risks. The FCDO follows ISO/IEC 27001:2013, the international standard for information security management systems and conducts internal reviews and audits against that.

OPD identified no reportable incidents of the loss of any personal data to the Information Commissioner’s Office in 2022 to 2023 and the Information Commissioner made no findings against OPD for breach of Data Protection principles. No such incidents were reported in the previous fifteen years.

Financial review

The pension liability at 31 March 2023 was £484.8 million (31 March 2022: £635.1 million).

A full actuarial valuation of the pension liability was carried out as at 31 December 2021 based on new membership data and it is assumed that there are no material changes to membership between this date and 31 March 2023.

Valuation adjustments in 2022 to 2023 decreased the pension liability by £119.7 million (2021 to 2022: £68.3 million increase). The £119.7 million decrease consists of:

• £23.9 million increase due to an experience loss – the pension increase in April 2023 will be 10.1% for CPI-linked pensions, compared with an assumption of 2.90% used to calculate the scheme liability as at 31 March 2022. The higher than assumed pension increase has increased the scheme liability and results in an experience loss of £69.60 million. Other experience gains and losses amount to a net increase of £45.71 million or 9.4% of the scheme liability as at 31 March 2023. This is due to an approximate allowance for actual deaths in the 2022 to 2023 year
• £150.1 million decrease due to changes in financial assumptions – the nominal discount rate increased from 1.55% as at 31 March 2022 to 4.15% as at 31 March 2023 which reduced the pension liability. Additionally, the assumed CPI pension increase rate decreased from 2.90% as at 31 March 2022 to 2.40% as at 31 March 2023 which reduced the pension liability
• £6.5 million increase due to changes in mortality assumptions which is driven by the update to the assumed future improvements in mortality, which use the latest population projections published by ONS, from the 2018 projections to the 2020 projections

Please also refer to Note 6 of the financial statements.

Pensions paid in 2022 to 2023 were £40.2 million (2021 to 2022: £44.6 million) and the interest cost was £9.5 million (2021 to 2022: £7.3 million). The interest cost is a notional charge to reflect the fact that future benefit payments are one year closer to settlement, so should be discounted by one year less. It increases the value of the pension liability. The current year interest cost is determined by applying the nominal discount rate at the end of the previous year to the pension liability at the end of the previous year, with allowance made for movements in the pension liability over the current year. Discount rates are determined by HM Treasury with reference to market yields on high quality corporate bonds. The increase in the interest cost is primarily due to the increase in the nominal interest rate used from 1.25% as at 31 March 2021 to 1.55% as at 31 March 2022, in addition to the increase in the pension liability from £604.2 million as at 31 March 2021 to £635.1 million as at 31 March 2022.

The inclusion of the pension liability of £484.8 million as at 31 March 2023 results in the Statement of Financial Position showing negative taxpayers’ equity of £484.9 million (2021 to 2022: £635.0 million). In common with other public service pension schemes, the future financing of the Schemes’ liabilities is to be met by future grants of supply to be approved annually by Parliament. Such approval for amounts required for 2023-24 has already been given. It has accordingly been considered appropriate to adopt a going concern basis for the preparation of these financial statements.

The Parliamentary Supply Resource AME Outturn of £9.5 million was 13.6% lower than the Estimate of £11.0 million due to changes in the assumptions on which the Resource AME requirement was based. The Net Cash Requirement Outturn of £39.9 million was 12.5% lower than the Estimate of £45.6 million reflecting lower than forecast pension payments, based on actual pensioner numbers.

The administration costs for managing pensions and the cost of audit of these Accounts by the Comptroller and Auditor General are part of the FCDO administration expenditure and are included in the FCDO’s Annual Report and Accounts. In 2022 to 2023 administration costs were £750,539 (2021 to 2022: £647,371) and audit costs £62,350 (2021 to 2022: £55,600).

Principal risks and uncertainties

The key risk which the Schemes face is the continued (unauthorised) payment of pension benefits after a member has died. To mitigate against this risk, the Schemes require all members to complete and return a signed annual declaration confirming proof of life and verifying their identity. Further details on controlling this risk are provided within the Governance Statement.

The FCDO Management Board

There is no Management Board in place within the Schemes due to the Schemes being closed. Instead, the FCDO Management Board assumes this responsibility. All Non-Executive Directors are invited.

The attendance of the FCDO Management Board during 2022 to 2023 was:

Board member 1 April 2022 to 31 March 2023	Date of in-year appointment/departure	No. of meetings attended 1 April 2022 to 31 March 2023
Baroness Helena Morrissey, Lead Non‑Executive Director	Departed 8 June 2022	2/3
Beverley Tew, Interim Lead Non-Executive Director	Appointed Interim Lead Non-Executive Director 29 June 2022	10/11
John Coffey, Non‑Executive Director		10/11
Ann Cormack, Non‑Executive Director		10/11
Sir Philip Barton, Permanent Under‑Secretary (Chair)		11/11
Sir Tim Barrow, Second Permanent Under Secretary and Political Director	Departed 7 September 2022	2/5
Juliet Chua, Director General – Finance and Corporate		11/11
Tom Drew, Director General – Defence and Intelligence		7/10
Nick Dyer, Director General – Humanitarian and Development		6/11
Harriet Mathews, Director General – Geopolitics and Security	Appointed 21 March 2022 Departed 31 January 2023	7/8
Christian Turner, Director General – Geopolitics and Political Director	Appointed 16 January 2023	3/3
Kumar Iyer, Director General – Economics, Science and Technology		6/11
Moazzam Malik, Director General – Africa	Departed 30 September 2022	1/1
Corin Robertson, Acting Director General – Africa and Latin America	Appointed 14 April 2022	10/11
Vijay Rangarajan, Director General – Middle East, Afghanistan/Pakistan, US, Canada and the Overseas Territories		5/11
Jenny Bates, Director General – Indo-Pacific		8/11
Julian Braithwaite, Director General – Europe	Departed 26 February 2023	4/10
Peter Wilson, Director General – Europe	Appointed 27 February 2023	2/2
Sally Langrish, Legal Adviser	Appointed 2 May 2022	6/10
Andrew Murdoch, Acting Legal Adviser	Appointed 25 February 2022 until 2 May 2022	1/1
Melanie Robinson, UK Ambassador to Zimbabwe (Overseas Network Representative)		9/11
Helen Bower-Easton, Director Communications	Returned from long term leave 1 August 2022, departed 24 February 2023	1/1
Danny Pruce, Interim Director Communications	Departed 1 August 2022	4/5
Janine Lloyd-Jones, Interim Director Communications	Appointed 27 February 2023	2/2
Tim Jones, Director Finance		11/11
Melinda Bohannon, Director Strategy		9/11
Mervyn Thomas, Chief People Officer		9/11
Pete Vowles, Director Transformation	Appointed 30 August 2022	3/6

Events after the reporting period

The Foreign, Commonwealth and Development Superannuation Accounts are laid before the Houses of Parliament by HM Treasury. IAS 10 Events After the Reporting Period requires the Accounts to disclose the date on which the Accounts are authorised for issue. This is the date on which the Accounts are certified by the Comptroller and Auditor General. Note 11 details any events after the reporting period.

Further information

An explanatory booklet ‘A Guide to Your Pension’ is issued to all pensioners. The booklet contains details of the standard of service they can expect to receive from OPD and general information on the administration of their pensions, including dispute resolution procedures. A copy of the Guide and other general information can be obtained from OPD.

Any enquiries about the Overseas Superannuation Accounts can be addressed to:

The Schemes’ Manager
Overseas Pensions Department
Foreign, Commonwealth and Development Office
Eaglesham Road,
East Kilbride G75 8EA

Managers and advisers

Accounting Officer:	Sir Philip Barton, Accounting Officer for the Overseas Superannuation Schemes, Foreign, Commonwealth and Development Office, King Charles Street, London SW1A 2AH
Managers:	Overseas Pensions Department, Foreign, Commonwealth and Development Office, Eaglesham Road, East Kilbride G75 8EA
Actuary:	Government Actuary’s Department, 6th Floor, 10 South Colonnade, Canary Wharf, London, E14 4PU
Bankers:	Royal Bank of Scotland plc, London Corporate SC, PO Box 39952, 21/2 Devonshire Square, London EC2M 4XJ
	Citibank, N A Citigroup Centre, Canada Square, Canary Wharf, London E14 5LB
	National Westminster Bank plc, 2nd Floor, 280 Bishopsgate, London EC2M 4RB
Legal Advisers:	Office of the Solicitor to the Advocate General for Scotland, Victoria Quay, Edinburgh EH6 6QQ
Auditors:	The Comptroller and Auditor General, National Audit Office, 157-197 Buckingham Palace Road, Victoria, London SW1W 9SP
GSIF Administrators:	Crown Agents Bank, Quadrant House, Sutton, Surrey SM2 5AS

Sir Philip Barton KCMG OBE
Accounting Officer for the Overseas Superannuation Schemes
22 January 2024

Report of the Actuary

Overseas Superannuation Schemes administered by the Foreign, Commonwealth and Development Office

Accounts for the year ended 31 March 2023

Introduction

This statement has been prepared by the Government Actuary’s Department (GAD) at the request of the Foreign, Commonwealth and Development Office (FCDO). It provides a summary of GAD’s assessment of the scheme liability in respect of the FCDO Overseas Superannuation Schemes (the Schemes) as at 31 March 2023, and the movement in the scheme liability over the year 2022 to 2023, prepared in accordance with the requirements of Chapter 12 of the 2022 to 2023 version of the Financial Reporting Manual.

The Schemes are defined benefit schemes providing pension and lump sum benefits on retirement, death, and resignation. The Schemes are wholly unfunded. I am not aware of any informal practices operated within the Schemes which lead to a constructive obligation.

The assessment has been carried out by calculating the liability as at 31 March 2022 based on the data provided as at 31 December 2021 and using a valuation date of 31 March 2023.

Membership data

Tables 6 and 7 below summarise the principal membership data as at 31 December 2021 used to calculate the liability as at 31 March 2023, which was used to prepare this statement.

The tables report the number of records; some members have more than one record. The pension figures exclude the pension increases awarded in April 2022. Average ages are weighted by pension amount.

Table 6: Membership data (excluding Hong Kong) by type of member

Membership	Number of records	Total pension (£000s p.a.)	Average age (years)
Service pensioners	3,332	12,888	91
Dependant pensioners	4,130	29,985	90
Total (excluding Hong Kong)	7,462	42,873	91

Table 7: Hong Kong membership data ^{[footnote 5]}

	Number of records	SPOS ceiling	SPOS base	Total safeguard	Contingent safeguard	Average age
		(£000s p.a.)	(£000s p.a.)	(£000s p.a.)	(£000s p.a.)	(years)
Total	1,114	35,608	18,535	21,227	4,228	79

As part of our calculations we have made an allowance for members who we have been informed died since the provision of the 2021 valuation dataset and for the probability of spouse pensions becoming payable.

Methodology

The present value of the liabilities as at 31 March 2023 has been determined using the Projected Unit Credit Method (PUCM) and the demographic and financial assumptions applying as at 31 March 2023.

This statement takes into account the benefits normally provided under the Schemes.

Financial assumptions

The principal financial assumptions adopted to prepare this statement are shown in Table 8.

Table 8: Principal financial assumptions

Assumption	31 March 2023 p.a.	31 March 2022 p.a.
Nominal discount rate	4.15%	1.55%
Rate of increase in pensions in payment (assuming CPI inflation)	2.40%	2.90%
Rate of increase in pensions in payment (assuming RPI inflation)	3.40% until February 2030	3.90% until February 2030
	2.50% from February 2030	3.00% from February 2030
Real discount rate in excess of CPI inflation	1.70%	(1.30%)

The assessment of the liabilities allows for the known pension increases up to and including April 2023.

Demographic assumptions

Table 9 summarises the mortality assumptions adopted to prepare this statement, which were derived from the specific experience of the Scheme membership. The table refers to the standard mortality tables prepared by the Continuous Mortality Investigation (part of the Actuarial Profession) known as the ‘S3 tables’ with the percentage adjustments to those tables derived from scheme experience.

Table 9: Post-retirement mortality assumptions

Baseline mortality	Standard table	Adjustment
Males: retirements in normal health	S3NMA	101%
Females: retirements in normal health	S3NFA	96%

These assumptions in Table 9 above are the same as those adopted for the accounts as at 31 March 2022.

Mortality improvements are assumed to be in line with the 2020-based projections for the United Kingdom published by the ONS in December 2022. This is a different assumption to that used for the 2021 to 2022 accounts.

The other demographic assumptions for family statistics are unchanged from the 2021 to 2022 accounts.

Our advice on the selection of assumptions can be found in our assumptions and methodology report dated 24 February 2023.

Liabilities

Table 10 summarises the assessed value as at 31 March 2023 of benefits accrued under the scheme prior to this date based on the data, methodology and assumptions described in the sections ‘Membership Data’, ‘Methodology’, ‘Financial Assumptions’ and ‘Demographic Assumptions’. The corresponding figures for the previous year are shown for comparison.

Table 10: Statement of financial position

	31 March 2023 £000	31 March 2022 £000
Total market value of assets	nil	nil
Value of liabilities	484,782	635,108
Surplus/(Deficit)	(484,782)	(635,108)
of which recoverable by employers	n/a	n/a

Accruing Costs

Past service costs arise when an employer undertakes to provide a different level of benefits than previously promised. I am not aware of any events that have led to a material past service cost over 2022 to 2023.

I am not aware of any events that have led to a material settlement or curtailment gain or loss over 2022 to 2023.

Sensitivity analysis

The results of any actuarial calculation are inherently uncertain because of the assumptions which must be made. In recognition of this uncertainty, I have been asked to indicate the approximate effects on the actuarial liability as at 31 March 2023 of changes to the most significant actuarial assumptions.

The most significant financial assumptions are the nominal discount rate and the pension increases (the real discount rate represents the difference between the nominal discount rate and the assumed rate of pension increases) and the impact of these varies with the different types of pension benefit for which the FCDO is responsible.

• where the FCDO is responsible for the entire increasing pension in-payment, the key impact comes from the difference between the nominal discount rate and the pension increase assumption
• where the FCDO is responsible for the entire fixed pension in-payment, it is the nominal discount rate that affects the value placed on the benefit, as the value is unaffected by changes in the pension increase assumption
• there are also pensions where the FCDO is only responsible for the increases on pensions in payment, the impact depends on the difference between the value of an increasing and non-increasing pension, ie the difference between the values in the above 2 bullet points

The key demographic assumption is pensioner mortality and we show the impact of assuming members live longer in retirement.

Table 11 shows the indicative effects on the total liability as at 31 March 2023 of changes to these assumptions (rounded to the nearest 0.5%).

Table 11: Sensitivity to significant assumptions

Change in assumption		Approximate effect on total liability
Financial assumptions
(i) Nominal discount rate [footnote 6]:	-0.5% p.a.	+4.0%	+£19.4 million
(ii) Pension increases [footnote 5]:	+0.5% p.a.	+5.0%	+£24.2 million
Demographic assumptions
(iii) Members assumed to be one year younger:		+5.0%	+£24.2 million

COVID-19 implications

As with the accounts last year, the 2022 to 2023 Resource Accounts are being produced when the UK continues to deal with the impacts of the COVID-19 pandemic. I have considered the potential implications of how this pandemic could impact on the actuarial calculations required for the Resource Accounts.

The assumptions for the discount rate and pension increases are specified by HM Treasury in the PES (2022) 08, dated 2 December 2022, and remain unchanged for these accounts. The PES assumptions reflect market conditions at the previous 30 November and are typically not amended for any changes between November and the accounting date.

The current population mortality projections make a short-term allowance for the impact of the Covid-19 pandemic. When deriving the ONS 2020-based mortality improvement projections, a panel of mortality experts gave their views on the impact of the Covid-19 pandemic on mortality rates in the short term. Based on this, short term adjustments were made to the 2019 to 2024 period to allow for estimated deaths in 2021 and an averaging of the experts’ views on estimated improvements by age group over this period. Long term rates of future mortality improvement are not projected to change as a result of COVID-19. A death rate from COVID-19 in excess of that already allowed for in the mortality assumptions would emerge as an experience gain in future accounting periods. I expect that the long-term impact of the COVID-19 pandemic on life expectancy will continue to evolve as experience and evidence emerges into the future.

Garry Swann FIA
Actuary
Government Actuary’s Department
14 April 2023

Statement of Accounting Officer’s responsibilities

Under the Government Resources and Accounts Act 2000, HM Treasury has directed the Foreign, Commonwealth and Development Office: Overseas Superannuation to prepare for each financial year a statement of Accounts in the form and on the basis set out in the Accounts Direction. The Accounts are prepared on an accruals basis and must give a true and fair view of the state of affairs of the Schemes and of their income and expenditure, Statement of Financial Position and cash flows for the financial year.

In preparing the financial statements, the Accounting Officer is required to comply with the requirements of the Government Financial Reporting Manual and in particular to:

• observe the Accounts Direction issued by HM Treasury including the relevant accounting and disclosure requirements, and apply suitable accounting policies on a consistent basis
• ensuring such internal controls are in place as deemed necessary to enable preparation of financial statements that are free from material misstatement, whether due to fraud or error
• make judgements and estimates on a reasonable basis
• state whether applicable accounting standards, as set out in the Government Financial Reporting Manual have been followed, and disclose and explain any material departures in the financial statements
• prepare the financial statements on a going concern basis and
• confirm that the Accounts as a whole are fair, balanced and understandable and take personal responsibility for the Accounts and the judgements required for determining that they are fair, balanced and understandable

HM Treasury has appointed the Accounting Officer of the Foreign, Commonwealth and Development Office as Accounting Officer for the Overseas Superannuation Schemes. The responsibilities of an Accounting Officer, including responsibility for the propriety and regularity of the public finances for which the Accounting Officer is answerable, for keeping proper records and for safeguarding the assets of the Schemes, are set out in Managing Public Money published by HM Treasury.

As the Accounting Officer, I have taken all the steps that I ought to have taken to make myself aware of any relevant audit information and to establish that the Schemes’ auditors are aware of that information. So far as I am aware, there is no relevant audit information of which the auditors are unaware and I believe that as a whole the accounts are fair, balanced and understandable.

Governance statement

Introduction

As Accounting Officer, I am required to provide assurances about the stewardship of the Overseas Superannuation Schemes. These assurances are provided in this Governance Statement, in line with HMT guidance. I also have responsibility for ensuring that an effective corporate governance framework is formed and applied to the Schemes that gives strategic direction and secures effective management of the Schemes and their administrators. This applies to actions carried out by the Foreign, Commonwealth and Development Office’s (FCDO’s) Overseas Pensions Department (OPD) on behalf of the Schemes. Key components of the governance framework are to ensure the supporting corporate governance systems are designed to manage risks, clarify accountability and deliver operational performance which is efficient and effective.

Opinion

As Accounting Officer, my opinion is informed by:

• the work the FCDO Internal Audit performs relating to OPD in the year under review
• the FCDO Audit and Risk Assurance Committee
• the FCDO Director General Finance and Corporate, who has responsibility for OPD, confirmed through the Director’s Statement of Assurance verification
• the FCDO Finance Director, who is accountable for OPD, confirmed through the Director’s Annual Consolidated Certificate of Assurance verification
• the work performed and reported by the National Audit Office (NAO)
• the work performed and reported by BDO who are commissioned to undertake a specific review of the Cordoba Agreement and Gibraltar Social Insurance Fund (GSIF) schemes

Based on this advice and evidence I am satisfied with the overall standard of corporate governance in place in OPD and applied to the Schemes for the year ended 31 March 2023 and up to the approval date of these Accounts.

Governing bodies

This Statement describes the governance structure and arrangements that the FCDO has put in place in its capacity as administrating authority for the Schemes.

The Minister with responsibility for the Overseas Superannuation Schemes for the financial year ending 31 March 2023 was Minister Rutley.

The Scheme Manager of the Overseas Superannuation Schemes was William Hunter, Deputy Head Finance Operations, who is an employee of the FCDO.

The FCDO Finance Director is accountable to the FCDO’s Management Board for the work of OPD and for assessing and managing associated risks. OPD’s sole responsibility is to fulfil the requirements of the Schemes, as set out in the Service Level Agreement (SLA).

There is no Schemes’ Management Board as these are closed Schemes. Decisions which would be sent to a Schemes’ Board are sent to the Management Board of the FCDO or the Audit and Risk Assurance Committee as appropriate. Refer to the ‘Internal Control’ section below.

Details of the FCDO Management Board members and their respective meeting attendance records are included within the Report of the Managers.

The pensions and related benefits under the Schemes are covered by the Acts of Parliament noted in the Management Commentary.

Compliance with the Corporate Governance Code of Good Practice

As the governance of the Schemes mirrors that of the FCDO, in line with the Corporate Governance Report within the FCDO’s 2022 to 2023 Annual Report and Accounts, it is considered that the Overseas Superannuation Schemes comply with the ‘Corporate Governance in Central Government Departments: Code of Good Practice 2017’ with 2 exceptions. Firstly, the FCDO does not have a Nominations and Governance Committee but instead has a Senior Leadership Board, chaired by the Permanent Under Secretary. This carries out a similar role to a Nominations Committee, overseeing the performance, talent, and broader aspects of management of the Senior Civil Service within the FCDO. Secondly, the Supervisory Board did not meet during the reporting period. Meetings were scheduled but had to be postponed. The good governance of the department is instead maintained through the Management Board, which is chaired by the Permanent Under Secretary and meets on a monthly basis. The Management Board conducts its business according to the principles and guidance the Code of Good Practice, including the 4 recognised precepts of good corporate governance and the adherence of members to the Nolan principles. The Management Board provides leadership to the department, reviews strategic and operational issues, and ensures the department delivers against its priorities and objectives. The Management Board also discharges the Supervisory Board’s responsibility, outlined in the code, to provide oversight to the department’s Arm’s Length Bodies.

OPD’s performance

A Service Level Agreement (SLA) is in place between the FCDO, as sponsoring employer to the Schemes, and OPD, who have been appointed to carry out the administration of the Schemes. It confirms that OPD are responsible for the administration and payment of pensions to the Schemes’ members and their dependants. The terms of the agreement also include OPD’s responsibilities to the British Government for advice and policy on colonial pension matters.

This SLA was agreed by the Scheme Manager and the Deputy Director of Finance Operations. It is subject to regular review to ensure it remains appropriate and effective in governing the work and resources of OPD. This includes consideration of the appropriateness of the content and quality of data used to measure performance. Key Performance Indicators showed that OPD met all performance targets during 2022 to 2023.

Details of OPD’s effectiveness are reported in the Report of the Managers. OPD’s effectiveness is reviewed independently by Assessment Services Ltd, a United Kingdom Assessment Service (UKAS) accredited body, against the Customer Service Excellence criteria. Customer Service Excellence is a trademark of the Cabinet Office and is used under licence to demonstrate service delivery competence, identify key areas for improvement and celebrate success. An interim assessment was carried out in January 2023 with OPD maintaining its eleven compliance plus elements.

Performance of Crown Agents Bank (CAB)

A contract is in place between the FCDO, as sponsoring employer to the Cordoba Agreement and GSIF Schemes, and CAB. This confirms that CAB are responsible for the administration and payment of pensions to the Schemes’ members. OPD provides funding for the pensions and the annual review while CAB reports to OPD on all aspects of the Schemes.

CAB report on their performance regularly and are reviewed by BDO separately from the annual NAO audit. Performance and relationship are discussed during quarterly reviews with CAB representatives. Refer to the Report of the Managers for information on CAB performance.

Board’s performance

The FCDO 2022 to 2023 Board Effectiveness Evaluation found the FCDO’s corporate governance structures are functioning well. In the next phase of work, the corporate governance team will focus on strengthening the coherence of strategic agenda planning and linkages across all top-level boards and committees and systematise the tracking of agreed actions/decisions at Executive Committee and the Management Board. During 2022 to 2023 there was a high level of attendance at the FCDO Management Board meetings and supporting Boards and Committees.

Highlights of Management Board Sub‑Committees

The FCDO’s Management Board sub-committees held meetings throughout 2022 to 2023. Highlights of the relevant Management Board sub-committees can be found within the Corporate Governance Report in the FCDO’s 2022 to 2023 Annual Report and Accounts.

Risk management and internal control environment

The Schemes’ assessment of risk and the internal control environment is based on the assessment of the environment applied within OPD and CAB and how this mitigates the principal risks and uncertainties identified which apply to the Schemes.

Internal control

OPD’s risk management architecture continues to be strengthened where required to deliver more active and effective management of risks.

The Scheme Manager works with the Deputy Director of Finance Operations and the Finance Director, to identify the key risks facing the Schemes and develop controls within OPD to mitigate, prevent and detect weaknesses in controls over these risks. All OPD staff are up to date with the relevant Fraud Awareness training renewed in 2023 and continuing awareness is raised and discussed at OPD Team meetings.

OPD system upgrades have continued during 2022 to 2023 to reduce the risks around system failure. The risk of single points of failure for system support in-house and by consultants will continue to be monitored and training of an internal resource is underway.

CAB continue to review their electronic systems, to improve their efficiency and reduce the risk of error. Pensioners now have the option of confirming their payment eligibility through CABs facial recognition software or the more established ADE paper return.

As part of the FCDO contract with CAB an external review is commissioned and undertaken annually. BDO were appointed by CAB to review the adequacy and effectiveness of the processes in place to certify those receiving pension payments and to consider how effective those processes and controls are in managing the risk of payments being made to ineligible individuals.

Looking ahead to 2023 to 2024, the FCDO will:

• review BDO’s conclusions for 2022 to 2023 and work with CAB to continually improve processes and controls
• continue to hold quarterly performance reviews with CAB
• continue to require CAB to commission an independent annual review and specify the areas of focus of the review

Capacity to handle risk

The FCDO’s capacity to handle risk, including that of OPD, is set out in the Corporate Governance Report in the FCDO’s 2022 to 2023 Annual Report and Accounts. This includes the overall responsibility of the Management Board in respect of risk management, and details of the integration of risk management throughout the department.

The risk and control framework

The FCDO’s processes for identifying, evaluating and managing risk are set out in the Corporate Governance Report in the FCDO’s 2022 to 2023 Annual Report and Accounts. These processes include the identification, evaluation and review of strategic risk by the Management Board and include the risks with potentially the most significant impact on the FCDO financially and non-financially. Risks associated with the work of OPD have not been identified among the strategic and policy risks monitored by the Management Board.

OPD has a Risk Register which highlights potential areas of risk, the key point of impact and the controls in place. The Risk Register is reviewed monthly by the Scheme Manager. Control of risk within OPD is also partly exercised through the setting of performance standards for OPD in the SLA. The SLA defines the required performance standards and efficiencies which are subject to monitoring and review. The pension entitlement and payment authorisation processes have been reviewed and fully mapped. Performance against the SLA is included within the Report of the Managers. The Scheme Manager reviews these results and takes action where appropriate to identify and implement improvement opportunities.

CAB operates a 3 lines of defence model in line with industry best practice for risk management. Risk management is an integral part of the Pensions Operations team processes. As part of the risk management framework the team undertake risk control self-assessments on identification and assessment of business risks and identification and implementation of appropriate controls. This ensures staff are competent and capable in their roles and the risk management process.

The FCDO must ensure that benefit payments are regular and only made to individuals who are eligible under the pension scheme rules. The key control to ensure this is Annual Declaration of Existence (ADE) exercise. This requires all members or their legal representatives to complete and return a signed declaration confirming proof of life, attested by a third party. This is carried out annually to detect ineligible payments to pensioners by identifying any change of pensioner circumstances, including whether pensioners have died. The inherent risk in any ADE process is that it only provides assurance at a point in time, and where a completed ADE is received before the financial year-end it cannot provide assurance of regularity for the entire period. OPD take the following steps to mitigate this risk:

• participation in the Cabinet Office’s National Fraud Initiative (NFI) Mortality Screening
• suspension of pension if the ADEs are not returned in a timely manner
• robust overpayment recovery procedures

The risk level is constantly under review with additional annual validation exercises on sample pensioner groups under consideration, to provide additional assurance on continued pension entitlement.

OPD administered pensions:

Annual participation in the Cabinet Office’s National Fraud Initiative mortality screening is now an established practice in OPD (this enhances information on pension eligibility of UK citizens in the UK and abroad).

The November 2022 NFI screening exercise covered those pensioners with a UK NI number (c.82% of the pension population) and identified 91 matches:

• 29 (32%) of the matches confirmed deaths already known to OPD
• 43 (47%) further death notifications were subsequently received by OPD
• 19 (21%) pensioners remained suspended in March 2023.

The outcome of the ADE Exercise for 2022 to 2023 is as follows:

• 4,661 ADEs were issued in April 2023
• 1,277 reminders were issued in June 2023
• 310 pensioners were suspended in August 2023

The suspension figure is currently 135 as a result of clarification received in the form of further death notifications or receipt of a completed ADE leading to pension reinstatement.

CAB administered pensions:

The outcome of the ADE Exercise for 2022 to 2023 is as follows:-

• 1,290 ADEs were issued in March 2023
• 527 reminders were issued in May 2023
• 292 pensioners were suspended in August 2023

The suspension figure is currently 260 as a result of further death notifications or reinstatements due to receipt of a completed ADE.

The ADE exercise for the Gibraltar Social Insurance Fund (currently 42 pensioners) resumed in May 2023. Although the FCDO funds the GSIF scheme, management of the scheme is the responsibility of the Government of Gibraltar.

In addition, where either OPD or CAB identify any correspondence that is undelivered or returned, or bank payments rejected, steps are taken to suspend pension payments until an explanation is provided.

In OPD, consistent compliance with prescribed procedures is promoted and supported through guidance manuals, training programmes and central scrutiny and checks. OPD also has contingency plans in place to respond to threats to key information systems and, where possible, to maintain continuity of operations.

OPD, as part of the FCDO, follows ISO/IEC 27001:2013, the internationally recognised standard for information security management. This provides considerable assurance on the efficiency of our information security management system, which is utilised by OPD to record information pertaining to the Overseas Superannuation Schemes. The FCDO has an Information and Cyber Security Management Group, who manage the FCDO’s Information Security Management System and regularly report the information risk position to the FCDO’s Management Board.

The FCDO is required to report on data incidents which meet criteria for severity to central government and to the Information Commissioner’s Office. OPD had no incidents which met these criteria in 2022 to 2023.

Review of effectiveness

As Accounting Officer, I have responsibility for reviewing the effectiveness of the system of internal control. My review is informed by the work of the internal auditors and the executive managers within the FCDO, who have responsibility for the development and maintenance of the internal control framework, and comments made by the external auditors in the management letter and other reports and by the FCDO Audit and Risk Assurance Committee.

The Finance Director has provided me with an Annual Consolidated Certificate of Assurance for the directorate, covering identification and management of risk and an assurance on compliance with management and control systems. The certificate of assurance informs my review of OPD systems for performance management and compliance with control systems. This reflects input from the Scheme Manager on the performance of OPD during the year under review, which is provided in the Scheme Manager’s annual report.

Significant internal control issues

There were no significant internal control issues found during 2022 to 2023. The documented Internal Control framework in place enables all internal controls to be continually reviewed. This allows OPD to respond and adapt quickly to any change in circumstances.

OPD’s strong control framework was evident in the significant work and analysis carried out across the year with NAO on OPD’s overpayment controls and the resulting mitigation of risk, contributing to the unqualified position of this year’s accounts.

During the Covid-19 pandemic period the ADE process was adjusted to reflect the age profile and vulnerability of our pensioner population, which resulted in longer gaps between declarations of continued entitlement for some pensioners. The auditors concluded in both 2020 to 2021 and 2021 to 2022 that it was not possible to offer the same high level of assurance over the validity of all payments, which resulted in the Comptroller and Auditor General issuing a qualified opinion in respect of regularity.

Over the last 2 years the pattern of annual declarations has returned to its previous regularity, and the overseas pensions team have continued to diligently pursue all cases of overpayment following a change in entitlement. We have evidenced recovery of 82% of overpayments in 2022 to 2023. We are pleased to note, therefore, that there is no regularity qualification this year and are grateful to the NAO for their engagement in confirming that the controls in place in the Overseas Pensions Department are effective in minimising payments in excess of entitlement.

Sir Philip Barton KCMG OBE
Accounting Officer for the Overseas Superannuation Schemes
22 January 2024

Parliamentary accountability and audit report

Statement of Outturn against Parliamentary Supply

In addition to the primary statements prepared under IFRS, the Government Financial Reporting Manual (FReM) requires the Schemes to prepare a Statement of Outturn against Parliamentary Supply (SOPS) and supporting notes.

The SOPS and related notes are subject to audit, as detailed in the Certificate and Report of the Comptroller and Auditor General to the House of Commons.

The SOPS is a key accountability statement that shows, in detail, how an entity has spent against their Supply Estimate. Supply is the monetary provision (for resource and capital purposes) and cash (drawn primarily from the Consolidated Fund), that Parliament gives statutory authority for entities to utilise. The Estimate details supply and is voted on by Parliament at the start of the financial year.

Should an entity exceed the limits set by their Supply Estimate, called control limits, their accounts will receive a qualified opinion.

The format of the SOPS mirrors the Supply Estimates, published on gov.uk, to enable comparability between what Parliament approves and the final outturn.

The SOPS contain a summary table, detailing performance against the control limits that Parliament has voted on, cash spent (budgets are compiled on an accruals basis and so outturn will not exactly tie to cash spent) and administration.

The supporting notes detail the following: Outturn by Estimate line, providing a more detailed breakdown (SOPS 1); a reconciliation of outturn to net operating expenditure in the Statement of Comprehensive Net Expenditure, to tie the SOPS to the financial statements (SOPS 2); a reconciliation of outturn to net cash requirement (SOPS 3); and an analysis of income payable to the Consolidated Fund (SOPS 4).

Figures in the areas outlined in thick line cover the voted control limits voted by Parliament. Refer to the Supply Estimates guidance manual, available on gov.uk, for detail on the control limits voted by Parliament.

The SOPS provide a detailed view of financial performance, in a form that is voted on and recognised by Parliament. The financial review, in the Report of the Managers, provides a summarised discussion of outturn against estimate and functions as an introduction to the SOPS disclosures.

Statement of Outturn against Parliamentary Supply for the year ended 31 March 2023

Summary of resource outturn 2022 to 2023, all figures presented in £000s

This section is subject to audit

Type of Spend	SOPS Note	Outturn			Estimate			Outturn vs estimate, saving/(excess)		Prior Year Outturn Total, 2021 to 2022
		Voted	Non-Voted	Total	Voted	Non-Voted	Total	Voted	Total
Departmental Expenditure Limit
Resource		-	-	-	-	-	-	-	-	-
Capital		-	-	-	-	-	-	-	-	-
Total		-	-	-	-	-	-	-	-	-
Annually Managed Expenditure
Resource	1	9,530	-	9,530	11,000	-	11,000	1,470	1,470805	7,274
Capital		-	-	-	-	-	-	-	-	-
Total		9,530	-	9,530	11,000	-	11,000	1,470	1,470	7,274
Total Budget
Resource	1	9,530	-	9,530	11,000	-	11,000	1,470	1,470	7,274
Capital		-	-	-	-	-	-	-	-	-
Total Budget Expenditure		9,530	-	9,530	11,000	-	11,000	1,470	1,470	7,274
Non-Budget Expenditure		-	-	-	-	-	-	-	-	-
Total budget and non-budget		9,530	-	9,530	11,000	-	11,000	1,470	1,470	7,274

Figures in the areas outlined in thick line cover the voted control limits voted by Parliament. Refer to the Supply Estimates guidance manual, available on gov.uk, for detail on the control limits voted by Parliament.

Net Cash Requirement 2022 to 2023, all figures presented in £000s

Item	SOPS note	Outturn	Estimate	Outturn vs estimate, saving/(excess)	Prior year outturn total 2021 to 2022
Net cash requirement	3	39,945	45,600	5,655	44,865

Administration costs 2022 to 2023, all figures presented in £000s

Item	SOPS note	Outturn	Estimate	Outturn vs estimate, saving/(excess)	Prior year outturn total 2021 to 2022
Administration costs	1	-	-	-	-

The administration costs for managing pensions and the cost of audit of these Accounts by the Comptroller and Auditor General are part of the FCDO’s administration expenditure and are included in the FCDO’s Annual Report and Accounts.

Notes to the Statement of Outturn against Parliamentary Supply 2022 to 2023, all figures presented in £000s

SOPS 1. Analysis of resource outturn by estimate line

Type of spend (resource)	Resource outturn						Estimate				Outturn vs estimate, saving/ (excess)	Prior year Outturn total 2021 to 2022
	Administration			Programme			Total	Total	Virements	Total inc. Virements
	Gross	Income	Net	Gross	Income	Net
Spending in Annually Managed Expenditure (AME)
Voted Expenditure
A: Interest on Schemes’ liability and other expenses	-	-	-	9,530	-	9,530	9,530	11,000	-	11,000	1,470	7,274
Total Voted AME	-	-	-	9,530	-	9,530	9,530	11,000	-	11,000	1,470	7,274
Total Spending in AME	-	-	-	9,530	-	9,530	9,530	11,000	-	11,000	1,470	7,274
Total Resource	-	-	-	9,530	-	9,530	9,530	11,000	-	11,000	1,470	7,274

The total Estimate columns include virements. Virements are the reallocation of provision in the Estimates that do not require parliamentary authority (because Parliament does not vote to that level of detail and delegates to HM Treasury). Further information on virements is provided in the Supply Estimates Manual, available on gov.uk.

The Outturn vs Estimate column is based on the total including virements. The estimate total before virements have been made is included so that users can tie the estimate back to the Estimates laid before Parliament. There were no virements in 2022 to 2023.

SOPS 2. Reconciliation of outturn to net operating expenditure

No reconciliation is presented as the total resource outturn of £9,530,000 in SOPS 1 is the same as the net operating expenditure in the Statement of Comprehensive Net Expenditure (2021 to 2022: £7,274,000).

SOPS 3. Reconciliation of net resource outturn to net cash requirement

Item	SOPS Note	Outturn Total	Estimate	Outturn vs Estimate, saving/ (excess)
Total Resource Outturn	1	9,530	11,000	1,470
Adjustments to remove non-cash items:
Addition to pension liability		(9,530)	(11,000)	(1,470)
Adjustments to reflect movements in working balances:
Use of pension liability		40,156	45,600	5,444
Decrease in receivables		(225)	-	225
Decrease in payables		14	-	(14)
Total		39,945	45,600	5,655
Net Cash Requirement		39,945	45,600	5,655

As noted in the introduction to the SOPS above, Outturn and the Estimates are compiled against the budgeting framework, not on a cash basis. Therefore, this reconciliation bridges the resource and capital outturn to the net cash requirement.

SOPS 4. Income payable to the Consolidated Fund

In addition to income retained by the department, there is no income is payable to the Consolidated Fund.

Parliamentary Accountability Disclosures

Losses and special payments (audited)

Losses statement

	2022 to 2023	2021 to 2022
Total number of losses	67	65
Total value of losses	£56,995	£98,358

Losses generally relate to overpayments to pensioners who have died. There are no individual cases greater than £300,000.

Special payments

	2022 to 2023	2021 to 2022
Total number of special payments	2	2
Total value of special payments	£21,083	£60,477

Special payments are ex-gratia payments. These are made in exceptional circumstances where despite there being no legal entitlement to payment, a constructive or moral obligation is deemed to exist. There are no individual cases greater than £300,000.

Gifts (audited)

There are no gifts to report.

Remote contingent liabilities (audited)

There are no remote contingent liabilities that are required to be disclosed under parliamentary reporting requirements.

Sir Philip Barton KCMG OBE
Accounting Officer for the Overseas Superannuation Schemes
22 January 2024

The Certificate of the Comptroller and Auditor General to the House of Commons

Opinion on financial statements

I certify that I have audited the financial statements of the Foreign, Commonwealth and Development Office Overseas Superannuation schemes (“the Schemes”) for the year ended 31 March 2023 under the Government Resources and Accounts Act 2000.

The Schemes’ financial statements comprise the:

• Statement of Financial Position as at 31 March 2023
• Statement of Comprehensive Net Expenditure, Statement of Cash Flows and Statement of Changes in Taxpayers’ Equity for the year then ended and
• the related notes including the significant accounting policies

The financial reporting framework that has been applied in the preparation of the financial statements is applicable law and UK adopted international accounting standards.

In my opinion, the financial statements:

• give a true and fair view of the state of the Schemes’ affairs as at 31 March 2023 and of their net expenditure for the year then ended and
• have been properly prepared in accordance with the Government Resources and Accounts Act 2000 and HM Treasury directions issued thereunder

Opinion on regularity

In my opinion, in all material respects:

• the Statement of Outturn against Parliamentary Supply properly presents the outturn against voted Parliamentary control totals for the year ended 31 March 2023 and shows that those totals have not been exceeded and
• the income and expenditure recorded in the financial statements have been applied to the purposes intended by Parliament and the financial transactions recorded in the financial statements conform to the authorities which govern them

Basis for opinions

I conducted my audit in accordance with International Standards on Auditing (UK) (ISAs UK), applicable law, Practice Note 15 (revised) The Audit of Occupational Pension Schemes in the United Kingdom and Practice Note 10 Audit of Financial Statements and Regularity of Public Sector Bodies in the United Kingdom (2022). My responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of my certificate.

Those standards require me and my staff to comply with the Financial Reporting Council’s Revised Ethical Standard 2019. I am independent of the Schemes in accordance with the ethical requirements that are relevant to my audit of the financial statements in the UK. My staff and I have fulfilled our other ethical responsibilities in accordance with these requirements.

I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion.

Conclusions relating to going concern

In auditing the financial statements, I have concluded that the Schemes’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work I have performed, I have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Schemes’ ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

My responsibilities and the responsibilities of the Accounting Officer with respect to going concern are described in the relevant sections of this certificate.

The going concern basis of accounting for the Schemes is adopted in consideration of the requirements set out in HM Treasury’s Government Financial Reporting Manual, which requires entities to adopt the going concern basis of accounting in the preparation of the financial statements where it is anticipated that the services which they provide will continue into the future.

Other information

The other information comprises information included in the Annual Report but does not include the financial statements and my auditor’s certificate and report thereon. The Accounting Officer is responsible for the other information.

My opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in my certificate, I do not express any form of assurance conclusion thereon.

My responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or my knowledge obtained in the audit, or otherwise appears to be materially misstated.

If I identify such material inconsistencies or apparent material misstatements, I am required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work I have performed, I conclude that there is a material misstatement of this other information, I am required to report that fact.

I have nothing to report in this regard.

Opinion on other matters

In my opinion, based on the work undertaken in the course of the audit:

• the parts of the Accountability Report subject to audit have been properly prepared in accordance with HM Treasury directions made under the Government Resources and Accounts Act 2000 and
• the information given in the Accountability Report for the financial year for which the financial statements are prepared is consistent with the financial statements and is in accordance with the applicable legal requirements

Matters on which I report by exception

In light of the knowledge and understanding of the Schemes and its environment obtained in the course of the audit, I have not identified material misstatements in the Accountability Report.

I have nothing to report in respect of the following matters which I report to you if, in my opinion:

• adequate accounting records have not been kept by the Schemes or returns adequate for my audit have not been received from branches not visited by my staff or
• I have not received all of the information and explanations I require for my audit or
• the financial statements and the parts of the Accountability Report subject to audit are not in agreement with the accounting records and returns or
• the Governance Statement does not reflect compliance with HM Treasury’s guidance

Responsibilities of the Accounting Officer for the financial statements

As explained more fully in the Statement of Accounting Officer’s responsibilities, the Accounting Officer is responsible for:

• maintaining proper accounting records
• providing the C&AG with access to all information of which management is aware that is relevant to the preparation of the financial statements such as records, documentation and other matters
• providing the C&AG with additional information and explanations needed for his audit
• providing the C&AG with unrestricted access to persons within the department from whom the auditor determines it necessary to obtain audit evidence
• ensuring such internal controls are in place as deemed necessary to enable the preparation of financial statements to be free from material misstatement, whether due to fraud or error
• ensuring that the financial statements give a true and fair view and are prepared in accordance with HM Treasury directions made under the Government Resources and Accounts Act 2000
• ensuring that the Annual Report is prepared in accordance with HM Treasury directions made under the Government Resources and Accounts Act 2000 and
• assessing the Schemes’ ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Accounting Officer anticipates that the services provided by the Schemes will not continue to be provided in the future

Auditor’s responsibilities for the audit of the financial statements

My responsibility is to audit, certify and report on the financial statements in accordance with the Government Resources and Accounts Act 2000.

My objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue a certificate that includes my opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

Extent to which the audit was considered capable of detecting non-compliance with laws and regulations including fraud

I design procedures in line with my responsibilities, outlined above, to detect material misstatements in respect of non-compliance with laws and regulations, including fraud. The extent to which my procedures are capable of detecting non-compliance with laws and regulations, including fraud is detailed below.

Identifying and assessing potential risks related to non-compliance with laws and regulations, including fraud

In identifying and assessing risks of material misstatement in respect of non-compliance with laws and regulations, including fraud, I:

• considered the nature of the sector, control environment and operational performance including the design of the Schemes’ accounting policies and key performance indicators
• inquired of management, the Schemes’ head of internal audit and those charged with governance, including obtaining and reviewing supporting documentation relating to the Schemes’ policies and procedures on: identifying, evaluating and complying with laws and regulations; detecting and responding to the risks of fraud; and the internal controls established to mitigate risks related to fraud or non-compliance with laws and regulations including the Schemes’ controls relating to compliance with the Overseas Pensions Act 1973, the Pensions (Increase) Act 1971, the Hong Kong (Overseas Public Servants) Act 1996, the UK Police and Firemen’s Act 1997, the Government Resources and Accounts Act 2000, Managing Public Money, Supply and Appropriation (Main Estimates) Act 2022 and the regulations set by The Pensions Regulator
• inquired of management, the Schemes’ head of internal audit and those charged with governance whether: they were aware of any instances of non-compliance with laws and regulations; they had knowledge of any actual, suspected, or alleged fraud
• discussed with the engagement team and the relevant internal and external specialists, including actuarial specialists, regarding how and where fraud might occur in the financial statements and any potential indicators of fraud

As a result of these procedures, I considered the opportunities and incentives that may exist within the Schemes for fraud and identified the greatest potential for fraud in the following areas: revenue recognition, posting of unusual journals, complex transactions, bias in management estimates, the selection of inappropriate assumptions or methodology unpinning the pensions liability and related estimates and the payment of benefits to ineligible members. In common with all audits under ISAs (UK), I am required to perform specific procedures to respond to the risk of management override.

I obtained an understanding of the Schemes’ framework of authority and other legal and regulatory frameworks in which the Schemes operate. I focused on those laws and regulations that had a direct effect on material amounts and disclosures in the financial statements or that had a fundamental effect on the operations of the Schemes. The key laws and regulations I considered in this context included Government Resources and Accounts Act 2000, Managing Public Money, Supply and Appropriation (Main Estimates) Act 2022, Public Service Pensions Act 2013, regulations set by The Pensions Regulator, the Overseas Pensions Act 1973, the Pensions (Increase) Act 1971, the Hong Kong (Overseas Public Servants) Act 1996 and the UK Police and Firemen’s Act 1997.

I considered the control environment in place at the Schemes, the administrator and the scheme actuary in respect of membership data, the pension liability, contributions due and benefits payable.

Audit response to identified risk

To respond to the identified risks resulting from the above procedures:

• I reviewed the financial statement disclosures and testing to supporting documentation to assess compliance with provisions of relevant laws and regulations described above as having direct effect on the financial statements
• I enquired of management, the Audit and Risk Management Committee and in-house legal counsel concerning actual and potential litigation and claims
• I reviewed minutes of meetings of those charged with governance and the Board; and internal audit reports
• in addressing the risk of fraud through management override of controls, I tested the appropriateness of journal entries and other adjustments; assessed whether the judgements on estimates are indicative of a potential bias; and evaluated the business rationale of any significant transactions that are unusual or outside the normal course of business
• I performed substantive testing of contributions received and benefits paid in the year to ensure compliance with laws, regulations and regularity
• I engaged an auditor’s expert to review the actuarial methods and assumptions used by the scheme actuary, reviewing the expert’s report and undertaking further procedures as necessary and
• I reviewed significant correspondence with The Pensions Regulator

I also communicated relevant identified laws and regulations and potential risks of fraud to all engagement team members including internal and external specialists and remained alert to any indications of fraud or non‑compliance with laws and regulations throughout the audit.

A further description of my responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of my certificate.

Other auditor’s responsibilities

I am required to obtain appropriate evidence sufficient to give reasonable assurance that the Statement of Outturn against Parliamentary Supply properly presents the outturn against voted Parliamentary control totals and that those totals have not been exceeded. The voted Parliamentary control totals are Departmental Expenditure Limits (Resource and Capital), Annually Managed Expenditure (Resource and Capital), Non-Budget (Resource) and Net Cash Requirement.

I am required to obtain evidence sufficient to give reasonable assurance that the expenditure and income recorded in the financial statements have been applied to the purposes intended by Parliament and the financial transactions recorded in the financial statements conform to the authorities which govern them.

I communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control I identify during my audit.

Report

I have no observations to make on these financial statements.

Gareth Davies
22 January 2024
Comptroller and Auditor General

National Audit Office
157 to 197 Buckingham Palace Road
Victoria
London
SW1W 9SP

Section B: Financial statements

Statement of Comprehensive Net Expenditure

for the year ended 31 March 2023

	Note	2022 to 2023	2021 to 2022
		£000	£000
Expenditure
Interest on Schemes’ liability	6.2	(9,530)	(7,274)
Net expenditure for the year		(9,530)	(7,274)
Other comprehensive net income/(expenditure)
Pension re-measurements:
Gain/(loss) due to change in financial assumptions	6.3	150,060	(39,750)
Loss due to change in mortality assumptions	6.3	(6,470)	(1,545)
Experience loss arising on Schemes’ liability	6.3	(23,890)	(26,990)
		119,700	(68,285)
Total comprehensive net income/(expenditure) for the year		110,170	(75,559)

Notes to the Financial Statements form part of these Financial Statements.

Statement of financial position

as at 31 March 2023

	Note	31 March 2023	31 March 2022
		£000	£000
Current assets
Receivables	3	361	586
Cash and cash equivalents	4	477	122
Total current assets		838	708
Current liabilities
Payables	5.1	(448)	(462)
Consolidated Fund payable for unused supply	5.2	(477)	(122)
Total current liabilities		(925)	(584)
Net current (liabilities)/assets, excluding pension liability		(87)	124
Pension liability	6.2	(484,782)	(635,108)
Net liabilities, including pension liability		(484,869)	(634,984)
Taxpayers’ equity
General fund		(484,869)	(634,984)
		(484,869)	(634,984)

Sir Philip Barton KCMG OBE
Accounting Officer for the Overseas Superannuation Schemes
22 January 2024

Notes to the Financial Statement form part of these financial statements.

Statement of changes in taxpayers’ equity

for the year ended 31 March 2023

	Note	General Fund
		2022 to 2023	2021 to 2022
		£000	£000
Balance at 1 April		(634,984)	(604,290)
Net Parliamentary funding – drawn down	5.2	40,300	44,670
Net Parliamentary funding – deemed	5.2	122	317
Supply payable adjustment	5.2	(477)	(122)
Comprehensive net income/(expenditure) for the year	SoCNE	110,170	(75,559)
Net change in taxpayers’ equity		150,115	(30,694)
Balance at 31 March		(484,869)	(634,984)

Notes to the Financial Statements form part of these Financial Statements.

Statement of cash flows

for the year ended 31 March 2023

	Note	2022 to 2023	2021 to 2022
		£000	£000
Cash flows from operating activities
Net expenditure for the year	SoCNE	(9,530)	(7,274)
Increase in pension provision	6.2	9,530	7,274
Use of pension provision – benefits paid	6.2	(40,156)	(44,615)
Decrease/(increase) in receivables	3	225	(186)
Increase/(decrease) in payables	5.1	341	(259)
Less: movements in payables for items not passing through the Statement of Comprehensive Net Expenditure		(355)	195
Net cash outflow from operating activities	SOPS3	(39,945)	(44,865)
Cash flows from financing activities
From the Consolidated Fund (Supply) – current year	5.2	40,300	44,670
Net financing		40,300	44,670
Net increase/(decrease) in cash and cash equivalents in the year before adjustment for receipts and payments to the Consolidated Fund		355	(195)
Payments of amounts due to the Consolidated Fund		-	-
Net increase/(decrease) in cash and cash equivalents in the year after adjustment for receipts and payments to the Consolidated Fund	4	355	(195)
Cash and cash equivalents at the beginning of the year	4	122	317
Cash and cash equivalents at the end of the year	4	477	122

Notes to the Financial Statements form part of these Financial Statements.

Notes to the financial statements

For the year ended 31 March 2023

1 Basis of preparation

1.1 The financial statements of the Overseas Superannuation Schemes have been prepared in accordance with the Government Resources and Accounts Act 2000 and the relevant provisions of the 2022 to 2023 Government Financial Reporting Manual (FReM) issued by HM Treasury. The accounting policies contained in the FReM apply International Financial Reporting Standards (IFRS) as adapted or interpreted for the public sector. IAS 19 Employee Benefits and IAS 26 Accounting and Reporting by Retirement Benefit Plans are of particular relevance to these statements in the context of their application under the FReM.

1.2 The financial statements of the Overseas Superannuation Schemes show the financial position at the year end and the income and expenditure during the year. The Statement of Financial Position (SoFP) shows the deficit of the Schemes; the Statement of Comprehensive Net Expenditure (SoCNE) shows, amongst other things, the movements in the liability analysed between the pension cost and the interest on the Schemes’ liability. Further information about the actuarial position of the Schemes is dealt with in the Report of the Actuary, and the Schemes’ financial statements should be read in conjunction with that Statement.

2 Statement of accounting policies

2.1 The accounting policies contained in the FReM follow IFRS to the extent that they are meaningful and appropriate in the public sector context.

2.2 Where the FReM permits a choice of accounting policy, the accounting policy which has been judged to be most appropriate to the particular circumstances of the Schemes for the purpose of giving a true and fair view has been selected. The accounting policies adopted have been applied consistently in dealing with items considered material in relation to the Schemes’ financial statements.

2.3 Provision is made for liabilities to pay pensions and other benefits in the future. The Schemes’ liabilities are measured on an actuarial basis using the projected unit credit method in accordance with IAS 19 Employee Benefits and are discounted at the real discount rate in excess of pension increases of 1.7% for 2022 to 2023 (2021 to 2022: (1.30%)). The discount rate is determined by HM Treasury who track changes in the real yield implied from high quality corporate bond rates.

2.4 Pension benefits payable are accounted for as a decrease in the Schemes’ liabilities on an accruals basis.

2.5 The interest cost is a notional charge to reflect the fact that future benefit payments are one year closer to settlement, so should be discounted by one year less. It increases the value of the Schemes’ liabilities and is recognised in the SoCNE. The current year interest cost is based on the nominal discount rate at the end of the previous year which was 1.55% for 2022 to 2023 (2021 to 2022: 1.25%). This is applied to the pension liability at the end of the previous year, with allowance made for movements in the pension liability over the current year.

2.6 Full actuarial valuations of the Schemes’ liabilities in accordance with IAS 19 Employee Benefits are prepared every 4 years by the Government Actuary’s Department. Interim year valuations are performed by rolling forward the previous full actuarial valuation adjusted for updated summary membership information. Actuarial gains and losses from changes in financial and mortality assumptions and events not coinciding with assumptions made for the last valuation (experience gains and losses) are recognised in the SoCNE.

2.7 Where the time value of money is material, contingent liabilities which are required to be disclosed under IAS 37 Provisions, Contingent Liabilities and Contingent Assets are stated at discounted amounts and the amount reported to Parliament.

2.8 The preparation of these Accounts requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenditure. These assessments are based on historic and other factors that are believed to be reasonable, the results of which form the basis for making judgements. The estimates and underlying assumptions are reviewed on an on-going basis. The key estimates and judgements relate to the valuation of the pension liability as set out in Note 6.

2.9 The following accounting standards are in issue but not yet effective at the reporting date and are not applicable as the Schemes have not entered into any such arrangements or transactions:

• IFRS 17 Insurance Contracts – effective for accounting periods beginning on or after 1 January 2023, there is not yet an implementation date for the public sector

• amendment to IAS 1 Presentation of Financial Statements (amendment to classification of some liabilities as current or non-current) – effective for accounting periods beginning on or after 1 January 2024, there is not yet an implementation date for the public sector

3 Receivables: in respect of pensions

Analysis by type

	2022 to 2023	2021 to 2022
	£000	£000
Amounts falling due within one year
Overpaid pensions	173	214
Accrued income	20	19
Other receivables	168	353
Balance at 31 March	361	586

There are no receivables falling due after more than one year (2021 to 2022: £nil).

4 Cash and cash equivalents

	2022 to 2023	2021 to 2022
	£000	£000
Balance at 1 April	122	317
Net changes in cash balances	355	(195)
Balance at 31 March	477	122

The following balances at 31 March were held at:

	2022 to 2023	2021 to 2022
	£000	£000
Government Banking Service	477	122
Balance at 31 March	477	122

5 Payables – in respect of pensions

5.1 Analysis by type

	Note	2022 to 2023	2021 to 2022
		£000	£000
Amounts falling due within one year
Other taxation and social security		(428)	(445)
Other payables		(20)	(17)
Total excluding amounts due to the Consolidated Fund		(448)	(462)
Supply issued and not used	5.2	(477)	(122)
Balance at 31 March		(925)	(584)

There are no payables falling due after more than one year (2021 to 2022: £nil).

5.2 Consolidated Fund payable for unused supply

	Note	2022 to 2023	2021 to 2022
		£000	£000
Supply drawn down		(40,300)	(44,670)
Deemed supply (retained from the previous year)		(122)	(317)
		(40,422)	(44,987)
Net cash requirement	SOPS3	39,945	44,865
Supply payable		(477)	(122)

6 Pension liability

6.1 Assumptions underpinning the Schemes’ liability

The Schemes included in these financial statements are unfunded defined benefit schemes. The actuarial valuation has been carried out by calculating the liability as at 31 March 2023 based on the data provided as at 31 December 2022 and using a valuation date of 31 March 2023. The Report of the Actuary sets out the scope, methodology and results of the work the actuary has carried out.

The Schemes’ Manager together with the actuary have signed a Memorandum of Understanding that identifies, as far as practicable, the range of information that the Schemes’ Manager should make available to the actuary in order to meet the expected requirements of the Schemes’ auditor. This information includes, but is not limited to, details of:

• schemes’ membership data, including age and gender profiles
• the benefit payable, including the member’s pension and any spouse’s pension
• the Schemes’ income and expenditure
• following consultation with the actuary, the key assumptions that should be used to value the Schemes’ liabilities, ensuring that the assumptions are mutually compatible and reflect a best estimate of future experience

The key financial assumptions used by the actuary were:

	At 31 March 2023	At 31 March 2022	At 31 March 2021	At 31 March 2020	At 31 March 2019
Rate of increase in salaries (%)	n/a	n/a	n/a	n/a	n/a
Rate of increase in pensions in payment – CPI (%)	2.40	2.90	2.22	2.35	2.60
Rate of increase in pensions in payment – RPI (%)   until February 2030   from February 2030	3.40 2.50	3.90 3.00	3.22	3.35	3.60
Real discount rate[footnote 7] in excess of CPI pension increases (%)	1.70	(1.30)	(0.95)	(0.50)	0.29
Nominal discount rate6 (%)	4.15	1.55	1.25	1.80	2.90
Expected return on assets	n/a	n/a	n/a	n/a	n/a

Pension scheme liabilities accrue over employees’ periods of service and are discharged over the period of retirement and, where applicable, the period for which a spouse or eligible partner survives the pensioner. In valuing the Schemes’ liability, the actuary must estimate the impact of several inherently uncertain variables into the future. These variables include not only the key financial assumptions noted in the table above, but also the changes that will occur in the future in the mortality rate.

Current baseline mortality rates have been assumed to be in line with the S3 mortality tables prepared by the Continuous Mortality Investigation (part of the Actuarial Profession), with the percentage adjustments to those tables derived from scheme experience:

Males: S3NMA, 101%

Females: S3NFA, 96%

Mortality improvements are assumed to be in line with the 2020 based population projections for the United Kingdom published by the Office for National Statistics in December 2022. This is a different assumption to that used for the 2021 to 2022 accounts. This is discussed further in the Report of the Actuary.

These key assumptions are inherently uncertain, since it is impossible to predict with any accuracy future changes in the rate of inflation, longevity or the return on corporate bonds. The actuary uses professional expertise in arriving at a view of the most appropriate rates to use in the valuation of the Schemes’ liabilities. However, the Schemes’ Manager acknowledges that the valuation reported in these Accounts is not certain, since a change in any one of these assumptions will either increase or reduce the liability. In reality, the complexity and range of assumptions underlying the calculation of the Schemes’ liabilities are such that a change in one assumption is likely to have a knock-on effect on other assumptions. A sensitivity analysis for each significant assumption as at 31 March 2023 is included in the Report of the Actuary.

In the opinion of the Schemes’ Manager, the actuary has used key assumptions that are the most appropriate for the Schemes in the light of current knowledge and in accordance with IAS 19 Employee Benefits.

The pension liability also includes an estimate for contingent spouses’ pensions.

6.2 Analysis of movements in the schemes’ liability

	Note	2022 to 2023	2021 to 2022
		£000	£000
Schemes’ liability at 1 April		(635,108)	(604,164)
Interest on Schemes’ liability		(9,530)	(7,274)
Benefits paid		40,156	44,615
Actuarial gain/(loss)	6.3	119,700	(68,285)
Schemes’ liability at 31 March		(484,782)	(635,108)

6.3 Analysis of actuarial gain/(loss)

	2022 to 2023	2021 to 2022
	£000	£000
Experience loss arising on Schemes’ liability	(23,890)	(26,990)
Loss due to change in mortality assumptions	(6,470)	(1,545)
Loss due to change in financial assumptions	150,060	(39,750)
Total actuarial gain/(loss) at 31 March	119,700	(68,285)

6.4 History of experience (losses)/gains

Total amount recognised in Statement of Changes in Taxpayers’ Equity:

	2023	2022	2021	2020	2019
Experience (losses)/gains on the Schemes’ liability:
Amount	(£23.9m)	(£27.0m)	£19.2m	£8.8m	£45.2m
Percentage of the present value of the Schemes’ liability	(4.9%)	(4.2%)	3.2%	1.4%	6.7%
Total amount recognised in Statement of Changes in Taxpayers’ Equity:
Amount	£119.7m	(£68.3m)	£3.8m	(£7.6m)	£54.1m
Percentage of the present value of the Schemes’ liability	24.7%	(10.7%)	0.6%	(1.2%)	8.0%

7 Third party arrangement

	2022 to 2023	2021 to 2022
	£000	£000
Balance held as at 31 March	20	20

The balance held by OPD for third parties is funding for the cost of pensions in relation to the Kenya Asian Officers’ Family Pension Fund and the Pakistan High Commission.

The pension liability associated with the Kenya Asian Officers’ Family Pension Fund is included in the pension liability balance in these Accounts. Although the Schemes are liable to pay the pensions, the Government of Kenya reimburses the Schemes with the amounts paid.

OPD acts solely as a paying agent for the Pakistan High Commission, holding no liability for these pensions.

During 2022 to 2023, OPD paid pensions totalling £151,000 (2021 to 2022: £159,000) in relation to the Kenya Asian Officers’ Family Pension Fund and the Pakistan High Commission.

8 Financial instruments

As the cash requirements of the Schemes are met through the Estimates process, financial instruments play a more limited role in creating and managing risk than would apply to a non-public sector scheme of a similar size. Some credit risk exists in relation to receivables, otherwise the Schemes are exposed to little credit, liquidity or market risk.

The carrying amounts of financial instruments as at 31 March were as follows:

	Note	2022 to 2023	2021 to 2022
		£000	£000
Financial assets
Receivables	3	361	586
Cash and cash equivalents	4	477	122
		838	708
Financial liabilities
Financial liabilities at amortised cost	5.1	(925)	(584)
		(925)	(584)

9 Contingent liabilities

A contingent liability of £43.5 million (2021 to 2022: £65.7 million) exists primarily relating to the Hong Kong (Overseas Public Servants) Act 1996, Sterling Safeguard Scheme for the value of public service pensions. The safeguard is the amount by which a member’s safeguard pension exceeds the UK base pension plus pension increases in relation to the Supplementary Pension for Overseas Service (SPOS). The member’s safeguard increases in line with UK inflation. If the Hong Kong pension ceased (either because of default by the government of the Hong Kong Special Administrative Region or because of a fall in the value of the Hong Kong dollar), then the FCDO would be responsible for paying the full safeguard pension or the SPOS pension, whichever is greater. This is recognised as a contingent liability (net of the SPOS and the safeguard liability already recognised in the pension liability) and is valued assuming that members’ Hong Kong pensions ceased on 1 April 2022.

10 Related party transactions

The administration costs for managing pensions and the cost of audit of these Accounts by the Comptroller and Auditor General are part of the FCDO administration expenditure and are included in the FCDO’s Annual Report and Accounts. In 2022 to 2023 administration costs were £750,539 (2021 to 2022: £647,371) and audit costs £62,350 (2021 to 2022: £55,600).

No other transactions with the Schemes have been undertaken by the Manager of the Schemes, key managerial staff or other related parties during the year.

11 Events after the reporting period

In accordance with the requirements of IAS 10 Events After the Reporting Period, events after the reporting period are considered up to the date on which the Accounting Officer authorises the Accounts for issue. The Accounting Officer authorised these financial statements for issue on the date of the Certificate and Report of the Comptroller and Auditor General. No non-adjusting or adjusting events after the reporting date have been identified.

Appendix

(not subject to audit)

Appendix A: List of pension Schemes and their updates

These Accounts relate to 109 pension Schemes and their updates:

1. The Antigua Officers’ Pensions (United Kingdom) Scheme 1985

2. The Barbados Public Officers’ Pensions (United Kingdom) Scheme 1985

3. The Belize Public Officers’ Pensions (United Kingdom) Scheme 1982

4. The Botswana Public Officers’ Pensions (United Kingdom) Scheme 1976

5. The Burma Public Officers’ Pensions (United Kingdom) Scheme 1974

6. The Cyprus Public Officers’ Pensions (United Kingdom) Scheme 1979

7. The Dominica Public Officers’ Pensions (United Kingdom) Scheme 1975

8. The East African Community Public Officers’ Pensions (United Kingdom) Scheme 1979 – 82

9. The Fiji Public Officers’ Pensions (United Kingdom) Scheme 1975

10. The Gambia Public Officers’ Pensions (United Kingdom) Scheme 1974

11. The Ghana Public Officers’ Pensions (United Kingdom) Scheme 1976

12. The Gilbert Islands Public Officers’ Pensions (United Kingdom) Scheme 1976

13. The Grenada Public Officers’ Pensions (United Kingdom) Scheme 1975

14. The Guyana Public Officers’ Pensions (United Kingdom) Scheme 1978

15. The India Public Officers’ Pensions (United Kingdom) Scheme 1986

16. The Jamaica Public Officers’ Pensions (United Kingdom) Scheme 1976

17. The Kenya Public Officers’ Pensions (United Kingdom) Scheme 1977

18. The Lesotho Public Officers’ Pensions (United Kingdom) Scheme 1975

19. The Malawi Public Officers’ Pensions (United Kingdom) Scheme 1975

20. The Malaysia Public Officers’ Pensions (United Kingdom) Scheme 1979

21. The Malta Public Officers’ Pensions (United Kingdom) Scheme 1976

22. The Mauritius Public Officers’ Pensions (United Kingdom) Scheme 1975

23. The Nigeria Public Officers’ Pensions (United Kingdom) Scheme 1979

24. The Pakistan Public Officers’ Pensions (United Kingdom) Scheme 1986

25. The Seychelles Public Officers’ Pensions (United Kingdom) Scheme 1976

26. The Sierra Leone Public Officers’ Pensions (United Kingdom) Scheme 1976

27. The Singapore Public Officers’ Pensions (United Kingdom) Scheme 1977

28. The Solomon Islands Public Officers’ Pensions (United Kingdom) Scheme 1976

29. The Sri Lanka Public Officers’ Pensions (United Kingdom) Scheme 1979

30. The St Christopher, Nevis and Anguilla Public Officers’ Pensions (United Kingdom) Scheme 1975

31. The St Lucia Public Officers’ Pensions (United Kingdom) Scheme 1975

32. The St Vincent Public Officers’ Pensions (United Kingdom) Scheme 1975

33. The Sudan Public Officers’ Pensions (United Kingdom) Scheme 1973

34. The Swaziland Public Officers’ Pensions (United Kingdom) Scheme 1975

35. The Tanzania Public Officers’ Pensions (United Kingdom) Scheme 1976

36. The Trinidad & Tobago Public Officers’ Pensions (United Kingdom) Scheme 1986

37. The Uganda Public Officers’ Pensions (United Kingdom) Scheme 1985

38. The Zambia Public Officers’ Pensions (United Kingdom) Scheme 1985

39. The Colonial Service Pensions Addition for War Service (United Kingdom) Scheme 1989

40. The Overseas Service (Allocation of Pension) (Amendment) Scheme 1991

41. The Barbados Public Officers’ Widows’ and Orphans’ Pensions (United Kingdom) Scheme 1985

42. The Belize Public Officers’ Widows’ and Orphans’ Pensions (United Kingdom) Scheme 1982

43. The Joint (Botswana, Lesotho and Swaziland) Public Officers’ Widows’ and Orphans’ Pensions Defunded (United Kingdom) Scheme 1986

44. The Cyprus Public Officers’ Widows’ and Orphans’ Pensions (United Kingdom) Scheme 1979

45. The East African Community (East African Scheme) Public Officers’ Widows’ and Orphans’ Pensions (United Kingdom) Scheme 1979

46. The East African Community (Railways & Harbours Corporation) Public Officers’ Widows’ and Orphans’ Pensions (United Kingdom) Scheme 1979

47. The Fiji Public Officers’ Widows’ and Orphans’ Pensions (United Kingdom) Scheme 1975

48. The Gambia Public Officers’ Widows’ and Orphans’ Pensions (United Kingdom) Scheme 1974

49. The Ghana Public Officers’ Widows’ and Orphans’ Pensions (Defunded) (United Kingdom) Scheme 1986

50. The Guyana Public Officers’ Widows’ and Orphans’ (United Kingdom) Scheme 1978

51. The Jamaica Public Officers’ Widows’ and Orphans’ Pensions (United Kingdom) Scheme 1976

52. The Kenya Asiatic Public Officers’ Widows’ and Orphans’ (United Kingdom) Scheme 1977

53. The Kenya Public Officers’ Widows’ and Orphans’ Pensions (Defunded) (United Kingdom) Scheme 1990

54. The Malawi Public Officers’ Widows’ and Orphans’ Pensions (United Kingdom) Scheme 1975

55. The Malaysia (Peninsular Malaysia) Public Officers’ Widows’ and Orphans’ Pensions (United Kingdom) Scheme 1979

56. The Malaysia (Sabah) (British North Borneo Company) Public Officers’ Widows’ and Orphans’ Pensions (United Kingdom) Scheme 1979

57. The Malaysia (Sabah) Public Officers’ Widows’ and Orphans’ Pensions (Defunded) (United Kingdom) Scheme 1986

58. The Malaysia (Sarawak) Public Officers’ Widows’ and Orphans’ Pensions (Defunded) (United Kingdom) Scheme 1986

59. The Malta Public Officers’ Widows’ and Orphans’ Pensions (United Kingdom) Scheme 1976

60. The Mauritius Public Officers’ Widows’ and Orphans’ Pensions (United Kingdom) Scheme 1975

61. The Nigeria Public Officers’ Widows’ and Orphans’ Pensions (United Kingdom) Scheme 1979

62. The Seychelles Public Officers Widows’ and Orphans’ Pensions (Defunded) (United Kingdom) Scheme 1986

63. The Sierra Leone Public Officers’ Widows’ and Orphans’ (Defunded) (United Kingdom) Scheme 1986

64. The Singapore Public Officers’ Widows’ and Orphans’ Pensions (United Kingdom) Scheme 1977

65. The Sri Lanka Public Officers’ Widows’ and Orphans’ Pensions (United Kingdom) Scheme 1979

66. The Tanzania (Tanganyika) Public Officers’ Widows’ and Orphans’ Pensions (United Kingdom) Scheme 1976

67. The Tanzania (Zanzibar Asiatic Officers)) Public Officers’ Widows’ and Orphans’ Pensions (United Kingdom) Scheme 1976

68. The Tanzania (Zanzibar) Public Officers’ Widows’ and Orphans’ Pensions (United Kingdom) Scheme 1976

69. The Trinidad and Tobago Public Officers’ Widows’ and Orphans’ Pensions (United Kingdom) Scheme 1986

70. The Uganda (European Officers) Public Officers’ Widows’ and Orphans’ Pensions (United Kingdom) Scheme 1985

71. The Zambia Public Officers’ Widows’ and Orphans’ Pensions (Defunded) (United Kingdom) Scheme 1985

72. The Zambia Public Officers’ Widows’ and Orphans’ Pensions (United Kingdom) Scheme 1985

73. The Zambia Transferred Federal Officers’ (Dependants) Pensions (United Kingdom) Scheme 1985

74. The Barbados Public Officers’ Widows’ and Children’s Pensions (United Kingdom) Scheme 1986

75. The Mauritius Public Officers’ Widows’ and Children’s Pensions (United Kingdom) Scheme 1975

76. The Seychelles Public Officers’ Widows’ and Children’s Pensions (United Kingdom) Scheme 1976

77. The Overseas Service Pensions Scheme 1985

78. The Indian Family Pensions (Transferred) (United Kingdom) Scheme 1985

79. The Governors Pensions Scheme 1979

80. The Overseas Superannuation (Defunded) Scheme 1991

81. Section 4 Of the Aden, Perim and Kuria Auria Island Act 1967 (The Aden Widows’ and Orphans’ Pensions (United Kingdom) Scheme

82. Section 5 Of the Superannuation (Miscellaneous Provisions Act 1967 (Palestine Pensions)

83. The Pensions (India, Pakistan and Burma) Act 1955 (India Civil and Military Pensions Only)

84. The Central Office of The Overseas Audit Department

85. The Governors Pensions Act 1957

86. Sections 2 And 4 Of the Overseas Pensions Act 1958 (Nigerian Special List A And B Officers Of HMOCS)

87. The Police Pension Scheme 1987

88. The Police Pension Scheme (‘Old Cases’) (Applies to Police Officers Who Left on Or Before March 1973)

89. The Firemen’s Pension Scheme 1992

90. The Overseas Service (Pension Supplement) Regulations 1995

91. The Increase of Pensions (India, Pakistan and Burma) Regulations 1972

92. The Increase of Pensions (Overseas Service Pensions (Scheme and Fund)) Regulations 1973

93. Aden Loan Advance Scheme

94. Burma Loan Advance Scheme

95. East African Community Loan Advance Scheme

96. Guyana Loan Advance Scheme

97. Somali Loan Advance Scheme

98. Tanzania Loan Advance Scheme

99. Zanzibar Loan Advance Scheme

100. The Naval, Military and Air Forces Etc (Disablement and Death) Service Pensions Order 1983, As Amended (For Former British India Armed Forces Personnel and Their Dependants)

101. The Personal Injury Civilian Scheme

102. Cotton Research Corporation

103. Hong Kong Pension Scheme

104. Ex-Gratia Awards on Terms Analogous to The DSS PICs Scheme

105. Additional Payments to Schemes Due as Benefits from War Service Credit Pension Scheme

106. Additional Payments to Schemes Due as Benefits from Allocation of Pension Scheme

107. Kenya AOFPF (Fund Held by CAIM on Behalf of Government of Kenya)

108. Gibraltar Social Insurance Fund

109. Pension Increase Element Schemes Where Overseas Territories Pay Level Pension:

• Bahamas
• Barbados
• Bermuda
• British Virgin Islands
• Brunei
• Cayman Islands
• Dominica
• Egypt
• Falkland Islands
• Fiji
• Gambia
• Gibraltar
• Grenada
• Guyana
• Jamaica
• Kenya
• Malaysia
• Mauritius
• Montserrat
• Nigeria
• St Helena
• Seychelles
• Singapore
• Somalia
• South Georgia
• Sri Lanka
• Trinidad And Tobago
• Turks And Caicos
• Tonga
• West Indies Federation
• Uganda
• Zambia
• Federation Of Rhodesia and Nyasaland

1. This excludes Hong Kong pensions as these are paid by the Hong Kong Government, OPD pays top ups and/or safeguard if required. Also see Note 2. ↩

2. Where OPD’s responsibility is limited to payment of capped pension supplement and/or safeguard, if in any month the current sterling value of the original pension exceeds the amount of the capped supplement and/or safeguard no payment is due. The capped pension supplement and/or safeguard is the entitled financial limits calculated for each individual pensioner. ↩

3. OPD received no complaints during 2022 to 2023 (2021 to 2022: Nil) from pensioners or their agents. ↩

4. The significant reduction in 2021-22 is due to 342 pensioners having been suspended in March 2022 after a Proof of Life exercise. There has been an increase in 2022-23 as many of those suspended were re-instated. ↩ ↩²

5. Pension increases are known as the Supplementary Pension for Overseas Service (SPOS). The “SPOS base” pension is the member’s pension at retirement converted into Pounds Sterling and the “SPOS ceiling” pension is the SPOS base pension plus pension increases. The “Safeguard” pension acts as an underpin to the SPOS pension and may apply for example if the value of the Hong Kong Dollar falls against the Pound Sterling. ↩ ↩²

6. Opposite changes in the assumptions will produce approximately equal and opposite changes in the liability. ↩

7. Discount rates are determined by HM Treasury with reference to market yields on high quality corporate bonds ↩