Agenda and minutes

The Democratic Services Officer read out the procedure.

Apologies were received from Cheryl Kirby.

At this point in the meeting declarations of interest are received from Members in any of the agenda items under consideration at the meeting. Members are asked to complete the green interest forms circulated to groups in their pre-meetings (which will be announced at the Council Meeting) to indicate:

(a) The agenda item number in which they have an interest to declare.

(b) The nature of their interest.

(c) Whether their interest is a disclosable pecuniary interest or an other interest,  (as defined in Part 2, A and B of the Code of Conduct and Rules for Registration of Interests)

Any Member who needs to clarify any matters relating to the declaration of interests is recommended to seek advice from the Council’s Monitoring Officer or a member of his staff before the meeting to expedite dealing with the item during the meeting.

There were none.

There was none.

Councillor Lin Patterson made a statement urging the Fund to divest from fossil fuels. A copy of her statement is attached to these Minutes.

The following members of the public made statements urging the Fund to divest from fossil fuels:

Jack Lloyd (Fossil Free Bristol)

Holly Templer (Fossil Free Bristol)

Elaine Ashley (Fossil Free Bristol)

David Searby (Fossil Free B&NES)

Simon Griffiths (Fossil Free B&NES)

The Chair thanked Councillor Patterson and the members of the public for their statements and assured them that they would be given due consideration. He asked the members of the public if they could email copies of their statements to the Democratic Services Officer, so that they could be attached to the minutes. Statements from Fossil Free Bristol, David Searby and Simon Griffiths are attached to these minutes.

There were none.

The public and exempt Minutes of the meeting of 3^rd February 2016 were approved as a correct record and signed by the Chair.

The Finance & Systems Manager (Pensions) introduced the report. He invited Members to note the Audit Plan 2015/16, which was attached as Appendix 1 to the report. He introduced Julie Masci from Grant Thornton, who commented in detail on the plan.

A Member noted the reference to Level 3 investments as a significant risk. He said that some of the Fund’s investment managers would be open to this type of risk and wondered how this would be reported by the external auditors. He said that this type of risk would arise in the case of fossil fuels and he that he would like to know how it was possible to have confidence in the valuations put on these investments by the markets and by managers. Similar issues applied to other types of investment. The risk might not always be material, but was something of which the Fund should be aware. In his response the Head of Business, Finance and Pensions noted that the public speakers had stated that some fossil fuel assets were overpriced and that this represented a risk to the Fund. But there were valuation risks associated with all asset classes. What the external auditors would be focussing on was the process of risk assessment and whether valuations were reasonable in the light of that risk assessment and of advice received. The Member said that he disagreed. He thought the whole point of active management was to buy shares when you thought they were undervalued and to sell them when you thought they were overpriced.

A Member said that one of the biggest risks now facing the Fund was pooling, involving the transfer of substantial assets to a collective investment vehicle, yet this was not included in the plan. Ms Marci responded that pooling of investments had been mentioned in the plan as part of the background to the business of the Fund in 2015/16, but no transfers had taken place in 2015/16 and the timing of the commencement of transfers was uncertain, so it was not possible to predict the impact on the 2016/17 accounts.

A Member asked about the level of the audit fee (£28,000). He wondered whether this was enough to do allow the auditor to do all the work that needed to be done. Ms Marci replied that external auditors had very specific responsibilities and that the level of fee was based on the national scale set by Public Sector Audit Appointments Limited.

RESOLVED to note the Audit Plan for the accounts for the year ended 31^st March 2016.

The Finance & Systems Manager (Pensions) presented the report. He invited Members to note the steps to be taken to comply with the recommendation of the external auditors in their audit of the 2014/15 accounts that it should be easier to identify Pension Fund transactions and balances separately from those of the Council. In reply to questions from Members he said:

·  The external auditors had confirmed that they were satisfied with the proposal to address the issue by creating a separate journal identifier for Pension Fund transactions.

·  The cash balances of the Fund were held and invested separately from those of the Council.

RESOLVED to note the additional controls to be set up in the Council’s Financial Management System to more easily identify Avon Pension Fund journal transactions as outlined in the report.

A Member spoke against the motion to take this item in exempt session. He said that he did not think the contents of the report justified this, and he felt very strongly that members of the Fund had a right to know what it was proposed to do with their money. He thought that Fund members should have free access to this information.

After Members had debated the motion, it was RESOLVED by 8 votes in favour, 1 vote against and with 2 abstentions that

the Committee having been satisfied that the public interest would be better served by not disclosing relevant information, in accordance with the provisions of section 100(A)(4) of the Local Government Act 1972 the public shall be excluded from the meeting for this item of business, and the reporting of this item shall be prevented under section 100A(5A), because of the likely disclosure of exempt information as defined in paragraphs 1 and 2 of Part 1 of Schedule 12A of the Act as amended.

After discussion, it was RESOLVED to agree the recommendations in the report.

The Head of Business, Finance and Pensions presented the report.

He said that the some of the key issues facing the Fund in the next three years were:

• pooling – the Committee had already agreed to provide additional resources, but there were the as-yet-unknown costs of implementation, which were not reflected in the Budget and Service Plan

• following the 2016 Budget, an acceleration in the Academies programme, resulting in the possible creation of 293 additional Academies, each of which could be a separate employer; there would be additional work in securing administrative compliance and in training; recruitment for additional posts would take place this year.  It would help the Fund if schools becoming Academies joined Multi Academy Trusts.

• the valuation

It was proposed to create specific member and employer focussed services within the Administration team.

Staff turnover had been, and was likely to remain, a serious concern.

Members discussed the report and made comments and asked questions, to which officers responded

Staff retention

Could retention allowances be paid to staff?

There would need to be discussion with the Council’s Human Resources Team. In the meantime attention will be given to job grading and flexibility.

How many apprentices are working in the Administration Team?

There are two at present, which will be doubled to four.

Increase in employers

The admission of Academies and the increase in employers will raise costs for the Fund. The Fund should investigate whether there were best practice models for dealing with Academies. A higher quality of data is demanded by the CARE scheme.

0.4% of employer contributions are earmarked for administration costs. This might not be enough, and will have to be examined as part of the valuation process. A great deal more is now being spent on compliance and regulation. In accordance with the Administration Policy, charges will be levied on employers who impose excessive additional administrative burdens. Efforts will be made to identify more efficient practices that employers could adopt, and consideration given to charging them supplementary fees if they fail to adopt them. As for best practice, administration staff visit schools about to become Academies and give training and help with thepensions software systems. The Fund needs smarter technology; discussions are ongoing with software suppliers about how to manage the increase in employers. All funds are facing the same issue. 53% of smaller employers are now sending data electronically. Member self-service needs to be encouraged to free up staff resources. Currently 10,000 scheme members are signed up for self-service; this needs to be increased to at least 80,000. The new member website will be launched next week.

Investment Strategy

The review of the Investment Strategy has been delayed because of work on pooling. The original target date was September 2016. There was a suggestion that there would be no new investments until the new Strategy had been agreed. There are serious issues in relation to the new Strategy that might not be resolved for many months. Would it be possible to agree an  ...  view the full minutes text for item 74.

The Finance & Systems Manager (Pensions) presented the report. He said there were no changes to the policy in Appendix 1, which was last approved by the Committee in July 2015. The Committee was not being invited to approve the list of counterparties in Appendix 2, which is simply a list of counterparties which meet the current criteria.

RESOLVED to approve the Treasury Management Policy as set out in Appendix 1.

The Assistant Investments Manager presented the report. He said that the Panel had made no recommendations to the Committee. The Committee was invited to the note the minutes of the latest meeting of the Panel on 24^th February.

RESOLVED to note the minutes of the Investment Panel meeting on 24^th February 2016 at Appendix 1.

The Assistant Investments Manager summarised the key information in the report.

Mr Giles commented on Mercer’s Investment Performance Report.

A Member asked Mr Giles whether he had any view on the assumptions made in the Fund’s Investment Strategy. He was concerned about the Fund setting targets that were not achievable. Mr Giles referred to agenda page 119, which tabulated Strategy Assumed Returns against the 3-year Index Returns with comments. The Investment Manager said that return expectations would be considered in the valuation process.

RESOLVED:

1. To note the information set out in the report.

2. To note the LAPFF Quarterly Engagement Report.

The Finance & Systems Manager (Pensions) presented the report.

RESOLVED:

1. To note administration and management expenditure incurred for 10 months to 31 January 2016.

2. To note the Cash Flow Forecast to 31 March 2016.

The Acting Pensions Manager presented the report.

RESOLVED to note:

1. Summary Performance Report to 31 January 2016;
2. Performance Indicators and Customer Satisfaction feedback for 4 months to 31 January 2016;
3. Progress on the Data Improvement Plan;
4. Risk Register.

The Acting Pensions Manager presented the report.

The Head of Business, Finance and Pensions said that the draft Breaches Procedure had been considered by the Pensions Board. The Chair of the Board had suggested that second paragraph on page 198 should require serious breaches to be reported to the Pensions Regulator “immediately” rather than “as soon as practicable”. He, however, suggested that the current wording should be retained, because it would not be known what precisely was to be reported until an investigation had taken place.

RESOLVED to approve the Breaches Procedure as outlined in the report.

The Acting Pensions Manager presented the report.

RESOLVED to note:

1. The current position regarding the potential changes that would affect the administration of the Fund;

2. The information regarding HM Treasury consultations.

The Investments Manager presented the report.

She requested Members to complete and return the training self-assessment form by the end of the month.

RESOLVED:

1. To note the workplans.

2. That Members will undertake a self-assessment of their knowledge to inform the training plan 2016-2018.