Agenda and minutes

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Contact: Sean O'Neill  01225 395090

Items
No. Item

52.

EMERGENCY EVACUATION PROCEDURE

The Chair will ask the Committee Administrator to draw attention to the emergency evacuation procedure as set out under Note 8.

Minutes:

The Democratic Services Officer advised the meeting of the procedure.

53.

APOLOGIES FOR ABSENCE AND SUBSTITUTIONS

Minutes:

Apologies were received from Cheryl Kirby.

54.

DECLARATIONS OF INTEREST

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.

Minutes:

There were none.

55.

TO ANNOUNCE ANY URGENT BUSINESS AGREED BY THE CHAIR

Minutes:

There was none.

56.

ITEMS FROM THE PUBLIC - TO RECEIVE DEPUTATIONS, STATEMENTS, PETITIONS OR QUESTIONS

Minutes:

Questions were asked and statements were made by Councillor Lin Patterson, Lynda Newbury, Eleanor Field and Dave Searby. The details are given in Appendix 1.

Public Speakers 161209 pdf icon PDF 70 KB

57.

ITEMS FROM COUNCILLORS AND CO-OPTED AND ADDED MEMBERS

To deal with any petitions or questions from Councillors and where appropriate co-opted and added members.

 

Minutes:

There were none.

58.

MINUTES: 24 NOVEMBER 2016 pdf icon PDF 56 KB

Members are invited to approve the Public and Exempt Minutes of the meeting of 24 November 2016. Before discussing the Exempt Minutes the Committee is invited to pass the following resolution:

 

the Committee, having been satisfied that the public interest would be better served by not disclosing relevant information, RESOLVES that the public shall be excluded from the meeting for the discussion of the Exempt Minutes of the meeting of 24 November 2016 in accordance with the provisions of Section 100(A)(4) of the Local Government Act 1972, because of the likely disclosure of exempt information as defined in paragraph 3 of Part 1 of Schedule 12A of the Act as amended.

Additional documents:

Minutes:

It was agreed that the resolution reported in the public minutes should be the same as that in the exempt minutes, so that

 

3. To delegate action to the Panel and Officers as appropriate.”

 

in the draft public minutes should be replaced by:

 

3. To delegate action to the Panel and Officers as follows:

 

a.  Officers to implement annual carbon/climate change analysis of the investments portfolio;

 

b.  Officers to implement the agreed engagement priorities;

 

c. Investment Panel to investigate passive equity indices available to reduce carbon exposure, for consideration in the Investment Strategy Review.

59.

AMENDMENT OF THE MINUTES OF THE MEETING OF 11TH DECEMBER 2015 pdf icon PDF 49 KB

To invite the Committee to agree that the Minutes of the meeting of 11th December 2015 approved and signed by the Chairman be amended to correct an omission subsequently discovered:

 

In minute 48 to add to the resolution:

 

3. To agree the recommendation to adopt the proposed rebalancing policy as at 4.3 a)”.

 

The full minute for this item is included in the papers.

 

The original report to Committee can be viewed here:

 

https://democracy.bathnes.gov.uk/ieListDocuments.aspx?CId=212&MId=4249&Ver=4

 

Minutes:

The Assistant Investments Manager informed Members that by an oversight part of the resolution about the revised rebalancing policy agreed at the meeting of 11th December had not been recorded in Minute 48 of the meeting, and invited them to agree to correct the omission.

 

A Member asked how this error had come to light. The Assistant Investments Manager explained that it had been discovered during rebalancing activity when officers had needed to refer to the policy and the resolution.

 

RESOLVED to amend the Minutes of the Meeting of 11th December to correct an omission subsequently discovered, by adding at the end of the resolution of Minute 48:

 

3. To agree the recommendation to adopt the proposed rebalancing policy as at 4.3 a)”.

 

60.

INVESTMENT PANEL ACTIVITY pdf icon PDF 77 KB

Before discussing the Exempt Minutes of the Panel the Committee is invited to pass the following resolution:

 

the Committee, having been satisfied that the public interest would be better served by not disclosing relevant information, RESOLVES that the public shall be excluded from the meeting for the discussion of the Exempt Minutes of the Panel appended to the report for this item in accordance with the provisions of Section 100(A)(4) of the Local Government Act 1972, because of the likely disclosure of exempt information as defined in paragraph 3 of Part 1 of Schedule 12A of the Act as amended.

Additional documents:

Minutes:

The Assistant Investments Manager presented the report. The Panel had made one decision: to delegate the setting of the trigger levels of the Liability Risk Management Framework to Officers in consultation with the Investment Consultant, Actuary and relevant Investment Manager. The rationale for this was that market conditions impact the appropriate trigger levels, so these need to be finalised at the point of implementation and in the future as necessary.

 

RESOLVED

 

1.  To note the decision taken about the implementation of the Liability Management Framework as summarised in paragraph 4.2(1)

 

2.  To note the Minutes of the Investment Panel meeting on 14 November at Appendix 1 and Exempt Appendix 2 and the summary of the Meet the Managers Workshop at Exempt Appendix 3.

61.

REVIEW OF INVESTMENT PERFORMANCE pdf icon PDF 111 KB

Before discussing Exempt Appendix 3 to this item the Committee is invited to pass the following resolution:

 

the Committee, having been satisfied that the public interest would be better served by not disclosing relevant information, RESOLVES that the public shall be excluded from the meeting for the discussion of Exempt Appendix 3 to this item in accordance with the provisions of Section 100(A)(4) of the Local Government Act 1972, because of the likely disclosure of exempt information as defined in paragraph 3 of Part 1 of Schedule 12A of the Act as amended.

Additional documents:

Minutes:

The Assistant Investments Manager introduced this item. He tabled supplementary information concerning the annual assurance review of the control environment of 3rd party suppliers, which is given in Appendix 2. The review found no issues of concern.

 

Mr Turner commented on the Mercer investment report. He said that during the quarter and over the year to date there had been a strong improvement in funding level, which was the key financial measure for the Fund. The funding level had improved by 4% during the quarter and 8% over the last twelve months. One of the main reasons for the underperformance of the Fund return over the quarter had been the impact of the currency hedging programme given the depreciation of sterling following the Brexit vote. However, he did not see any immediate need to change the existing currency hedging policy, as he expected this element of underperformance to be reversed as sterling rose, as it had started to do at the end of the quarter. It had also been an unusual period in that seven of the eight active managers had underperformed. It would normally be expected that with so many active managers there would be reduced risk through diversification. He therefore proposed that as part of the strategic Investment Review in 2017 a series of high-level checks should be carried out to see the extent to which their portfolios overlapped. There were a number of plausible reasons for underperformance. For example Unigestion, one of the emerging markets managers, would be expected to do well when markets fall, but in general markets have been rising and Unigestion’s  investment style had not matched market conditions.

 

A Member referred to paragraph 5.4 of the covering report and asked whether there would be a replacement for the local authority average performance report that State Street WM used to produce. The Investment Manager replied that a National Framework for the procurement of performance measurement services would be issued shortly.

 

A Member asked about the process and timeframe for the strategic Invesment Review. The Assistant Investments Manager said this had not been determined yet, though the intention was to complete it during the first half of the year. It would probably be on the agenda of the February Panel Meeting, and there would probably need to be an additional Committee meeting, or at least a workshop. He would give an update about this at the next meeting. A Member cautioned that it was important to make investment decisions on a long-term view and not simply in reaction to current market volatility.

 

RESOLVED:

 

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

 

  1. To note the LAPFF Quarterly Engagement Report at Appendix 4.

Supplementary Information to Item 10 REVIEW OF INVESTMENT PERFORMANCE pdf icon PDF 36 KB

62.

BUDGET AND CASHFLOW MONITORING 2016/17 pdf icon PDF 59 KB

Additional documents:

Minutes:

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

 

He advised that the directly-controlled Administration budget was forecast to be £205,400 below budget, mainly because of the holding over of expenditure on the IT strategy, owing to the Employer Self Service product offer being revised. There was also a forecast of a reduced expenditure on salaries due to the delayed appointment of staff.

 

In the part of the budget not directly-controlled, expenditure is forecast to be £1,560,000 over budget, mainly because of increased Investment Manager fees resulting from higher asset values in the quarter.

 

There was a forecast of a net cash outflow for the year of £3m more than forecast in the Service Plan on present trends.

 

RESOLVED to note:

 

a)  the administration and management expenditure incurred for 7 months to 31 October 2016;

 

b)  the Cash Flow Forecast to 31 March 2017.

63.

PENSION FUND ADMINISTRATION pdf icon PDF 110 KB

Additional documents:

Minutes:

The Acting Pensions Manager presented the report.

 

He said that following the receipt of regulatory guidance work continued in-house to clear the backlog of cases relating to scheme transfers in and out and, separately, the membership update. Planned down days had been set aside to target specific work streams, and significant progress was now being made, which would be reflected in the next report to the Committee.

 

An outcome of the year-end process was that a training programme had been put in place for employers on the provision of accurate and timely data to the Fund. This will be spread over the next six months.

 

Pension Officers were currently supporting redundancy exercises at Bristol City Council, South Gloucestershire Council and North Somerset Council by providing bulk calculations and information to individual members.

 

The Pension Regulator’s 2016 governance and administration survey had been completed and returned. The results would be reported to the next meeting of the Committee.

 

The restructuring of the Pensions Administration Team was well under way, and a number of manager and deputy manager appointments had been made. Internal staff moves should be completed by Christmas and backfill by the end of the financial year, so staffing should be up to full complement by the end of March. The new staffing structure would be reported to the next meeting of the Committee.

 

Members asked questions to which the Acting Pensions Manager responded.

 

Q: What was the reason for employers’ failure to submit full CARE data (paragraph 6.4, agenda page 110)?

 

A: B&NES and North Somerset both changed their payroll software, which caused some problems. The Administration Team was currently working with both these employers to resolve the problems.

 

Q:  The actual KPI figures for the past three months (agenda page 123) when compared with the 2015/16 actuals seem to indicate a downward trend. Is this due to staffing or other factors?

 

A: The table in its present form is somewhat misleading as it combines two separate reports. The new set of reports will be introduced at the next meeting of the Committee. At present only part of the data is being reported, and in addition some of the reports reflect the old targets.  However, it is true that there is a slightly downward trend.

 

Q: The employer error rate of 25.57% (paragraph 3.7, agenda page 108) is very high. How is it being addressed?

 

A: It is actually an improvement over the previous error rate of 34.21%, but it is far too high. Errors are now being dealt with on the day that the employer data are received and before they are entered into the database. With the restructuring of the Administration Team there will be dedicated staff to interface with employers and give them onsite training. Challenges are presented by the increasing number of employers in the Fund, greater staff turnover and the number of different sets of data required, e.g. for the CARE scheme and the final salary scheme.

 

RESOLVED to note:

 

  1. Summary Performance Report  ...  view the full minutes text for item 63.

64.

LGPS REGULATORY UPDATE pdf icon PDF 73 KB

Additional documents:

Minutes:

The Acting Pensions Manager presented the report.

 

LGPS 2014 Regulations

 

The amendment Regulations were due to be issued by the end of December 2016, but as a result of implementation problems the Regulations relating to “Fair Deal” will now be put into a separate Statutory Instrument and further consultation is required. The Freedom and Choice section also needs modifications, and further discussion will take place in 2017. The target date for issue of the amendment Regulations is March 2017. A major concern is the near complete lack of staff resource within DCLG.

 

Public Sector Exit Payments

 

It is expected that Recovery Regulations will be laid before Parliament by the end of December 2016 to come into effect in early 2017. Also early in 2017 there will be further consultation on the £95,000 exit cap. Individual departments have been asked to put forward proposals for reform that fit within certain public-sector-wide guidelines. It is intended that these Regulations will come into force by early summer 2017.

 

RESOLVED to note:

 

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

 

ii.  the current position regarding HM Treasury consultations and pending commencement dates.

65.

WORKPLANS pdf icon PDF 55 KB

Additional documents:

Minutes:

The Investment Manager presented the report.

 

A Member asked how the Investments Team was coping with such a large workload. The Investment Manager replied that a post to support the Assistant Investments Manager had been backfilled. It was also important to complete work in the right order and not overstretch the Team. Members would be regularly updated on this.

 

RESOLVED to note the workplans.

66.

POOLING OF INVESTMENTS - FULL BUSINESS CASE pdf icon PDF 86 KB

Before discussing the Exempt Appendices to this item, the Committee is invited to pass the following resolution:

 

the Committee, having been satisfied that the public interest would be better served by not disclosing relevant information, RESOLVES that the public shall be excluded from the meeting for the discussion of the Exempt Appendices 2-6, 8 and 9 of this item in accordance with the provisions of Section 100(A)(4) of the Local Government Act 1972, because of the likely disclosure of exempt information as defined in paragraphs 3 and 5 of Part 1 of Schedule 12A of the Act as amended.

Additional documents:

Minutes:

The Head of Business, Finance and Pensions introduced this item.

 

It was then RESOLVED, the Committee having been satisfied that the public interest would be better served by not disclosing relevant information, that the public should be excluded for the remainder of the meeting, in accordance with the provisions of Section 100(A)(4) of the Local Government Act 1972, because of the likely disclosure of exempt information as defined in paragraphs 3 and 5 of Part 1 of Schedule 12A of the Act as amended.

 

After discussion the Committee RESOLVED to recommend to Council that it should adopt the following resolution:

 

In its capacity as the Administering Authority for the Avon Pension Fund, and having received and reviewed the Full Business Case relating to the proposed Brunel Pension Partnership, the Council hereby resolves to enter into investment pooling with respect to the Avon Pension Fund. Such resolution is made on and subject to the following terms and conditions:

 

1)  That the Brunel Pension Partnership investment pool is developed, funded and implemented substantially in accordance with provisions in the Full Business Case, and more particularly that:

 

a)  A FCA regulated company to be named Brunel Pension Partnership Limited be established and operated substantially in accordance with provisions in the Full Business Case as to its ownership, structure, governance and services capability;

 

b)  A new supervisory body be established comprising the Council and all other Administering Authority participants in the Brunel Pension Partnership to act to ensure effective oversight of the Council’s investment and participation in the Brunel Pension Partnership.

 

2)  The Avon Pension Fund Committee be authorised and granted delegated powers to undertake such tasks as it thinks appropriate to progress implementation of investment pooling, and to take such decisions and do all other things deemed necessary in order to promote the interests of the Council with respect to pooling, which without limitation shall include participation in the development of Terms of Reference and the role of the supervisory board and agreeing and authorising financial expenditure or investment that may be required consequential upon the Council’s participation in the Brunel Pension Partnership.

 

3)  That the Chief Finance Officer, Chief Legal Officer and Head of Business Finance and Pensions be authorised and granted delegated powers to undertake such tasks as it thinks appropriate to progress implementation of investment pooling, and to take such decisions and do all other things deemed necessary in order to support the Avon Pension Fund Committee with respect to pooling, which without limitation shall include agreeing and authorising documentation and contracts, and informing and advising the Committee on the continued viability and suitability of investment pooling in light of any developments, financial or otherwise, in the period up to the establishment of the Brunel Pension Partnership.

 

4)  That subject to the above, all such matters be carried out with the aim of achieving a target date for investment pooling of 1 April 2018, and otherwise subject to such intermediate steps and timescales as may be considered  ...  view the full minutes text for item 66.