Agenda and draft minutes

Venue: Kaposvar Room - Guildhall, Bath. View directions

Contact: Sean O'Neill  01225 395090

Items
No. Item

1.

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.

2.

APOLOGIES FOR ABSENCE AND SUBSTITUTIONS

Minutes:

Apologies were received from Cllr Toby Savage, John Goddard and Mick Rumph. There was no North Somerset representative present, because they would not make nominations to external bodies until 25th June 2019.

3.

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:

William Liew declared a non-pecuniary interest as the representative of an employer in the Fund in relation to items 10 (Update on Legislation) and 11 (Approval of Draft FSS for Consultation).

 

4.

TO ANNOUNCE ANY URGENT BUSINESS AGREED BY THE CHAIR

5.

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

Minutes:

The Chair explained that only members of the public who had given the required notice to Democratic Services could address the Committee at today’s meeting. The required notice was 2 clear working days for statements and 4 clear working days for questions. Three members of the public had given the required notice to make statements.

 

Cllr Carla Denyer (Bristol City Council) made a statement, a copy of which is attached as an appendix to these minutes.

 

Adrian Shaw made a statement, which is attached as an appendix to these minutes.

 

Matthew Soames had submitted a written statement, which is attached as an appendix to these minutes.

 

The Chair thanked them for their statements and said that their comments would be considered by the Committee when they reviewed the investment strategy later in 2019, and that the impact of climate change on the Fund’s strategy would be specifically considered as part of the review.

Statement Matt Soames pdf icon PDF 15 KB

Statement Adrian Shaw pdf icon PDF 23 KB

APF statement Jun 2019 C Denyer pdf icon PDF 45 KB

6.

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.

7.

MINUTES: 22 MARCH 2019 pdf icon PDF 258 KB

Minutes:

A Member raised a point of accuracy on the minutes in item 68 (Governance Review), paragraph 2.1a (proposal to reduce the number of B&NES Councillors on the Committee). He said that his group had voted against this proposal, and would like that to be recorded in the minutes. The Committee accepted this amendment, and it was accordingly agreed that the record of the voting on this proposal should read:

 

“The recommendation was put to the vote and was carried by 5 votes in favour and 2 votes against with one abstention.”

 

RESOLVED that the minutes be approved and signed by the Chair subject to this amendment.

8.

PENSION BOARD MINUTES: 7TH MARCH 2019 pdf icon PDF 91 KB

Minutes:

RESOLVED to note the minutes of the meeting of the Pension Board of 7th March 2019.

9.

ROLES AND RESPONSIBILITIES OF THE COMMITTEE pdf icon PDF 91 KB

Additional documents:

Minutes:

The Governance and Risk Advisor presented the report. She suggested that the Committee should discuss and vote on each of the recommendations separately.

 

2.1 and 2.2

 

The Committee noted the roles and responsibilities of the members, advisors and officers and the Terms of Reference of the Committee and the Investment Panel, which had been approved by the Council.

 

2.3 Governance Compliance Statement

 

The LGPS regulations require the publication of a revised Governance Compliance Statement whenever there is a material change. The draft revised statement in Appendix 2 reflected the revised Terms of Reference agreed by the Council on 21 May 2019. Members were invited to approve the draft.

 

2.4 Membership of Investment Panel

 

B&NES Members are appointed to the Panel by the Political Groups in accordance with the rules of political proportionality. The Groups had appointed Cllrs Bruce Shearn, Shaun Stephenson-McGall and Chris Dando as Members of the Panel. The Committee appointed Shirley Marsh and Pauline Gordon as the remaining Members of the Panel.

 

2.5: Committee Representation on Brunel Oversight Board

 

The Chair was appointed as the Committee’s representative on the Brunel Oversight Board.

 

2.6 Membership of Brunel Working Group

 

The Chair and Pauline Gordon were nominated as members of the Brunel Working Group.

 

A Member asked whether it was in accordance with good governance that the Chair should be both the Committee’s representative on the Brunel Oversight Board and a member of the Brunel Working Group. The Investment Manager replied that the purpose of the Working Group was to support the Oversight Board representative and act as a sounding board and a channel of communication and it would not have executive powers; she suggested therefore that there was no conflict of interest between the two roles. The two nominations to the Working Group were approved.

 

2.7 Members to represent Fund on Local Authority Pension Fund Forum

 

Cllr Steve Pearce and Richard Orton were appointed to this role.

 

It was noted that Wendy Weston would succeed Richard Orton as the voting representative of the Trade Unions for the current year with immediate effect.

 

RESOLVED:

 

  1. to note the roles and responsibilities of the Members, advisors and officers;
  2. to note the approved Terms of Reference of the Committee and Investment Panel;
  3. to approve the Governance Compliance Statement;
  4. to agree the membership of the Investment Panel as indicated above;
  5. to agree the Brunel Oversight Board representative as indicated above;
  6. to agree the membership of the Brunel Working Group as indicated above;
  7. to agree the members to represent the Fund on the Local Authority Pension Fund Forum as indicated above;
  8. to agree to delegate the drafting of the Annual report to Council to officers and the Chair (subject to informal consultation with Committee Members prior to the Chair approving the report).

10.

UPDATE ON LEGISLATION pdf icon PDF 81 KB

Additional documents:

Minutes:

The Technical and Compliance Advisor presented the report. She drew attention to the consultation responses made on behalf of the Fund.

 

A Member asked how the Fund was likely to respond to the MHCLG consultation on the LGPS Local Valuation Cycle and the Management of Employee Risk in relation to the proposal that further and higher education corporations would not have an automatic right of admission to the Fund. The Investment Manager replied that the response would be from the Fund’s perspective and would use financial metrics to demonstrate the likely long-term impact on the Fund.

 

A Member referred to the comment in the final paragraph on agenda page 77 about a University seeking to deprive non-academic staff of LGPS membership, and asked whether since the consultation response had been submitted there had been any further evidence of current employers in the Fund trying to do the same. The Investment Manager replied that there was no evidence of this.

 

RESOLVED to note:

 

  1. the current position regarding the developments that could affect the administration of the Fund;

 

  1. the responses sent to the MHCLG consultations on ‘LGPS Asset Pooling’, ‘Fair Deal’ and ‘Late Retirement Factors’.

 

 

11.

APPROVAL OF DRAFT FSS FOR CONSULTATION pdf icon PDF 86 KB

Additional documents:

Minutes:

The Investment Manager presented the report and invited Members to approve the draft Funding Strategy Statement (FSS) 2019 for consultation with employers and the Pension Board. The consultation would conclude in early September, and a revised draft would be presented to the Committee at the 27 September special meeting, when Members would be invited to approve it. Members were invited to delegate to officers, having taken advice from the Actuary, the power to amend the draft FSS as new legislation or guidance was issued.

 

The Fund’s Actuary, Paul Middleman, presented the draft FSS. He said it was a very important document, because what it did essentially was to set employer contribution rates.

 

He directed Members to paragraph 5.7 of the covering report (agenda pages 89-90), where the major changes from the existing FSS were set out.

 

He said that a key assumption that has to be made is the discount rate, which is set by the Actuary to reflect the expected overall long-term real investment return with an allowance for prudence. The level of returns that can be expected depends on the assets held by the Fund, the outlook for those assets and the protection policies the Fund has in place.

 

The assumption about life expectancy had to be changed to take account of the fact that the rate of improvement had tailed off a little. That would have a 3-4% positive effect on the Fund’s liabilities.

 

There were a number of national issues whose outcomes would need to be incorporated into the FSS when they were clarified, as detailed in paragraph 5.9 of the covering report. They could be incorporated under delegated powers by officers, if the Committee granted these. One of the most significant of these issues is the proposed move from a three-yearly to a four-yearly valuation cycle. He drew the attention of Members to paragraphs in the draft FSS that reflected these issues.

 

After discussion it was RESOLVED:

 

  1. to approve the draft Funding Strategy Statement as set put in Appendix 1 for wider consultation, subject to the insertion of information which can only be included when the actuarial valuation and consultation processes are complete;

 

  1. to delegate power to officers, having taken advice from the Actuary, to amend the draft FSS as new legislation or guidance is issued as appropriate.

 

 

12.

UPDATE ON BRUNEL PENSION PARTNERSHIP pdf icon PDF 65 KB

Additional documents:

Minutes:

The Investment Manager presented the report.

 

She said that since the last Committee meeting in March the Brunel Oversight Board (BOB) had met once, in April. There were two matters of particular interest to the Committee. One was a report on governance. Brunel is reviewing the governance arrangements for the whole partnership after 18 months of operation. The review is in large part focussed on technical issues to reflect changes in legislation, FCA regulations, and operational practice now that Brunel is established. The legal officers of the client funds will review the draft proposals, which will go back to BOB in July for comment with the final proposals being considered by BOB in September. Governance arrangements are a special reserved matter, so any changes will require the unanimous approval of the shareholders. The other matter was a review of the Brunel’s internal control environment. Because Brunel is an FCA-regulated company, the control environment is quite onerous. Brunel is in the process of developing their control environment and as part of this process the internal auditor had completed audits on different aspects which identified areas that needed to be strengthened. This had been constructive, and would assist Brunel in developing a robust control environment. Progress would be reviewed by BOB in July. The plan for transitioning assets remains on track. The client assurance framework, by which funds in the pool will hold Brunel to account for service delivery, is near to completion.

 

Before considering exempt appendices 2a, 2b and 3 the Committee, having been satisfied that the public interest would be better served by not disclosing relevant information, RESOLVED that the public should be excluded from the meeting for the consideration of exempt appendices 2a, 2b and 3 and that the reporting of this part of the meeting should be prevented, 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 Schedule 12A of the Act as amended.

 

After the Committee returned to open session it RESOLVED to note:

 

  1. the progress made on the pooling of assets;

 

  1. the updated project plan for the transition of assets.

 

13.

ANNUAL REVIEW OF INVESTMENT STRATEGY AND PERFORMANCE pdf icon PDF 107 KB

Additional documents:

Minutes:

The Investment Manager introduced this item. She informed the Committee that there would be an investment training session in the morning before the Investment Panel meeting of 2 September for new Committee Members and Panel Members. An invitation would be sent out the following week.

 

Mr Turner presented the Mercer Annual Investment Review.

 

A Member suggested that the Fund’s communication strategy should be reviewed, as he and other Members were getting lots of emails about the Fund’s investment policy. The Investment Manager replied that a new communications manager had been appointed for the Fund, who would start in August.

 

Responding to a question from a Member the Investments Manager said that the annual report on the Fund’s carbon footprint would be available later in the year and presented to the Committee. It would inform the Fund’s Investment Strategy.

 

RESOLVED to note:

 

  1. the information set out in the report;

 

  1. the LAPFF quarterly engagement report.

 

 

14.

PENSION FUND ADMINISTRATION - PERFORMANCE INDICATORS FOR YEAR AND RISK REGISTER pdf icon PDF 117 KB

Additional documents:

Minutes:

 The Pensions Manager presented the report.

 

Members noted that there during the year 57 employers had joined the Fund and that there were 74 potential new employers in the pipeline, with 38 expected to join in the next six months.

 

A Member referred to the agenda page 249 (cases measured against SLA) and noted that payments at death were only made within target in 61.76% of cases. He asked whether there was plan to improve performance in this area, as these payments could be critical at a difficult time for the families concerned. The Pensions Manager said that the performance on the table was given against the Fund’s own SLA; against the new national standard issued by CIPFA performance would be much better.

 

A Member requested an update on the conversations that Pensions had been having with B&NES about improving the employment package for pensions’ staff to make it more attractive in the market place. Officers advised that the conversations were ongoing.

 

A Member asked when an employer was last fined by the Fund for repeated poor performance in submitting data. The Pensions Manager said that the first response was to offer training and to find out where things had gone wrong. In 2016 there were 100 employers who failed to provide accurate or complete data by year end. In 2018 there were less than 30.

 

RESOLVED to note:

 

  1. membership data, Fund and employer performance for the 3 months to 31st March 2019;

 

  1. progress and reviews of the TPR Data Improvement Plan.

 

 

 

15.

BUDGET AND CASH FLOW MONITORING 2018/19 pdf icon PDF 60 KB

Additional documents:

Minutes:

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

 

A Member asked for a breakdown of the £70,000 increase in Brunel management fees referred to in paragraph 4.2 (agenda page 278. The Investments Manager said that she did not have this information immediately available and would reply to the Member after the meeting.

 

RESOLVED to note:

 

  1. the administration and management expenditure incurred for the year to 31 March 2019.

 

  1. the Cash Flow report for the year to 31 March 2019.

 

 

16.

WORKPLANS pdf icon PDF 55 KB

Additional documents:

Minutes:

The Governance and Risk Advisor presented the report.

 

RESOLVED to note the workplans and training programme for the relevant periods.