Agenda and minutes

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Contact: Mark Durnford  01225 394458

Items
No. Item

46.

Welcome / EMERGENCY EVACUATION PROCEDURE

The Chair will ask the Committee Administrator to draw attention to the emergency evacuation procedure as set out under Note 5.

Minutes:

The Chair announced that Committee member Richard Orton had sadly passed away. He acknowledged that Richard had worked in Local Government since the 1970s, had supported the Avon Pension Fund Committee for more than 14 years in his role as the Unison Union representative and had also contributed to the Committee during his employment at South Gloucestershire Council prior to this.

 

The Chair said that they were grateful for his dedication, support and long service to the Committee and that he will be missed by all who had the pleasure of working with him.

 

The Committee observed a minute’s silence to pay their respects to Richard Orton.

 

The Chair drew attention to the emergency evacuation procedure.

47.

APOLOGIES FOR ABSENCE AND SUBSTITUTIONS

Minutes:

Councillor Shaun Stephenson-McGall had sent his apologies to the Committee.

48.

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 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 4.4 Appendix 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 Officeror a member of his staff before the meeting to expedite dealing with the item during the meeting.

 

Minutes:

There were none.

49.

TO ANNOUNCE ANY URGENT BUSINESS AGREED BY THE CHAIR

Minutes:

There was none.

50.

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

Minutes:

There were none.

51.

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.

52.

MINUTES: 15th December 2023 pdf icon PDF 163 KB

Minutes:

The Committee RESOLVED that the minutes of the meeting on 15th December 2023 be confirmed as a correct record and signed by the Chair.

53.

PENSION BOARD - DRAFT MINUTES - 20th February 2024 pdf icon PDF 102 KB

The Committee is asked to note the draft minutes of the meeting of the Pension Board held on 20th February 2024.

Minutes:

The Committee RESOLVED to note the minutes of the Board meeting held on 20th February 2024.

54.

Avon Pension Fund - New Member Website

The Committee will receive a verbal update on this item.

Minutes:

The Head of Pensions addressed the Committee and explained that at the end of February the Avon Pension Fund had launched its new website and the refreshed brand logo. He said that this was a beginning of a journey and that feedback on the website would be welcome.

 

The Website Development Project Manager gave a presentation to the Committee, a summary of which is set out below.

 

·  Why have we developed a new member website?

o  The need to upgrade website platform software – as the current platform will become obsolete and unsupported during 2024.

o  Avon Pension Fund Rebrand

 

·  This provided the opportunity to improve:

o  Accessibility support for assistive technology like screen readers and speech recognition software.

o  Simplify the website structure and navigation (Homepage > Landing Pages > Content Pages).

 

·  What have we done so far?

o  Website launched on 29 February 2024

o  Rebranded ensuring colour and fonts combinations are accessible.

o  Updated the platform, adopted a version specifically developed for Local Government.

o  Website design based on new APF brand guidelines and Government accessibility recommendations.

o  Content rewritten in ‘plain English’ using an authoring framework and introduced ‘tell us’ content.

o  Secure online forms developed to capture the information needed to validate a member.

 

Councillor Robert Payne asked if any feedback had been received from users so far.

 

The Website Development Project Manager replied that feedback links have been put in place on the website and said that around 60 had been received in the last month and acted upon.

 

William Liew commented that he felt that the new site looked fresh and that he understood why the likely frequent enquiries tabs were at the top of the page above the corporate section, in order to reduce the number of direct contacts made with the Fund. He added that there was one link that he used though that took him to the B&NES website which obviously looks quite different to the new site and appeared to have no back button to use to return to the new site.

 

The Website Development Project Manager replied that the home page had been designed that way so that the key tasks are seen by members when they arrive there.

 

Pauline Gordon said that the site looked good. She said she had tried to access the members’ section of the site, but as she was not one, she couldn’t, this was therefore a good thing and showed a degree of security in place. She said that she did have to manually input her date of birth as the drop-down boxes did not seem to work for her at the time.

 

The Website Development Project Manager replied that the site is effectively split into two parts, before and after the log-in stage so only certain information will be able to be seen by members post-login.

 

Jackie Peel said that she had been asked to see how the process works for changing your address or submitting an expression of wish form via  ...  view the full minutes text for item 54.

55.

2024-27 SERVICE PLAN & BUDGET pdf icon PDF 94 KB

The purpose of this report is to present to the Committee the 3-year plan and budget for the period 2024-27. 

Additional documents:

Minutes:

The Head of Pensions introduced this report to the Committee and highlighted the following areas from within Annex 1.

 

Management Summary

 

·  Global markets were broadly favourable during 2023. The Fund’s portfolio value increased by 9% to £5,700m and we enter 2024 in a robust financial position with 97% funding.

 

·  The Fund reviewed its investment strategy and executed material changes in 2023-24: equities are now split 50:50 across active and passive with materially lower fees.

 

·  The Fund has reduced equity hedging from 100% to 50% to raise longer term growth potential.

 

·  The Fund confirmed £175m for Local Impact investing, initiated with a £50m investment in solar farms.

 

·  The new investment strategy confirmed more ambitious climate targets with the Fund’s net zero date for its investments brought forward from 2050 to 2045. This target is underpinned by tangible near-term actions for the period 2024-30.

 

·  Service performance in aggregate remains below required levels with only 5 of 18 service measures completed within target timescales. This is a result of high staff vacancy rates at the start of the period, regulatory changes e.g. McCloud, and the emergence of new challenges such as the Pension Increase issue which had to be promptly resolved.

 

To address the service challenge, we are driving key areas of action:

 

• People: the Fund will complete a new organisational structure and continue recruitment to build full capacity of 92 FTEs.

• Digital: we will develop digital communications and improve My Pension Online to enable simpler self-serve and drive operational efficiency.

• Control: we will review internal processes to drive control improvements and reduce operational risks.

 

Governance

 

·  Good Governance Review (GGR) – The Scheme Advisory Board’s review sets out recommendations to improve governance of LGPS. Statutory guidance necessary for the recommendations to take legal effect is expected to be published this year. The Fund has taken action to comply with draft requirements and during 2024 the Fund will implement any additional requirements from the Scheme Advisory Board’s GGR.

 

·  Knowledge & Skills

o  Both Committee and Board members committed in 2023 to complete Hyman’s Learning Academy modules and this now forms a mandatory part of the Fund’s Training policy.

o  Achieving compliance in line with our policy will be a priority for 2024-25.

 

·  Audit

o  Audit attention is increasing and the 2024-25 Audit Plan will focus on a few critical areas, including Pensions Payroll and Internal Control Framework.

 

Regulatory Update

 

Projects for McCloud and the Pensions Dashboard are already in place.

 

·  McCloud regulations came into force in October 2023, with the Fund applying the rules to new cases such as retirements. For the McCloud Remedy (retrospective application to those members who have left or retired) numbers of impacted members still needs to be confirmed and guidance from DHLUC is not yet final. There remains significant work to implement the remedy in full in terms of calculations and communications, which the Fund will complete before the regulatory deadline in Q3 2025.

 

·  For the Pensions Dashboard, the LGA issued draft guidance in November 2023. The  ...  view the full minutes text for item 55.

56.

PENSION FUND ADMINISTRATION - Overview & Summary Performance Report pdf icon PDF 106 KB

The purpose of this report is to present the Fund’s administration performance for the three months to 31st December 2023 vs key performance indicators (KPI’s).

Additional documents:

Minutes:

The Pensions Operation Manager introduced the report to the Committee and asked if they had any questions regarding it.

 

Jackie Peel referred to the numbers of staff who were off work due to long term sickness and asked if it was likely whether any of them would not return to work and what the process was for considering when these positions should be filled.

 

The Pensions Operation Manager replied that due process is followed in all such cases and the positions are not able to be backfilled. She added that two members of staff are planning to return soon or have already returned.

 

Jackie Peel referred to Appendix 1, Annex 1 (Annex 1 Overall Performance by Case Type) and in particular the figures relating to Refund – Quotes. She said that she felt that this was a particularly high number and asked if that was reflected by the low level of SLA achieved.

 

The Pensions Operation Manager replied that this was due to a capacity issue and that staff were prioritising retirement cases. She added that as of today a large number of those backlog cases have been cleared, with only around 100 remaining outstanding.

 

Councillor Toby Simon asked if there was a particular reason why performance had dropped in January 2024.

 

The Pensions Operation Manager replied that they do struggle in this regard as the clock does not stop ticking when waiting for a reply from a member. She added that in terms of McCloud over this time there was not enough guidance in place and there was a software bug that had also had an impact on the service.

 

William Liew referred to the current SLA targets and questioned whether some should be adjusted to reflect on their achievability.

 

The Pensions Operation Manager replied that they were cautious about making any such changes and may address the RAG rating in the first instance.

 

Jackie Peel wished to thank the Pensions Operation Manager and the whole team for the work that they continue to do on behalf of the Fund.

 

The Committee RESOLVED to note the service performance for the period ending 31st December 2023.

 

57.

TREASURY MANAGEMENT POLICY pdf icon PDF 78 KB

The Committee is asked to approve the Fund’s Treasury Management Policy each year. It was last approved in March 2023. The policy closely mirrors the Council’s policy set out in the Councils’ Annual Treasury Management Strategy.

Additional documents:

Minutes:

The Head of Pensions introduced the report to the Committee. He explained that they are asked to approve the Fund’s Treasury Management Policy each year and that it was last approved in March 2023. He added that the policy closely mirrors the Council’s policy set out in the Councils’ Annual Treasury Management Strategy.

 

Pauline Gordon asked if any changes had been made to the Policy.

 

The Head of Pensions replied that they had reduced the maximum amount that can be put into the CCLA Public Sector Deposit Fund.

 

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

58.

INVESTMENT STRATEGY STATEMENT 2024 pdf icon PDF 76 KB

The Investment Strategy Statement (ISS) was last revised in March 2023 following the asset allocation review. The ISS is being updated to include changes arising from the review of the climate targets and the Equity Protection Hedge which was completed in 4Q23.

Additional documents:

Minutes:

The Investments Manager introduced the report to the Committee. He explained that the Investment Strategy Statement (ISS) is being updated to include changes arising from the review of the climate targets and the Equity Protection Hedge which was completed in 4Q23.

 

He added that the regulations state that the administering authority must consult on the ISS as appropriate and that the Pension Board will review the draft ISS for compliance with the regulations and any feedback will be considered by the Committee in June.

 

Charles Gerrish referred to section 7.13 of the draft ISS and asked for clarification of what currency was being used in the Qualified Alternative Investor Fund (QAIF) if its regulator is the Central Bank of Ireland.

 

The Investments Manager replied that currency used is sterling.

 

Charles Gerrish referred to section 8.7 of the draft ISS and suggested whether some additional information could be included in this section rather than simply stating that the Climate Change Policy can be found by clicking on a link.

 

The Investments Manager replied that he would look at that section and update it appropriately.

 

The Committee RESOLVED to:

 

(i)  Approve the draft 2024 Investment Strategy Statement subject to feedback from the Pension Board.

 

(ii)  Note that the 2024 ISS will be published on the Fund’s website.

59.

BRUNEL POLICY POSITION: ACTIVITY-BASED EXCLUSIONS pdf icon PDF 75 KB

The purpose of this paper is to invite discussion from Committee members on whether they deem the limited use of activity-based exclusions to be consistent with the Fund’s overarching approach to responsible investment. Committee views will then be fed back to Brunel who will update their policy position based on the consensus views of all underlying client funds.

Additional documents:

Minutes:

The Investments Manager introduced the report to the Committee and highlighted the following areas from within it.

 

·  As a continuation of their work on the climate agenda, and ESG more broadly, Brunel propose the adoption and limited use of activity-based exclusions, which can act as a mechanism that enables efficiencies to be gained, allowing time and resources to be deployed on more complex areas of the climate transition.

 

·  The proposed exclusionary criteria are set in reference to industry- standard criteria, with implications for very specific parts of the energy, tobacco and defence sectors.

 

·  The exclusions are intentionally targeted at companies with activities that have no, or very limited, capacity to transition or pivot to alternative industries. The threshold for exclusion across the specified sectors has been set sufficiently high to ensure diversified companies e.g. integrated energy companies and diversified aerospace and defence companies are not captured. Companies in these sectors remain in scope for investment and will continue to play a pivotal role in delivering the Fund’s fiduciary duty.

 

·  Critically, the proposed changes have minimal impact on the Fund’s current holdings, with only one small position representing less than 0.1% of total Fund assets affected. Furthermore, the proposed exclusions are largely consistent with those applied by the passive Paris- aligned equity strategy, which the Fund has a 20.5% strategic allocation to.

 

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

 

 The Committee RESOLVED to support Brunel’s limited use of activity-based exclusions as set out in Exempt Appendix 1.

60.

OVER & UNDER PAYMENTS POLICY pdf icon PDF 85 KB

The Fund has identified the need to put in place a clear policy to establish the principles of rectification for members where there has been either an overpayment or underpayment of pension benefits. The policy is attached to this report for approval.

Additional documents:

Minutes:

The Governance & Risk Advisor introduced the report to the Committee and highlighted the following sections to them.

 

·  The Fund has identified the need to put in place a clear policy to establish the principles of rectification for members where there has been either an overpayment or underpayment of pension benefits.

 

·  Underpayments and Overpayments of benefits can arise due to various reasons. Eg:

o  Control errors such as Pensions Increase not being applied or where short-term spouses pensions are not reduced.

o  Employers providing incorrect data used to put benefits into payments.

o  No or late notification of the death of a member or dependant.

o  Rectification projects such as GMP and McCloud.

 

·  The Fund has worked with Consultants, Aon, to produce the policy. The principles set out in the policy aim to treat all members fairly with a consistent approach to each scenario, whilst giving the Fund discretion to consider individual circumstances.

 

Wendy Weston asked whether the policy confirmed the current working practices.

 

The Governance & Risk Advisor replied that a policy was not currently in place, but this does broadly align with our working principles. She added that many scenarios had been considered during the drafting of the policy.

 

Jackie Peel referred to section 5.6.2 of the policy and said that this was open to a degree of subjectivity as to whether the Administering Authority will / will not seek to recover the total value of the overpayment. She asked also how this differs with the scenario involving Lump Sums.

 

The Governance & Risk Advisor replied that they have tried to be as consistent as possible in their approach to this work and would assess each case on its own merits. She said that they would need to establish whether a member could have reasonably known about an overpayment and then would seek to work with the member if repayment is sought.

 

Jackie Peel said that she felt that the approach was inconsistent.

 

The Director of One West & APF commented that he took that section of the policy to be more of a principles based judgement and was comfortable with the advice that had been received from AON.

 

Councillor Toby Simon referred to section 5.9 and said that all efforts should be made to recover what we can in this scenario and to cross reference any relevant regulations.

 

Councillor Robert Payne asked how unauthorised payments would still be possible.

 

The Governance & Risk Advisor replied that this can still occur if a claim is made across a certain time period.

 

The Committee RESOLVED to approve the Over & Under Payments Policy.

61.

Update on Legislation pdf icon PDF 79 KB

The purpose of this report is to update the Pension Committee on the latest position concerning the Local Government Pension Scheme [LGPS] and any proposed regulatory matters that could affect scheme administration. 

Additional documents:

Minutes:

The Pensions Operations Manager introduced the report to the Committee. She informed them that it had been a quiet Quarter in terms of legislation matters. She said that draft statutory regulations and guidance had been received on 4th March in relation to McCloud and that a consultation would now take place with LGPS stakeholders who will have until 12th April to respond.

 

The Committee RESOLVED to note the current position regarding the developments that could affect the administration of the fund.

62.

GOVERNANCE UPDATE pdf icon PDF 105 KB

The amended Terms of Reference for the Committee & Investment Panel for approval is attached as Appendix 1. The risk register which has been reviewed and updated is attached as Appendix 2 and 3. The work plan for the Committee is attached as Appendix 4 and the provisional training programme for 2024 is included as Appendix 5.

Additional documents:

Minutes:

The Governance & Risk Advisor introduced the report to the Committee and highlighted the following sections to them.

 

Terms of Reference

One change has been made to reflect decisions regarding the Local Impact Portfolio Framework being delegated to The Head of Pensions in conjunction with the working group.

 

The formal decision will be taken by the Head of

Pensions as an Officer Decision Report via the normal democratic reporting

processes within Bath and North East Somerset Council.

 

The revised TOR will be put forward for approval by Council in June.

 

Risk Register

 

Our most critical risks remain:

 

• NR01 – Ability to deliver admin service to members and employers within agreed standards. The current factors impacting this risk are set out in item 13 – Pension Fund Administration report.

 

• NR06 – the likelihood of a cyber attack remains a high risk due to the recent high profile attacks in the public domain. The Fund is currently implementing further audit actions around staff awareness and education and will shortly carry out a review of its business continuity plan.

 

NR04 – Governance of Fund not in accordance with APF policies. Controls not adequate. Internal Audit continue to assist in checking of internal controls.

 

Committee Workplan & Training Programme

 

Hymans LGPS Online Learning Academy (LOLA) – All members have been contacted and informed whether any modules are outstanding that need to be completed ahead of the 31st March deadline.

 

• A number of workshops have been arranged in conjunction with the Pension Board as follows.

 

·  May/June 2024 - TPR General Code of Practice

·  October - Interim Valuation Results

·  November/December 2024 - Admin Strategy

·  TBA - Pensions Dashboard

 

Councillor Toby Simon commented that he found the Hymans Learning Academy difficult to engage with and asked if any other options had been considered.

 

The Director of One West & APF replied that he would take those comments on board.

 

The Head of Pensions said that it is the intention that the Hymans Learning will be complimented by the workshops that are planned.

 

The Governance & Risk Advisor replied that the Good Governance Review and The Pensions Regulator Code of Practice reference the CIPFA skills and knowledge required for members and Hymans have made sure that their training meets these requirements.

 

She added that they do recommend that members study modules alongside the plan that is set out to coincide with particular Committee agendas so that they can complete the modules in stages.

 

Jackie Peel referred to the Risk Register and asked why the likelihood of ‘Rare’ is not used and whether it could be with regard to NR16 (Cashflow profile is maturing).

 

The Head of Pensions replied that this was a fair observation, the probability of it occurring was very low and they would consider if amendments were needed in the future.

 

The Committee RESOLVED to:

 

(i)  Approve the Terms of Reference.

(ii)  Note the risk register.

(iii)  Note the Committee workplan & training programme.

 

The Chair on behalf of the Committee wished to thank Councillor  ...  view the full minutes text for item 62.