Agenda and draft minutes

Venue: Council Chamber - Guildhall, Bath. View directions

Contact: Mark Durnford  01225 394458

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:

The Chairman announced that this meeting was being held with only a quorum of the Committee due to ongoing social distancing measures resulting from Covid-19.

 

The Committee had held a briefing session on Friday 25th June for all members.

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:

Councillor Shaun Stephenson-McGall declared an interest in agenda item 13 (Funding & Employer Update) as he is an employee of the University of Bath.

 

Charles Gerrish declared an interest in agenda item 13 (Funding & Employer Update) as Chairman of Aequus Developments Ltd and Trustee responsible for Finance for Youth Connect South West.

4.

TO ANNOUNCE ANY URGENT BUSINESS AGREED BY THE CHAIR

Minutes:

There was none.

5.

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

Minutes:

Alasdair Yule, B&NES UNISON Branch Green Officer, addressed the Committee on behalf of B&NES UNISON Branch, Bristol UNISON Branch, North Somerset UNISON Branch, South Gloucestershire UNISON Branch, Bath Spa University UNISON, Bath University UNISON Branch and the University of the West of England UNISON Branch. A copy of his statement is attached as an online appendix to these minutes, a summary is set out below.

 

We commend the fund for the steps it has taken to account for climate change, including reducing the risk of stranded assets to the pensions of its members, and significant investments the fund is now making in low carbon infrastructure such as renewables.

 

However, we still have questions relating to the fund’s engagement with the fossil fuel industry.

 

Firstly, your response has not disclosed the companies in which the fund invests are engaging in fossil fuel extraction and fossil fuel energy production.

 

  Please provide a list of these companies.

 

Secondly, we have concerns with how the fund is tracking progress traditional fossil fuel companies are making towards decarbonisation.

 

  Please provide details on the tracking process.

 

We understand the fund’s ‘net zero ambition’ only concerns emissions from scope 1 and 2 but does not include scope 3 emissions. It therefore covers direct emissions from owned and controlled sources (scope 1), and indirect emissions from energy consumed but generated elsewhere (scope 2). It does not include indirect emissions from the value support chain, such as investments (scope 3).

 

If this is the case, the fund’s Net Zero Ambition does not account for fossil fuel company investment in exploring and developing new future oil & gas fields.

 

We would like to put the following questions to the fund –

 

• Can the fund confirm which emissions types (scope 1, 2 and 3) are included in its net zero ambition?

 

• If scope 3 type emissions are not included in the fund’s net zero ambition, would the fund consider updating their net zero ambition to include scope 3 emissions, thereby including investment companies are making in future oil and gas?

 

The Head of Business Finance & Pensions said that a written response to the questions and points raised would be supplied in due course.

 

The Chairman thanked Alasdair Yule for his statement on behalf of the Committee.

APF Joint Statement June 2021 pdf icon PDF 179 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: 26th March 2021 pdf icon PDF 215 KB

Minutes:

The minutes were approved as a correct record.

8.

Draft Pension Board Minutes: 27th May 2021 pdf icon PDF 149 KB

The Committee are asked to note the draft minutes of the recent meeting of the Pension Board.

Minutes:

The Committee noted the draft minutes of the Pension Board from their meeting that took place on May 27th 2021.

9.

Fund Governance Framework pdf icon PDF 193 KB

This report is to remind members of the roles and responsibilities of members, advisors and officers of the Avon Pension Fund and the governance framework for the Fund as a whole.

 

Additional documents:

Minutes:

The Governance & Risk Advisor introduced this item to the Committee. She explained that the report is to remind members of the roles and responsibilities of members, advisors and officers of the Avon Pension Fund and the governance framework for the Fund as a whole.

 

She added that the report also sets out a summary of the Scheme Advisory Board’s (SAB) Good Governance Review and The Pension Regulator’s (TPR) Single Code of Practice.

 

Charles Gerrish asked when members would be likely to receive training in relation to the outcomes of the Good Governance Review.

 

The Governance & Risk Advisor replied that discussions with Hymans were ongoing and that she expected training to be available within the next six months.

 

The Committee unanimously RESOLVED to:

 

i)  Note the roles and responsibilities of the members, advisors and officers

ii)  Approve the Terms of Reference of the Committee and Investment Panel

iii)  Approve the Scheme of Delegation

iv)  Approve the Governance Compliance Statement

v)  Agree the membership of the Investment Panel (Councillor Shaun Stephenson-McGall (Chair), Councillor Paul Crossley, Councillor Chris Dando, John Finch (Independent Member), Pauline Gordon (Independent Member) and Shirley Marsh-Hughes (Independent Member)

vi)  Agree independent member representation of the Brunel Working Group (Pauline Gordon)

vii    Agree substitute of Brunel Oversight Board (Councillor Shaun Stephenson-McGall)

viii)  Agree the member(s) to represent the fund on the Local Authority  Pension Fund Forum (Councillor Shaun Stephenson-McGall, Councillor Steve Pearce and Richard Orton)

xi)  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.

Brunel Update pdf icon PDF 124 KB

This report updates the Committee about Brunel and the wider pool covering delivery of service, performance, and risk management aspects of the pool.

 

Additional documents:

Minutes:

The Head of Business Finance & Pensions introduced this item to the Committee.

 

He explained that the last transition of our liquid/listed assets, the Multi Asset Credit Portfolio, is nearing completion and as a result, we will no longer report on the transition plan.

 

He said that the next stage of the governance review was now underway with proposed changes being considered by Client Group and legal officers.

 

The Committee unanimously RESOLVED to note the information set out in the report and appendices.

11.

Annual Review of Investment Strategy & Performance pdf icon PDF 218 KB

This paper reports on the investment performance of the Fund and seeks to update the Committee on routine strategic aspects of the Fund’s investments and funding level; and policy and operational aspects of the Fund.

Additional documents:

Minutes:

The Investments Manager introduced this item to the Committee. He highlighted that the Fund published its fifth annual carbon metrics report which showed, among other things, that the Fund’s listed equity portfolio was 30% more carbon efficient than the benchmark (on a Weighted Average Carbon Intensity basis).

 

He added that as an advocate for improved transparency in climate related disclosures the Fund committed to becoming an early adopter of the recommendations put forward by the Taskforce on Climate Related Financial Disclosures (TCFD) and that  the Fund’s first report will be published later in the year and will cover the 12 months to 31 March 2021. He said that the TCFD was supported by Brunel.

 

He referenced the following comments made at the Committee briefing.

 

  Due to the amount of capital allocated to renewable infrastructure opportunities, investors could potentially expect to see slightly lower returns from this asset class in the future relative to historical returns, noting however that the pipeline of opportunities under consideration in the Brunel portfolio remains strong.

 

  Plastics – A priority for the Fund. They, alongside 26 international investors, joined a collaborative engagement led by First Sentier Investment, with support from the Marine Conservation Society aimed at engaging 18 of the largest global manufacturers of washing machines to highlight the risk of micro plastic leakage and to champion technological advances to tackle the issue.

 

  China:

o  Valuation reliability

o  Social / Governance issues

 

The Committee unanimously RESOLVED to note the information set out in the report and appendices.

12.

Investment Panel Activity pdf icon PDF 110 KB

The Investment Panel is responsible for addressing investment issues including the investment management arrangements and the performance of the investment managers. The Panel has delegated responsibilities from the Committee and may also make recommendations to Committee. This report informs Committee of decisions made by the Panel and any recommendations. 

Additional documents:

Minutes:

The Investments Manager introduced this item to the Committee. He informed them that the Panel had received a presentation from David Vickers, Chief Investment Officer, Brunel.

 

He highlighted that the Panel were informed of the plan to manage down the

legacy assets, which were largely illiquid in nature.

 

The Committee RESOLVED to note:

 

i)  The information summarised in paragraph 4.1 and 4.2

ii)  The draft minutes of the Investment Panel meeting on 28 May at

Appendix 1.

13.

Employer Covenant update pdf icon PDF 172 KB

This report seeks to provide the Committee with an overview of the covenant assessment framework developed by the Fund to monitor employer risk. This framework helps direct resources where closer monitoring and possible intervention is required and enables the Fund to identify any emerging risks early so that appropriate actions can be taken to prevent sub optimal outcomes for the Fund and employer.

 

Additional documents:

Minutes:

The Head of Business Finance & Pensions introduced this report to the Committee. He stated that with over 400 employers in the Fund resources are focused on employers who pose a risk to the current funding plans or a risk of default to the Fund.

 

He referenced the following comments made at the Committee briefing.

 

·  No increase to funding levels for Academies – impact that this will have on resources for education

 

Councillor Chris Dando asked when members would be able to see the results of the interim valuation of the whole fund level referred to in section 3.1 of the report.

 

The Head of Business Finance & Pensions replied that this was likely to be towards the end of 2021.

 

The Committee unanimously RESOLVED to note the report.

 

14.

Update on Legislation pdf icon PDF 90 KB

The purpose of this report is to update the Pensions 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 Manager introduced this report to the Committee and highlighted the following sections from within it.

 

HMT Public Sector Exit Payments Cap / MHCLG Consultation on Further Reform to Exit Payments

 

On 12 February 2021, HMT published directions disapplying the cap with immediate effect with the regulations revoking the cap coming into force on 19 March 2021. HMT expects employers to pay the additional sums that would have been paid, had the exit cap not applied in respect of employees who left between 4 November 2020 and 11 February 2021.

 

Despite this revocation, the Government remains committed to implementing reforms to public sector exits which will have the aim of ending excessive payments and bringing practice more in line with the private sector and we understand an exit cap may be in force later in 2021.

 

McCloud and Sargeant Court Case

 

Changes to the LGPS were consulted on separately by MHCLG and, on 13 May 2021, a Written Ministerial Statement outlining some key remedy policies was issued and a full consultation response and draft regulations are expected to follow later in the year.

 

Scheme Pays for Annual Allowance (AA)

 

The AA is the amount by which a member’s pension benefits may increase in a year without attracting a tax charge. If the value of their pension benefits grow by more than the AA, the excess will be taxed as income.

 

Scheme Pays is the mechanism by which a member can ask the Fund to pay the tax charge to HMRC in exchange for a reduction to their future pension benefits. Each Local Government Pension Fund has the discretion to offer Voluntary Scheme Pays (VSP) to its members. The Committee previously agreed a policy in relation to the use of VSP where a member has a tax charge as a result of tapering.

 

Charles Gerrish asked if consideration could be given to updating the chronological format of the report.

 

The Pensions Manager replied that officers would review the content of the report.

 

Charles Gerrish asked what would happen if Scheme Pays has been allocated to a member who then subsequently dies.

 

The Pensions Manager replied that with the decision having already been made the benefit would remain in place.

 

Councillor Bruce Shearn asked for an update on staff / working from home.

 

The Pensions Manager replied that the redevelopment of Keynsham Civic Centre (KCC) was ongoing and therefore limited numbers of officers were able to be in the office. He added some group spaces were now becoming available to book within KCC and the Guildhall.

 

He added that some members of the team have found working at home easier than others.

 

The Committee unanimously RESOLVED to:

 

i)  Note the current position regarding the developments that could affect the administration of the fund.

ii)  Agree the policy regarding application of Scheme Pays for Annual Allowance.

 

15.

Pension Fund Administration - Performance Indicators and Risk Register pdf icon PDF 116 KB

The purpose of this report is to inform the Pensions Committee of the performance for Fund Administration for the period up to 31st March 2021 and actions undertaken following the Coronavirus outbreak and UK lockdown on 23rd March 2020.

Additional documents:

Minutes:

The Pensions Manager introduced this report to the Committee. He said that there has been an increase in telephone calls and emails to the administration team which has led to a small downturn in overall performance.

 

He added that there are some concerns amongst staff about the continuation of working from home relating to mental health and childcare.

 

Referring to section 8.4 of the report Councillor Shaun Stephenson-McGall asked if any of the employers were consistently of notable concern.

 

The Pensions Manager replied that there were not and said that employer relations teams were in place to monitor this.

 

The Committee unanimously RESOLVED to note the Fund and Employer performance for the three months to 31st March 2021.

 

 

16.

Budget & Cash flow Monitoring pdf icon PDF 75 KB

The purpose of this report is to inform the Committee of administration and management expenditure incurred against budget for the year to 31 March 2021.

Additional documents:

Minutes:

The Head of Business Finance & Pensions introduced this report to the Committee.

 

The Committee unanimously RESOLVED to note:

 

i)  The administration and management expenditure incurred for the year to 31 March 2021.

ii)  The Cash Flow report for the year to 31 March 2021.  

17.

Workplans pdf icon PDF 111 KB

Attached to this report is the work plan for the Committee and a separate one for the Investment Panel which set out provisional agendas for forthcoming meetings.   

Additional documents:

Minutes:

The Governance & Risk Advisor introduced this report to the Committee. She said that the purpose of the work plans is to provide members with an indication of their future workload and the associated timetable.

 

Councillor Shaun Stephenson-McGall asked if the Equity Review, scheduled to be undertaken by the Investment Panel, should be opened up to all members of the Committee.

 

The Head of Business Finance & Pensions replied that he could discuss the matter further outside of this meeting.

 

The Committee unanimously RESOLVED to note the Committee & Investment Panel work plans and training programme for the relevant period.