Agenda and draft minutes

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

The Democratic Services Officer announced the emergency evacuation procedure.

Councillor Shaun Stephenson-McGall and Councillor Kate Kelliher had sent their apologies to the Committee.

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.

There were none.

There was none.

Elaine Pierpont addressed the Committee a summary of her statement is set out below.

A case made for divesting from suppliers to Israel is their illegal settlements.

·  If illegality is an argument then divest from suppliers to the UK as UK passed laws last month which break the Refugee Convention and International Law

·  If Europeans or others settling without regard to existing residents is an argument then it also applies to New Zealand, Australia, Canada, USA, and many other nations, in which case we would have to divest from their suppliers.

·  With no objective reason applying solely to Israel, such divestment is anti-Semitic.

A case made that Israel is committing genocide against the Palestinians

·  She referred to a Guardian article 3rd December 2023, which pointed out that Israel was dropping leaflets warning Palestinians to move - hardly the act of a nation committing genocide.

·  She referred to news reports that Egypt and Hamas effectively took it in turns to close the Rafah Crossing, thereby trapping Palestinians and raising the casualty rate.

·  This is a continuation of a policy going back decades.  She referred to a video clip she had seen made by a woman who grew up in Gaza in the 1950s, when it was still part of Egypt, in which she stated Arab nations wanted the Palestinians stuck in Palestine to be a problem for Israel.

An argument that it is, in fact, Hamas, who want to exterminate the Jews

·  She referred to the same video clip in which she said children were taught to hate Jews.

·  She referred to a statement by a Hamas leader shortly after the mass rape, murders, and kidnappings of 7th October 2023 in which he applauded the actions of the participants and said Hamas would do it again and again until there were no Jews left alive.  That is a declaration of genocide.

She concluded with a quote from Benjamin Disraeli "God treats the nations as the nations treat the Jews", and a warning that carrying out anti-Semitic divestments risks having the remaining investments perform badly. 

Dr Eldin Fahmy addressed the Committee a summary of his statement is set out below.

‘The Board make many contentious political judgements in their report about the claimed beneficial purposes of the arms trade. These are well beyond their remit. The claim that the arms trade protects us is not substantiated. The implication that thousands of jobs are at risk if APF divests is not credible. Sadly, business at UK arms manufacturers including in Bristol is booming.

The claim that arms investments protect the UK and NATO are contentious, unevidenced, and beyond the Board’s remit.  Whether arms investments protect the welfare of UK residents is a political judgement – and one which should properly be exercised by members.

We are witnessing a global arms race fuelled by arms companies for profit. If APF Board decide not to consult members, they will send a powerful message that they wish to facilitate this trade for political reasons, and  ...  view the full minutes text for item 50.

There were none.

The Committee RESOLVED that the minutes of the meeting on 13^th December 2024 be confirmed as a correct record and signed by the Chair.

The Committee are asked to note the draft minutes of the Pension Board which met on 4^th March 2025.

The Committee RESOLVED to note the draft minutes of the Board meeting held on 4th March 2025.

At its December 2024 meeting the Pension Committee received 8 petitions demanding that APF divest from Aerospace & Defence (A&D) companies which supply Israel and from other companies which operate in Israel and its occupied territories. This paper does not recommend any particular course of action as it is a political and moral decision. Instead, it lays out the context, facts and trade- offs which the Committee should consider in coming to its conclusion.

The Head of Pensions began by thanking the public speakers for delivering a clear articulation of their views and said that the Fund welcomed the scrutiny of this issue.

He said that member consultation will take place following whatever decision the Committee makes today.

He explained that in December 2024 public statements were made to the Committee largely regarding the supply of arms to Israel and that today the Committee debates a report on whether it should exclude all Aerospace & Defence (A&D) companies from the Fund’s investments.

He said that this was a complex issue and that there were many layers to the decision which the Committee needs to consider.

He explained that within the report the Committee were being asked to consider supporting one of two options.

·  Option A: Exclude all Aerospace & Defence (A&D) companies

·  Option B: Continue to apply current policies on responsible investment and exclusions

He said that any decision made by the Committee would be in principle and subject to further legal advice and consultation with Fund members.

He explained that, to divest from A&D companies which supply Israel, the Committee should note that such a decision could set a precedent, potentially forcing the Committee to consider other conflicts in a similar way. He added that the Committee should also note the referred to legal opinions stating that, if a decision were taken on non-financial grounds, there should be no risk of significant financial detriment to the Fund, and scheme members in aggregate should support the decision within a wider context of related issues.

He said that any such decision based on non-financial factors is likely to be controversial among a material body of the scheme’s membership and open to legal challenge.

He informed the Committee that they could decide to set broader and more robust criteria covering conflicts in general, to avoid unique focus on Israel-Palestine. He said that this would require a definition of what constitutes a conflict and assessment of the companies involved. Such an approach may need to cover multiple conflicts, e.g. Israel-Palestine, Kashmir, Sudan-Darfur, Myanmar.

He stated that this approach could be very complex to execute, even if stock selections and exclusions were undertaken by external asset managers with independent expert advice. He said that officers do not recommend investment criteria covering conflicts in general.

He outlined the two options that were before the Committee for their consideration.

Option A: Exclude all Aerospace & Defence (A&D) companies

The Committee could decide to apply an A&D exclusion policy across the whole Fund, which would entail divesting from existing holdings and excluding these stocks in future. This option would substantially reduce risk of exposure to conflict zones and the risk of inconsistent application with potential legal challenge triggered by narrow focus on Israel.

Such a policy could be implemented through new funds which exclude the whole A&D sector. In assessing Option A, the Committee should consider related consequences, as set out in the report.

The Committee  ...  view the full minutes text for item 54.

The purpose of this report is to present the Fund’s administration performance for the period up to and including 31st January 2025 vs key performance indicators (KPI’s).

The Pensions Operations Manager introduced the report to the Board and highlighted the following points.

• Recruitment – final stages in progress. 4.5 vacancies across the department.

• McCloud - During Q1 2025 APF have written to around 27,000 members (18,000 via email) who are all out-of-scope requesting details of any additional public service pension that may put them in scope of the remedy. 800 replies have so far been received.

Councillor Toby Simon referred to the subject of recruitment and asked if the Committee could receive information at its next meeting on how the B&NES incoming personnel policy changes have had any impact on Avon Pension Fund staff.

The Pensions Operations Manager replied that this process remains ongoing and that if concluded in time they would provide information to the next meeting of the Committee.

SLA monthly performance average Jan 2024 to January 2025

• Averaging between 87% - 90%
• Increase in some areas of activity over the Christmas period

She informed the Committee that a Pension Board member had raised that there had been a notable drop in the figures recorded for Retirement (Active) – Quote (46% in Jan 25 down from 86% in Dec 24). She explained that this was due to the number of enquiries that had been received at this time of year as members look to potentially change their circumstances as they enter a New Year and staff being on annual leave and sickness.

KPI cases outstanding under 31 days – Oct 2023 – Feb 2025

·  Cases continuing to go down

KPI’s case by age %

• Attempting to keep below 10%

Jackie Peel referred to slide 8 (KPI’s outstanding over 31 days – Oct 2023 to Feb 2025) and asked if there were a core of cases that are stuck in this category.

The Pensions Operations Manager replied that there were a number of outliers, but that the figures are a true reflection and that more are being resolved generally. She added that they do plan to review the KPIs as part of the Admin Strategy.

Service performance – plan v’s actual – 2nd Feb 2025

• The Fund remains ahead of the plan as of Q3 2024.

Strategic Roadmap & Business Change 2025-26

2024 / 2025 – Highlights and Achievements

• People:
  • Restructure done
  • 16 New starters
  • 24 Promotions within existing team
  • Creation of Business Change function

• Performance:
  • Backlog reduction of KPIs
  • 39 new employers onboarded to the fund
  • Webinar based training introduced for scheme employers

• Process:
  • All employers now on i-Connect
  • Policy approvals for GMP / Unders and overs

• Digitalisation
  • New Employer website live
  • New employer webforms introduced to improve data submissions
  • Bank Account Validation implemented

2025 and beyond, Priorities & Objectives

• People:
  • Fully resourced
  • Fully trained
  • Ongoing development and opportunities

• Performance:
  • Within SLA for all KPIs
  • Meet needs of Pensions Dashboards
  • Compliance with regulatory changes i.e. McCloud

• Process:
  • Effective controls, proportionate to risk
  • All process mapped
  • Clear and concise user guides & training

• Digital Transformation:
  • Automation of key processes
  • Member portal upgrade to unlock the digitalisation of processes  ...  view the full minutes text for item 55.

The purpose of this report is to present to Committee the 3-year plan and budget for the period 2025-28. 

The Head of Pensions introduced the report to the Committee and highlighted the following objectives for the year ahead and the 2025-28 period.

Investments & Funding

·  Proposed changes to the LGPS – ‘Fit for the Future’ - In 4Q24 the government launched its ‘Fit for the Future’ proposals for the LGPS and pools. Following consultation we await the government’s final plans – expected during Q2 2025. The direction of travel leads towards greater authority over investments by the pools which will select all asset managers and provide investment advice for LGPS funds including the Avon Pension Fund.

·  Triennial Valuation This will be struck based on the Fund’s financial position on 31 March 2025 and it sets out the Fund’s valuation and funding plan. It will embed prudence into assumptions for future investment returns, to reduce the risk of the funding level going back below 100% over the medium term.

·  With the funding level currently 105%, the Fund and its employers face a strategic choice between: a) sustaining the current investment strategy with lower employer contributions, vs b) adopting a lower risk investment strategy which could lock in greater certainty of employer contributions near their current level.

·  Local Impact Portfolio - The Fund will continue to deploy capital into its local investments across its three subsectors: renewable infrastructure, affordable housing, small company (SME) funding. Having already deployed £40m, the Fund expects to deploy the full £175m by the end of the 2026-27 financial year.

Governance

·  Good Governance Review (GGR) - The Scheme Advisory Board’s review (now within Fit for the Future proposals) sets out recommendations to improve LGPS governance. Statutory guidance for the recommendations to take legal effect is expected to be published this year. The Fund has already taken action to comply with the draft requirements and during 2025 the Fund will complete this process.

·  The Audit Plan for 2025-26 will focus on the following areas: System Access Control / Payroll – year-end processes / Contributions & Member Information / Business Continuity Preparedness / Transfers Out from Deferred Pensions / Follow ups, risk management & governance.

Business Change

·  Change Programme - The newly formed Business Change team’s key focus for 2025-26 is to work with the Administration and Technical teams to deliver the following projects: Pensions Dashboard connection / McCloud remedy / Pension administration software hosting transition / Member portal upgrade.

We will progress transformation and digitalisation projects where resources allow.

Budget & Cashflow Forecast 2025-28

·  The 2025-26 budget of £34.6m is £3.2m (+10%) above the £31.4m budget of 2024-25.

·  Investment Fees - 2025-26 investment management fees of £24.7m are £2.0m (9%) higher than the £22.7m for 2024-25.

·  Increased investment fees are driven by: a) higher asset values, b) the build out of the Local Impact portfolio and c) additional capital invested in private market portfolios. In aggregate this represents a 4 bps increase on investment management fees to 42 bps, projected to stay at this level for the following 2 years.

·  Cashflow - As Fund membership matures, monitoring cash flow trends becomes increasingly  ...  view the full minutes text for item 56.

The Committee is asked to approve the Fund’s Treasury Management policy each year. It was last approved in March 2024. The policy closely mirrors the Council’s policy set out in the Councils’ Annual Treasury Management Strategy.

The Finance Manager for Pensions & Investments introduced the report to the Committee and highlighted the following points.

·  The proposed Treasury Management policy closely mirrors the policy set out in the Councils’ Treasury Management Strategy. The Fund’s Treasury Management is delegated to the Council’s Treasury Management team. The Pension Fund and Council have a similar attitude to Treasury Management risk. The use of similarly formatted policies reduces the risk of error. Where the policy limits differ, it reflects the different cash flow requirements and the amounts of cash that need to be invested.

·  The Council’s Treasury Management investment policy incorporates ESG criteria where it lends to banks via bank deposits on longer maturity terms. In contrast the Fund requires more liquid cash management which means it utilises money market funds rather than bank deposits meaning that the Council’s use of ESG criteria is less applicable to the Fund. When investing in banks and funds, the Council will prioritise banks that are signatories to the UN Principles for Responsible Banking and funds operated by managers that are signatories to the UN Principles for Responsible Investment, the Net Zero Asset Managers Alliance and/or the UK Stewardship Code.

·  The Treasury Management Policy is in line with the advice of the Council’s Treasury management advisers Arlingclose. All potential counterparties are continuously monitored using the advice of external consultants.

Charles Gerrish asked how long Arlingclose had been advising the Council and when was the contract due to be renewed.

The Director of Financial Services, Assurance & Pensions replied that he believed that it was 5-6 years, and the contract renewal process would take place within the next 12 months.

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

The government has consulted on changes to the pooling arrangements for the LGPS funds. This paper is an update for Committee.

The Group Manager for Funding, Investment & Risk introduced the report to the Committee.

·  The government has consulted on changes to the pooling arrangements for the LGPS funds.

·  The proposed changes broadly cover three areas:

a) Reforming LGPS asset pools

b) Boosting LGPS investment in their localities and regions of the UK

c) Strengthening governance of both LGPS and pools

·  The deadline for LGPS fund responses was 16 January 2025. The pools had to submit their business plan for implementing the proposals by 01 March 2025.

She explained that the pools have all met with the Treasury recently, but that no further information had been provided as part of the Spring Statement by the Chancellor.

She said that she believed that there is the intention to lay the Pensions Bill in Parliament before summer recess.

Jackie Peel asked if any comment had been received regarding the issue that Administering Authorities were being asked to fully delegate implementation of investment strategy to, and take principal investment advice from, the pool.

The Group Manager for Funding, Investment & Risk replied that there had been much push back on the issue of receiving principal investment advice from the pool and that they were awaiting clarity from the Government on this.

The Committee RESOLVED to note the report.

The purpose of this report is to update the Committee with the quarterly review of the risk register.

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

• The quarterly review of the risk register has taken place and no changes have been made to scores for this quarter.

• The Fund has just completed its review and testing of its Business Continuity Plan. As part of this work risks identified in the plan have been checked for consistency against the risk register. As a result of this risk NR06 has been reworded to better reflect the risk of losing IT, which could be due to a cyber attack, but also due to other factors such as loss of power.

• The top three risks remain:

The Committee RESOLVED to note the report.

Attached to this report is the workplan for the Committee at Appendix 1 and the provisional training programme for 2024/25 is included at Appendix 2.

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

• The training plan sets out the timeframes for studying the Hymans training modules as set out in Appendix 2. The plan will be refreshed in April 2025.

• Committee membership – Councillor Kate Kelliher has resigned from the Committee, the Parish & Town Councils are being consulted with regard to allocating another representative.

• Unison and Unite have been approached to assign representatives to the Committee and it is hoped that these will be in place by the next meeting.

Nick Weaver, Chair of the Pension Board stated that the Board were very keen that the training programme is maintained by all members.

The Committee RESOLVED to note the workplan & training programme.

The Committee will receive a verbal update on this matter from the Group Manager for Funding, Investment & Risk.

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 note the update that had been provided.