Agenda and draft minutes

Venue: Virtual Meeting - Zoom - Public Access via YouTube https://www.youtube.com/bathnescouncil. View directions

Contact: Mark Durnford  01225 394458

Items
No. Item

86.

WELCOME & INTRODUCTIONS

Minutes:

The Chairman welcomed everyone to the meeting.

87.

APOLOGIES FOR ABSENCE AND SUBSTITUTIONS

Minutes:

John Goddard and Mike Rumph had both sent their apologies to the Committee.

88.

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 Paul May declared an other interest in agenda item 11 ‘Pension Fund Administration’ as he is on the Board of Avon Fire Authority.

89.

TO ANNOUNCE ANY URGENT BUSINESS AGREED BY THE CHAIR

Minutes:

There was none.

90.

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

Minutes:

There were none.

91.

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.

92.

MINUTES: 10TH DECEMBER 2021 (INFORMAL) AND 17TH DECEMBER 2021 pdf icon PDF 709 KB

Additional documents:

Minutes:

The members of the Committee were minded to advise that the minutes be approved as a correct record.

93.

2022 - 25 SERVICE PLAN AND BUDGET pdf icon PDF 230 KB

The purpose of this report is to present to Committee the 3 Year Service Plan and Budget for the period 1 April 2022 to 31 March 2025. 

 

Additional documents:

Minutes:

The Service Director for Financial Control and Pensions introduced the report to the Committee. He said that a more difficult valuation process was expected this year with respect to the ongoing conflict between Russia and Ukraine.

 

He highlighted the following points from the Service Plan.

 

He explained that the operating circumstances have been challenging over the past two years during which, productivity and particularly the management of new developments and projects have remained challenged in respect of delivery times.

 

He stated that a review will take place of the wider operating model and structure to include member and employer services and separate support and development function.

 

He informed the Committee that they will develop a new digital service platform providing Customer services and digital records management.

 

He said that they will be implementing an action plan following a review of TPR’s Single Code of Practice, particularly in regard to cyber security.

 

He stated that the direction of travel of the Service Plan has been consistent for a number of years.

 

Charles Gerrish asked for confirmation that new offices will be available for the Fund at the River Suite, Keynsham.

 

The Service Director for Financial Control and Pensions replied that an arrangement is in place with the Council and that hopefully this will come to fruition by end of the year.

 

Shirley Marsh-Hughes said that she supported the proposals, but asked does the Plan go far enough.

 

The Service Director for Financial Control and Pensions replied that it was a question of what work the Fund can manage and to focus on our delivery. He added that investment in technology was also required across the Fund.

 

Richard Orton asked when the Committee will be able to meet in person.

 

The Service Director for Financial Control and Pensions replied that officers have tried to arrange in person meetings and have come close, but infection rates for Covid-19 are currently high. He added that this being the case it was felt best to revert to a meeting online as there are no hybrid facilities available at present.

 

The Chairman added that the Committee has taken its lead from Council and Cabinet who had also made the same decision this month to meet virtually. He said that he hoped that a hybrid solution would be in place soon.

 

Shirley Marsh-Hughes asked if the Pension Board has a role in this process to approve the Service Plan.

 

The Service Director for Financial Control and Pensions replied that elements of the Plan are discussed with them, but it was just a matter for the Committee to approve it.

 

Richard Orton referred to page 10 of the Service Plan where it states that ‘As at 31/12/21, Brunel manage £4.9 billion or 83% of the Fund’s assets’ and asked if that was to be the maximum and which assets do the Fund directly manage.

 

He also asked what the net savings figure was projected for in 2024 / 2025.

 

The Group Manager for Funding, Investment & Risk replied that  ...  view the full minutes text for item 93.

94.

TREASURY MANAGEMENT POLICY pdf icon PDF 171 KB

The Committee is asked to approve the Fund’s Treasury Management policy each year. It was last approved in March 2021. The policy closely mirrors the Council’s policy set out in the Councils’ Annual Treasury Management Strategy.

 

Additional documents:

Minutes:

The Finance & Systems Manager (Pensions) introduced this report. He explained that the Committee is asked to approve the Fund’s Treasury Management policy each year.

 

He stated that the policy closely mirrors the Council’s policy set out in the Councils’ Annual Treasury Management Strategy and that the policy proposed for 2022/23, set out in Appendix 1, is the same as the policy approved in March 2021.

 

Councillor John Cato referred to Appendix 2 (Proposed Counterparty List) and asked if there were plans to still utilise the ones in Singapore / China with lower fixed ratings.

 

The Finance & Systems Manager (Pensions) replied that Appendix 2 was included in the report for illustrative purposes for information and that the one listed in Appendix 1 are who we place our money with.

 

William Liew asked if money for the Avon Pension Fund is held in a separate bank account to that of the Council.

 

The Finance & Systems Manager (Pensions) replied yes.

 

Pauline Gordon asked if any elements of the policy have changed over time as it always appears quite similar.

 

The Finance & Systems Manager (Pensions) replied that some banks do come in and out of the policy. He said that one of the major changes is that a new MMF deposit facility, Handelsbanken has now been added.

 

The members of the Committee were minded to advise that the following resolution should be made on Monday 28th March.

 

That the Committee approves the Treasury Management Policy set out in Appendix 1.

95.

Update on Legislation pdf icon PDF 252 KB

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

Minutes:

The Pensions Manager introduced this report to the Board and highlighted the following areas.

 

McCloud Judgement

 

  • The Public Sector Pensions and Judicial Offices Bill has received Royal Assent.
  • The first two sets of regulations are expected before the Summer recess.
  • DLUHC plans to consult on a second set of regulations in Autumn re: Taxation and Compensation
  • Delay expected in implementation date – possibly now 1st October 2023.
  • Employer data collection ongoing.
  • When the detail of the remedy is announced administration work to implement remedy could be challenging.

 

Ukraine

 

The Fund has undertaken a series of overseas indicator reports to ascertain that there aren’t any pensioner or dependant members with accounts either in Russia or the Ukraine.

 

Shirley Marsh-Hughes asked if the Fund has been able to implement the Occupational and Personal Pension Schemes (Conditions for Transfers) Regulations and how onerous have they been.

 

The Pensions Manager replied that they have reviewed their Transfer Out process to introduce the new levels and have begun preparing for changes expected to emerge from the “Stronger Nudge to Pensions Guidance” consultation. He added that it is more onerous as more steps are now involved in the process and it therefore takes longer to go through.

 

He added that if cases do get red flagged they might not be able to proceed with them which then could lead to complaints.

 

Richard Orton asked when Funds are expected to implement the McCloud judgement.

 

The Pensions Manager replied that it was due to be from 1st April 2023, but that the LGA believes that this will be delayed until October 2023.

 

The members of the Committee were minded to advise that the following resolution should be made on Monday 28th March.

 

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

96.

PENSION FUND ADMINISTRATION pdf icon PDF 456 KB

The purpose of this report is to present the Fund’s performance for the three months to 31st December 2021 against its key performance indicators (KPI’s) in relation to the administration of pension benefits.

Additional documents:

Minutes:

The Pensions Manager introduced this report to the Board and highlighted the following areas.

 

Workload

 

Generally, the Fund continues to operate below its desired target of >90% for most case types, although the case-by-case breakdown evidences an overall improvement in critical processes for retirements and death cases from the previous quarter. Generally, however, KPI benchmarking performance has declined over the past year.

 

A contributory factor relating to underperformance can be associated with the inclusion of the current backlog project and the processing of historic workload cases impacting KPI’s. As outlined in the previous report, a short-term project is in progress to complete the build-up of processing work identified at the end of September 2021. The project was set to run from October to March with the aim being to clear down all ‘backlog’ cases over a six-month period whilst continuing to maintain all new business as usual tasks in time.

 

Currently there is a projected six to eight week overrun on the original completion date which has been attributed to; an increase in staff officer resource transitioning from the project to support business as usual and the complexity of a number of backlog cases remaining. The intention is to now complete this work by the end of May.

 

Have seen an upturn in performance since staff have been able to return to the office.

 

The Fund continues to support the Avon Fire Authority in providing affected members with retirement options as identified under the immediate detriment and framework (IDF) agreement in lieu of the McCloud remedy.

 

The Pensions Manager explained that he and the Service Director for Financial Control and Pensions had recently met with the Avon Fire Authority to explain that due to the challenging nature of the work the Fund would not be seeking to administer on their behalf in the coming years and that support would cease sometime in 2023 / 24.

 

Richard Orton referred to paragraph 9.7 of the report and asked if it were correct that as part of the Levelling Up agenda, further regulations were expected to direct investments of LGPS Funds. He added that previously Unions have challenged similar proposed regulations.

 

The Service Director for Financial Control and Pensions replied that earlier this year when the Levelling Up papers were issued by the Government it was identified that 5% of LGPS funds should be invested locally. He added that the Scheme Advisory Board has since advised that can be attributed to UK investment.

 

He said that they were still awaiting guidance, but there could be an expectation that we are asked to not make investment decisions that conflict with the UK’s foreign and defence policy.

 

Shirley Marsh-Hughes asked if there had been a rise in complaints from members due to some areas of work taking longer than usual.

 

The Pensions Manager replied that there has been a slight rise in the number of complaints, but said that this was due to the sheer volume of work at the present time.

 

Councillor John Cato  ...  view the full minutes text for item 96.

97.

WORK PLANS pdf icon PDF 154 KB

Attached to this report is the work plan for the Committee (Appendix 1) and a separate one for the Investment Panel (Appendix 2) which set out provisional agendas for forthcoming meetings.  The dates for future Committee and Panel meetings are also included.

 

Additional documents:

Minutes:

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

 

Attached to this report is the work plan for the Committee (Appendix 1) and a separate one for the Investment Panel (Appendix 2) which sets out provisional agendas for forthcoming meetings. The dates for future Committee and Panel meetings are also included.

 

The provisional training programme for 2022/23 is included at Appendix 3.

 

Modern Gov Library

 

From March 2022 the following monitoring reports will be available on the Modern Gov library only:

 

i) Regulatory Update

ii) Investment Performance Monitoring (appendices and supporting detail)

iii) Budget Monitoring

 

Hymans LGPS Online Learning Academy (LOLA)

 

In order to meet the additional knowledge and skills requirements of SAB’s Good Governance Review the Fund has introduced Hymans LGPS Online Learning Academy (LOLA).

 

The training is split into a number of modules covering the revamped CIPFA Knowledge & Skills Framework and TPR’s Code of Practice 14. The schedule for completion of the modules is contained within the training programme (Appendix 3).

 

The members of the Committee were minded to advise that the following resolution should be made on Monday 28th March.

 

Note the Committee & Investment Panel workplans and training programme

for the relevant period.

98.

Brunel Pension Partnership - Update pdf icon PDF 191 KB

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

 

Additional documents:

Minutes:

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

 

The Service Director for Financial Control and Pensions updated the Committee following the recent Brunel Oversight Board (BOB) meeting and AGM that was held on 17th March.

 

He informed them that the Chair and Non-Executive Directors had all been reappointed. He added that they have taken the decision to appoint Pannell Kerr Forster as their external auditors.

 

He said that the main topic for the BOB was a Strategic Review which the Fund has been pushing for in terms of their next steps following the conclusion of the transition work. He stated that this will be a thorough piece of work that will be carried out over the next few months and would involve engaging with stakeholders, including the Committee and shareholders, via workshops and questionnaires to begin to map out a clear path for how their services need to develop.

 

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 members of the Committee were minded to advise that the following resolutions should be made on Monday 28th March.

 

The Committee notes the information set out in the report and appendices.

99.

INVESTMENT PERFORMANCE AND STRATEGY MONITORING (for periods ending 31 December 2021) pdf icon PDF 361 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 the report to the Committee. He said that there were no material concerns with the portfolio to report at this time from either a returns or operational perspective.

 

He informed the Committee that the Fund’s current exposure to assets connected to Russia / Ukraine amounted to £135,000 (0.002% of Fund assets). He added that all remaining direct Russian assets have been marked to zero and have live sell orders in place.

 

He explained that following the recent Responsible Investment (RI) Member’s Survey they would be using the data to input into the Brunel Climate Stocktake. He said that responses to the survey were largely supportive of the current approach to RI, the integration of ESG into our investment decision making, the long term financial risk posed by climate change and the importance of engaging with companies and policy makers.

 

Nick Page, Mercer addressed the Committee and highlighted some points from within Appendix 2.

 

  • Global supply chains remained stretched and a new Covid-19 variant was discovered mid-quarter.
  • Soaring inflation also forced some major banks to accelerate their exit strategies from ultra-loose monetary policies.
  • In spite of this, risk assets fared reasonably well with a few exceptions.
  • The funding level is estimated to have improved over Q4 to c.102%, as asset growth outweighed the rise in the value of liabilities.
  • Mid-March funding level expected to fall by around 4-5%.
  • Asset Performance – Equity Markets are down, more so in Europe than the US.
  • During the quarter, the Fund transferred most holdings in the Low Carbon Equity fund to the Brunel passive Paris-Aligned Equity fund.
  • It also terminated its holdings in Emerging Markets Equity, for which strategic allocation was distributed between High Alpha and Sustainable Equity mandates (which still contain emerging markets exposure).
  • Risk Management – Performing in line with expectations.

 

The members of the Committee were minded to advise that the following resolutions should be made on Monday 28th March.

 

The Committee notes the information set out in the report and appendices.