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.

In the initial absence of the Chair of the Committee it was agreed that Councillor Joanna Wright would act as the Chair. She asked the Democratic Services Officer to announce the emergency evacuation procedure.

Councillor Kate Kelliher, Councillor Fi Hance and William Liew had all sent their apologies to the Committee.

Councillor Chris Dando and John Finch were attending the meeting remotely via Teams.

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.

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The Committee RESOLVED that the minutes of the meeting on 28^th June 2024 be confirmed as a correct record and signed by the Chair.

The Committee RESOLVED to note the minutes of the Board meeting held on 4th September 2024.

The report covers periods to March 2024. Significant RI work has been undertaken over the year, building on the positive steps taken last year to enhance the Fund’s net zero climate targets and allocate capital to local impact investments.

The Group Manager for Funding, Investment & Risk introduced the report to the Committee. She thanked the Investments Manager and the Senior Investments Officer for their work on this subject and in compiling the report.

She gave the Committee a presentation. A summary of the main points are set out below and a copy of it will be attached as an online appendix to these minutes.

2023 Responsible Investing Annual Report Recap

•  Significant changes to the Fund’s responsible investment strategy took place in 2023, with a particular focus on climate change - “We commit to be Net Zero on financed emissions by 2045 across the whole Fund.”

•  To help achieve this, we have set clear interim targets:

•  By 2030 the Fund will divest from all developed market equity holdings in high impact sectors that are not achieving net zero or aligning to achieve net zero by 2050.

•  The Fund will reduce the carbon intensity of its listed equity portfolios by 43% by 2025 and 69% by 2030 (verses 2019 baseline).

Responsible Investing Annual Report 2024

The 2024 report:

•  Focuses on key areas where we have seen increased stakeholder interest and faced challenge through the year e.g. investing in conflict affected regions, sustainability in supply chains and local investment

•  Progress on climate targets

•  High profile engagement examples

•  Introduces forward look section to help readership get a sense of what the Fund will be focusing on next year.

Net Zero 20245 - Climate Metrics & Monitoring

•  Listed equity portfolio has delivered a 63% reduction in absolute emissions verses 2019 baseline year.

•  Ahead of interim decarbonisation targets of -43% by 2025 and -69% by 2030.

•  Going forward, reductions will be harder to achieve and will be driven by efficiency gains.

Private Markets – Renewables

•  Total Fund investments in sustainable infrastructure totalled just under £500m.

•  Well diversified portfolio across asset classes and investment funds.

•  Investments span established renewable assets:

-  £165m invested in solar (across GIF, Secured Income, Brunel renewable infrastructure & Wessex gardens)

-  £120m invested in wind

Wendy Weston asked why there currently was a lack of investment in Hydro.

The Group Manager for Funding, Investment & Risk replied that it hasn’t been an area of investment that has been highlighted by any of our managers. She added that it was an area that would likely need substantial capital investment and that a view on this should be sought from Brunel.

The Head of Pensions added that the bulk of the Fund’s renewables investment has been in the UK and Europe, where there were limited new hydro investment opportunities.

Councillor Robert Payne referred to page 52 of the agenda pack and asked if an explanation could be given as to what is covered by the term ‘Other’ in the chart.

The Group Manager for Funding, Investment & Risk replied that this covered areas such as providing energy to data warehouses and greenhouses using waste power, among many different projects. She added that it  ...  view the full minutes text for item 24.

At the beginning of this item Councillor Paul Crossley resumed the role of Chair of the Committee.

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 purpose of this report is to present the Fund’s administration performance for the three months to 30th June 2024 vs key performance indicators (KPI’s).

The Pensions Operations Manager introduced the report to the Committee and the following points were highlighted from it.

McCloud: Moving forward slowly following recent software issues.

Year End: Late data received from some employers. Seek to avoid fines where possible and provide training opportunities.

Restructure update

·  New structure in place with effect from 1st August

·  All Ring-fenced officers got their first choice of roles

·  Recruitment into new structure & new roles – Q3-Q4

·  Movement of work and responsibilities – Q3

Wendy Weston asked if any redundancies were made as a result of the restructure.

The Pensions Operations Manager replied that two positions have been deleted, leading to 1 resignation and 1 notice being given.

The Head of Pensions added that a process was ongoing to see if a possible new role could be established for the person who has been given notice.

Q1 and beyond – what’s been happening

·  Permanent team leaders appointed

·  Training – new and existing officers

·  Continued focus us on backlogs

·  Temporary “retirement team”

SLA monthly performance average July 23 – 18th August 24

• Many more areas turning green
• Team is focussed and working hard

KPI cases completed as % July & August 24

• Overall picture is improving

The Pensions Operation Manager commented that, as suggested by the Chair of the Pension Board, officers will input a cumulative ‘Green’ column to this slide for future reports.

Wendy Weston asked if she was happy with the recruitment that had taken place so far.

The Pensions Operation Manager replied that she was and that the additional officers have enabled resources to be available across all teams.

Service performance – plan v’s actual – August 24

·  14% ahead of our current target

Pensions Increase Update

The Technical & Compliance Advisor highlighted the following areas from the report.

Phase 2

• 39 cases have been manually calculated, with arrears / interest paid in July and August 2024.
• 95 cases are going through the bulk remediation process and will have the arrears / interest paid in September 2024.
• 68 cases have been reviewed and no further remediation is due.
• Total = 202 completed

Phase 2 – What’s in progress

• 11 suspended child pensions have had arrears calculated. Dependants have been written to for current bank details.
• 39 death cases have been reviewed and arrears are being calculated.
• 10 cases are currently in checking
• Total = 60 in progress

Phase 2 – What’s left

• 142 pensions suspended from outset (Member tracing) – These members are being traced and this population will be removed from the project as they are not a pension increase issue. These will be owned and dealt with as part of the normal tracing process.
• 94 GMP cases. These are complex cases and will require manual calculation and resolution.
• 11 Payroll cases – Once payroll queries are resolved, increases will need to be calculated.
• Total = 247 – 142 = 105 to action

The Head of Pensions said that a figure of £1.5m had been assigned as financial provision regarding the Pensions Increase and  ...  view the full minutes text for item 26.

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. 

The Technical & Compliance Advisor introduced this report to the Committee and highlighted the following points.

Pensions Review /Pension Schemes Bill

·  In July 2024, following announcement of a Pension Schemes Bill in the King’s Speech, the Government issued a press release announcing the launch of landmark pensions review. The release included reference as to how to “unlock the investment potential of the £360 billion LGPS” and “tackle the £2 billion that is being spent on fees”. Mandatory pooling and benefits of further consolidation will also be considered. The Terms of Reference for Phase One of the review were released in August and will focus on investment.

·  These updates, and the impact on the Fund, will be considered further by the investment team as the position develops and any recommendations emerge.

McCloud Judgement

·  MHCLG issued a short consultation in June 2024 to relevant stakeholders in relation to the issuing of Annual Benefit Statements in 2023/24 and 2024/25 and the inclusion of information relating to the underpin. The consultation contained draft regulations that would mean administering authorities would not need to include underpin information in the 2023/24 ABS’s in line with the original government response to the 2020 consultation. The consultation also sought views on whether the above change would extend to the 2024/25 ABSs’ too but on a discretionary basis only.

·  MHCLG laid the LGPS (Information) Regulations on 28 August 2024 thereby removing the requirement to include estimated underpin information in the 2023/24 statements (and thereby removing the need to report a breach of law to the Regulator).

·  The ABS statements issued by the team in August 2024 did not include estimated information relating to the underpin. Whilst the regulatory change removes the need to report a breach to TPR, further consideration will be needed in the lead up to the 2025 exercise whether to exclude the underpin on a discretionary basis for some members. Further guidance is now awaited.

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

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 Board and highlighted the following areas from it.

The quarterly review of the risk register has taken place and there have been a few changes made to the risks and their scores as follows:

• Risk NR07 (Employers data) has increased from a possible post-mitigation likelihood to likely to reflect the need for more focus on employer training.

·  Risk NR02 (Regulatory change) has been decreased post-mitigation from likely to a possible likelihood. This reflects the strong mitigants in place with no major changes in regulations on the horizon that we haven’t already planned for.

Other changes that have been made are:

·  Risk NR19 (Pensions Reform Bill) ) is a new risk which has been introduced to recognise the uncertainty around the Government’s potential plans to restructure LGPS funds and pools. There is limited mitigating actions Funds can take but we recognise that the risk could create increased workload and cause possible staff retention issues particularly in the Pools. The reference to pooling has now been removed as an impact from risk NR02 as it is now covered by this new risk.

·  Risk NR18 (Reputational damage) has been removed and it’s impacts now contained within risk NR04 which is now “Significant errors arising from poor controls”.

·  The reference to pooling has now been removed from risk NR02’s impact as it is now covered by the new NR19 risk.

·  The wording for risk NR01 has changed to “Poor service levels below agreed standards”.

·  The wording for risk NR10 has changed to “Failure to earn investment returns as per Funding Strategy”.

The Committee RESOLVED to note the report.

The Governance & Risk Advisor introduced the report to the Board and highlighted the following areas from it.

Hyman’s LGPS Online Learning Academy (LOLA)

The SAB’s Good Governance Review & TPR’s General Code of Practice include additional knowledge and skills requirements for Committee, Pension Board and Officers. Hymans Robertson have been working with the SAB to develop these requirements and have produced an LGPS Online Learning Academy (LOLA).

The full timetable for completion of all modules is contained in Appendix 2.

Workshops

26th September 2024 - TPR General Code of Practice

24th October 2024 - Interim Valuation Results

The Governance & Risk Advisor informed the Committee that they were in the final stages of completing the Committee’s Annual Report to Council. She said that it would be shared with members in October ahead of the Council meeting on 21^st November.

Jackie Peel asked if the 2025 dates for the Investment Panel could be included in the next report.

The Governance & Risk Advisor replied that she would make this addition.

The Committee RESOLVED to:

i) Note the Committee workplan & training programme

ii) Note the service plan monitoring.