Agenda and minutes

The Democratic Services Officer read out the procedure.

Apologies were received from Gaynor Fisher and Mark King.

Tom Renhard said that he had recently been appointed a Director of Freedom of Mind CIC. The Chair said that this would not be a relevant interest for this meeting, but that he should add this appointment to his Register of Interests entry.

There was none.

There were none.

A Member asked about the impact of the vote to leave the EU on the Avon Pension Fund.

The Head of Business, Finance and Pensions replied that conversations were taking place with the Fund’s investment managers. There were as yet no plans for the UK to leave the EU, so institutional investors were not reacting with major decisions at the moment. Currency issues were the most significant for the Fund at present. A currency hedge denominated in dollars had been place some time ago; this was not too helpful at present, but things were not as bad as they could be. It is difficult to put the right kind of currency hedge in place at the right time. Property portfolios were causing some concern in the short term. However, it should be remembered that the Fund is a long-term investor with a long-term strategy, which it will be reviewing in the near future.

These were approved as a correct record and signed by the Chair.

A Member asked for an update on insurance indemnity for Board Members. The Head of Business, Finance and Pensions said the Council’s insurers had given written assurance that Board Members were covered by the Council’s existing indemnity policies.

If the Board wishes to discuss the exempt minutes, it should resolve to go into exempt session.

A Member asked about the Committee’s review of responsible investment. The Head of Business, Finance and Pensions replied that because of the amount of officers’ and members’ that had been taken up by pooling, consideration was being given to a special meeting in December dedicated to the Responsible Investment Policy.

RESOLVED that the public interest would be better served by not disclosing information about the Board’s discussion of the Exempt Minutes of these two meetings of the Avon Pension Fund Committee, and that therefore the public should be excluded from the meeting for this discussion and its reporting should be prevented in accordance with the provisions of section 100(A)(4) of the Local Government Act 1972 as amended.

When the meeting returned to open session, it was RESOLVED to note the minutes of the Avon Pension Fund Committee of the 24th and 30^th June 2016.

If the Board wishes to discuss the exempt minutes, it should resolve to go into exempt session.

RESOLVED to note the minutes of the meeting of the Avon Pension Fund Committee Investment Panel for 25^th May 2016.

The Head of Business, Finance and Pensions presented this item and commented on the list of consultations, surveys and issues contained in Appendix 1 to the report.

He said that the Government had promised legislation to implement the Public Sector Exit Payments Cap by October, but he doubted about whether they could achieve this.

The Fund would respond to the Best value and Fair Deal consultation. The proposals were good news for employees, who would no longer have to leave the Fund when their jobs were outsourced. At the same time it would be more difficult for local authorities to make outsourcing contracts attractive to potential bidders.

There was an ongoing consultation on the insolvency regime for the further education and sixth form sector. The Fund had been speaking to all colleges about this, and encouraging them to respond to the consultation. Colleges, unlike Academies, do not have guarantees and represent a risk to the Fund. If colleges did have guarantees, their contribution rates could be more affordable.

GAD had consulted about information needed to manage the cost cap regulation. The Fund had responded that this was not deliverable.

A response had been received from DfE about failed Academies. This stated that DfE expected to pick up the first tranche of liabilities. The Chair noted that the National Scheme Advisory Board had issued a tender for a review of the funding and status of Academies; there is a suggestion that all new Academies should be allocated to a single LGPS fund. The Head of Business, Finance and Pensions said that the future of Academies needs to be debated; individual Academies differ in their liabilities. Responding to a Member he clarified that it was only the non-teaching staff in Academies who could be members of the LGPS.

Pooling

The Chair reminded Members that the Board did not have a specific remit in relation to pooling yet, because the revised Investment Regulations had not been issued and there were no TPR requirements relating to it. It was, however, covered by the Board’s general duty to monitor the Fund’s processes and procedures. A Member noted that pooling was included in the Risk Register.

The Head of Business, Finance and Pensions said that the Government’s response to the Project Brunel proposal was awaited. The proposal to establish an investment company would have to be approved by each of the Councils in Project Brunel and by their pensions committees. It was expected that the APF Committee would be invited to approve business case before the the proposal before it was submitted to B&NES Council on 17^th November. It was hoped that sign-off by all the Councils would be achieved by the end of the year before annual budget setting and county elections. Developments after that would depend on the Government issuing the revised Investment Regulations.

A Member wondered whether transition costs would be likely to pressure on contribution rates, and whether the Committee and Panel should be alerted to this risk. The Head  ...  view the full minutes text for item 79.

The Communications and Public Relations Manager gave a presentation. A copy of his PowerPoint slides is attached.

The Chair said that the Fund was making good progress with communications and that he thought the Board should review APF’s communication strategy once a year.

RESOLVED to note the Avon Pension Fund’s communication strategy.

The Acting Pensions Manager presented the report. He said that he hoped the new template used in Appendix 1 for the top ten risks made things easier to follow. It indicated the risk status as red, amber or green together with previous risk levels for each item. A new item had been added for risks arising from the Brunel Pension Partnership. The Head of Audit West said that giving the risk level for the three previous quarters would enable Members to monitor trends. The new presentation was also more focused on actions to minimise the risks.

A Member asked whether Brexit should be listed as a risk. The Head of Business, Finance and Pensions referred back to his earlier comments about the impact of Brexit and about the Fund being a long-term investor, and said that he thought it inappropriate to list it as separate risk as a knee-jerk reaction. The Chair said that he felt that the impact of Brexit was something for the Committee and Panel to keep under review as part of their general role in monitoring the Fund’s investments.

The Chair suggested that the creation of Brunel Pension Partnership would give rise to the risk of losing senior staff to the investment company and that thought needed to be given to recruitment and retention of staff in the Fund. The Head of Business, Finance and Pensions said that it was difficult to judge the impact at this stage. The company would be a new entity, and as it developed it would become part of a competitive market with other organisations created by pooling. The Chair suggested that vacancies in the Fund arising in the short term could be filled on short-term contract. The Head of Business, Finance and Pensions said that if recruitment problems arose in the future, it might be necessary to review the terms and conditions of APF staff.

RESOLVED to note the report.

The Acting Pensions Manager introduced this item. He said that the reports contained in the appendices were being reviewed as part of the Task Workflow Project; it was expected that new and updated versions would be presented to the APF Committee in the Autumn.

He commented on the report and the appendices.

The Chair asked whether outstanding issues could be categorised as to whether delays were due to the employee, the employer or the Fund. The Acting Pensions Manager said that reports were being reviewed and he would consider how far this was possible.

A Member asked why some targets in the key performance indicators in Appendix 3A were set at 75%; a cynic might suggest that this indicated a willingness to accept a 25% failure rate. The Head of Business, Finance and Pensions said that the really low scores, e.g. 59% for transfers in, related to tasks where there was a multi-stage process, and delays occurred when information was awaited from the scheme member or from GAD, for example. The reduced control that the Fund’s officers had over the speed of the process was reflected in a lower performance target.

The Chair asked whether the actuaries were happy with the information being supplied for the valuation. The Acting Pensions Manager said that they had sent a list of queries, which had been received the previous day, but were generally happy with the data. The queries received were minimal and related mainly to the smaller employers.

RESOLVED to note the report and Performance Indicators and Customer Satisfaction feedback for 3 months to 30 June 2016 and progress on the Data Improvement Plan.

The Head of Audit West presented the report. He reminded Members that there was a statutory requirement for the Board to publish an annual report. He invited them to comment on the structure and content of the draft report.

A Member queried the phrase “securing compliance” (paragraph 6, agenda page 86). He suggested that the Board could only monitor and advise and that it could not actually “secure” compliance. He also felt that the description of the Board as “sitting alongside” the Committee (paragraph 9, agenda page 87) was misleading. He noted that table giving details of Members’ attendance at Board meetings on page 87 did not include the employee representatives and suggested that it should also include Members’ dates of appointment. The Chair agreed that “secure compliance”, unless it was the wording of the statute, should be replace by “monitor” and “advise” and that “sitting alongside” should be replace by “works with”.

The Head of Business, Finance and Pensions referred to the third paragraph on page 90:

“In summary compliance was high and there were only a small number of recommended actions to take in relation to the Fund and meeting best practice…”

and said that this could be understood to mean that the Fund was not compliant, when in fact it was intended to state that the Board was compliant with its own codes. The Chair said that it should state that the Board was compliant with its code and guidance and that when the Board had assessed the Fund’s compliance it had recommended some actions to enable the Fund to achieve best practice. The Head of Business, Finance and Pensions noted that the Breaches Policy, which the Board had reviewed before it was submitted to the APF Committee, was not mentioned. The Head of Audit West explained that the list of items page 90 was taken directly from TPR’s benchmarking exercise. The Fund was compliant on all of these, but the Board had identified a few actions that could be taken for the Fund to achieve best practice. The Chair said that the wording would be reviewed and that the Annual Report should state that there had been no breaches to report to TPR.

A Member asked whether it was planned to issue the report as plain monochrome text or whether it would be in colour with illustrations. The Chair said that the plan was to issue it as a plan PDF file. The Head of Audit West said that he assumed that people would want to read the Annual Report because they were interested in the contents, though he would be happy to take advice about design from the Communications team.

RESOLVED to approve the Annual Report subject to comments made.

The Head of Audit West presented the report. He drew attention to the high level summary of skills and knowledge on page 103, in which he had amalgamated Members’ self-assessments to produce an average rating for the Board in each of the eight knowledge areas. He had then had looked at the different types of training that might be used. Pages 104 and 105 listed Members’ specific requests for additional briefing.

Two Members said that that they would prefer interactive training, e.g. at seiminars, than just receving briefing papers.

The Chair suggested Members could be invited to training events arranged for the Committee and the Investment Panel. He advised Members to keep an eye on training offered by the LGA and TPR and to apply to go to relevant events. He also advised Members to keep their training logs up to date.

RESOLVED to note the report and high-level plan and comments made by Members.

The Head of Audit West presented the report.

RESOLVED to note the report and endorse the work plan outlined in Appendix A.

The next meeting is scheduled for 2^nd November 2016 at 2 p.m.

RESOLVED to note that the next meeting is scheduled to be held at 2 p.m. on Wednesday, 2^nd November 2016 in Keynsham.