Agenda and draft minutes

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

The Chair welcomed everyone to the meeting and asked the Democratic Services Officer to read out the Emergency Evacuation Procedure.

The Democratic Services Officer informed the Board that apologies had been received from Tony Whitlock (Employer Representative) and Steve Harman (Employer Representative).

There were none.

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The Board approved the minutes of the previous meeting and they were duly signed by the Chair.

The purpose of this report is to present the Fund’s administration performance for the three months to 31st December 2023 vs key performance indicators (KPI’s).

The Pensions Operations Manager introduced the report and highlighted the following areas from within it.

Pension Increases:

The rectification project has been split into 4 phases with phase 1 due to complete in March 2024 which will rectify c750 members. The fund is continuing to brief the Board and Committee sub-group with key milestones.

She explained that from the original 1,500 suspected cases, the figure had now likely reduced to around 1,200. She added that an actuarial consultant was being used to calculate the exact amounts owed to members (arrears & interest), with the sub-group being consulted for guidance on key decisions.

She stated that, for the c.750 members, payment records were now accurate within the live system and that Aon were supporting officers working on an ‘Overs & Under Policy’.

She said that the Fund is confident that phase 1 would work and rectify the identified cases. She added that they were aware of 46 cases of overpayment and that these would be dealt with on a case by case basis.

She said that a controls review would take place during Q2-Q3 2024 and that an interim update to the Board will be made at the next meeting in June.

Alison Wyatt asked if the people affected know about this situation yet.

The Pensions Operations Manager replied that some do, where they have approached the Fund and already been rectified, but that the c. 1,200 outstanding members do not yet know, and will be written to over the next two weeks and recompensed during March.

The plan is to have made all rectifications to the remaining c.450 members by the end of 2024.

Alison Wyatt asked if it was known what sums of money were likely to be involved.

The Pensions Operations Manager replied that the largest individual amount would be around £60,000, but that the majority of cases would be below £5,000. She added that some cases would be going back over ten years and therefore the errors would be cumulative. The Head of Pensions added that total costs are likely to be lower than the Fund’s initial estimate of £1.5m.

Alison Wyatt asked if the annual Pensions Increase should be communicated to members of the Fund.

The Member Services Manager replied that this information is always included in payslips to members in both April and May.

The Head of Pensions commented that initially the discrepancies were treated as individual cases until a further analysis revealed that this was a broader issue.

Helen Ball asked how much the use of the consultants mentioned would cost the Fund.

The Pensions Operations Manager replied that the cost of the consultants working on the Pensions Increase arrears was to be £33,000 and that Aon’s fee for the policy work would be £12,000. She added that the Fund was still working within its previously agreed budget.

Stuart Anstead asked if officers were working to a timeline of 3 month windows per phase in order to complete the work by the end of the year.  ...  view the full minutes text for item 36.

The Board will receive a verbal update from the Head of Pensions / Group Manager for Funding, Investment & Risk.

The Head of Pensions addressed the Board and gave the following update on investments.

·  At the end of 2023 the asset value of the Fund was £5.7bn which had seen an 8.7% return in Q4.

·  Brunel funds performed well during this period.

·  The Fund has raised its exposure to gilts in Q3 2023, and their value increased during Q4 2023 as the rate of interest dropped.

·  The funding level is now 97% (improvement of 1% since 31 September 2023).

·  Decision taken to reduce hedging to 50% of our Equity Portfolio – this is expected to improve our long-term growth potential by 0.4% / 0.5%.

·  The Committee has approved a 3% (£170m) allocation to Local Impact Investment across three sleeves.

o  Renewable Infrastructure

o  Affordable Housing

o  Small & Medium Enterprise (SME) Funding

·  £50m has been deployed within a consortium, alongside other Local Authorities, into investment in 16 solar farms across the South West.

·  Future returns expected to be between 7 – 9%.

The Chair thanked the Head of Pensions for the update on behalf of the Board.

The purpose of this report is to update the Pension Board 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.

She explained that as part of the quarterly review the pre mitigation scores have been reviewed and a couple adjusted as follows:

• Risk NR04 – Governance of Fund, the pre mitigation likelihood has been increased from likely to almost certain to reflect the risk of internal controls not being sufficient.

• Risk NR08 – Employers unable to meet financial obligations, the pre mitigation likelihood has been changed from possible to likely to reflect the fact that the underlying risk has increased.

She stated that changes made to the post mitigation scores this quarter were:

• Risk NR18 - Unforeseen events or service issues leads to reputational damage to the Fund amongst its stakeholders. On review the impact has been reduced from high to medium impact to reflect the mitigating actions taken.

• Risk NR08 – Employers unable to meet financial obligations to Fund. The impact has been reduced from high back to medium as there is now more certainty that if a Local Authority fails it will be regulatory to pay employer contributions.

She informed the Board that the most critical risks remain:

• NR01 – Ability to deliver admin service to members and employers within agreed standards.

• NR06 – The likelihood of a cyber attack remains a high risk due to the recent high profile attacks in the public domain. The Fund is currently implementing further audit actions around staff awareness and education and will shortly carry out a review of its business continuity plan.

• NR04 – Governance of Fund not in accordance with APF policies – Controls not adequate. Internal Audit continue to assist in checking of internal controls.

Alison Wyatt asked if the work relating to the Pensions Increase was covered in NR04.

The Governance & Risk Advisor replied that it was.

The Chair asked if the Internal Audit workplan could be shared with the Board.

The Governance & Risk Advisor replied that this would be circulated to the members of the Board.

The Board RESOLVED to note the report.

The purpose of this report is to receive regular updates on Training and Work Plan issues from the Board and request high level training needs from Board Members.

The Governance & Risk Advisor introduced the report to the Board. She explained that a series of workshops were planned across the year.

May: The Pension Regulator General Code of Practice

November: Interim Valuation - Funding / Employer session

TBC: Pensions Dashboard

She reminded Board members that all online learning modules from Hymans Robertson have to be completed by the 31^st March 2024 deadline.

The Board RESOLVED to:

i) Note the workplan & training plan for 2024

ii) Note the dates for future meetings.