Agenda item

The Head of Business, Finance and Pensions presented the report.

The Chair asked why in Appendix 2 (The Pensions Regulator Requirements under Code of Practice) under Annex A the APF compliance for “any specific roles and responsibilities of individual Pension Board members” was indicated as “not applicable”. Officers responded that evidently the Board had a Chair and Employer and Member Representatives, but it was not clear if TPR meant this or something else by “specific roles and responsibilities”. The Chair suggested this should be clarified with them, so that if possible the Fund could demonstrate 100% compliance with all requirements.

The Head of Business, Finance and Pensions commented on State Street’s Local Authority Pension Funds Annual League Tables (Appendix 3). He said that it should be remembered that funds had widely differing investment mandates and structures and the tables only gave a very broad indication of their comparative performance. That understood, the ranking of the Avon Fund (equal 49^th) appeared quite good. He said that the Fund’s investment performance had been very good over the last ten years or so and had exceeded expectations.  However, investment performance was only one half of the equation; the liabilities were the other half, and the Fund was taking steps to cap these in the lead up to the next valuation.

The Chair noted that the Avon Fund had made a negative return of -0.2% in the latest year. A Member noted the varying performance of other funds in Project Brunel: for example the Environment Agency and Dorset ranked higher. The Chair said that as State Street WM tables had been compiled for many years, a time analysis of the Avon Fund overall fund performance relative to other Brunel funds prior to asset pooling would be useful.

The Head of Business, Finance and Pensions commented on Appendix 1 (Summary of Consultations and Surveys):

• Members were asked to note that the revised Investment Regulations, which provide the legal basis for pooling, had come into effect on 1^st November. The Regulations conferred intervention powers on the Secretary of State, though it was not clear by what process these would be exercised or what would trigger them.

• The Mayoral Combined Authority, comprising B&NES, Bristol and South Gloucestershire, will be set up. The details of how pensions’ liabilities for the Authority will be shared need to be worked out.

• The Academies Review is ongoing. At present different funds are dealing with Academies in slightly different ways. One issue is whether the employer is the Academy or the Multi Academy Trust (MAT), if there is one. Some funds treat a MAT as the employer and aggregate liabilities and contribution rates for all schools in it, others keep individual Academies in the MAT separate. An option being considered is for all Academies to be allocated to a single LGPS fund. The Review should be completed by the end of the year.

The Chair noted that the Investment Regulations require that the administering authority must “consult such persons as it considers appropriate” as to the proposed contents of its investment strategy statement (ISS) before issuing it by no later than 1^st April 2017, and asked who the Fund would consult and how it would do it. The Head of Business, Finance and Pensions said that the Fund would produce an ISS and would consult on it. The Chair said that he was aware from other funds that there was considerable interest in the new investment strategy because of pooling, and advised that as there were only four months to carry out a consultation, the Fund should produce a consultation plan quickly; the Board had a requirement to check that the Fund was consulting on the ISS. He also asked Members to note that in accordance with the Investment Regulations the Secretary of State would consult the Pensions Board before exercising his intervention powers.

The Chair noted that he and Members who had attended TPR training courses were receiving emails from TPR asking whether the Board was complying with particular requirements, or asking for responses to surveys. He advised Members that such emails should be forwarded to the Head of Audit West, who would co-ordinate the Board’s response.

RESOLVED to note the report and latest developments.