Agenda item

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

He explained that the Fund’s three-year Service Plan is reviewed annually, giving an opportunity to identify the key issues and challenges facing the Fund in the coming year. It also contains an update on progress with the previous three-year plan.

The top challenge facing the Fund over the next two years was obviously the impact of Brunel, including the transitioning of assets, achieving savings and ensuring that Brunel delivers on the efficient management of investment. A number of staff had been lost to Brunel, and the Fund needed to ensure that it had sufficient resources to manage the investments for which it was still responsible.

The second challenge was the valuation on 31^st March 2019. At the moment it looked as though the Fund was in a good position, with a 95% funding level.. However, the position of individual employers varied greatly, with new  employers  joining the Fund regularly. This gave rise to a wide spectrum of risk, in response to which the actuarial team had been strengthened. The team were looking at the level of risk of individual employers to ensure that the Fund as a whole does not carry excessive risk. Academies were an area of concern  because of continuing change in the sector which is continuing to evolve, and so also were colleges without guarantors. This actuarial work on risk would inform the funding strategy and the setting of contribution rates.

On the administration side, the Pension Board been concerned about whether resources were adequate, but in his view it was not simply a matter of resources, it was something more fundamental: it was a matter of approach. There was a combination of some regulatory benchmarks being not fit for purpose, and the employers, who were a key source of data, not having any common standard. This was a major challenge.The Service Plan identified specific improvement projects, some of which would be supported by temporary staff appointments. A key part of the strategy was the rolling out of electronic services for members and employers. A number of new temporary posts had been created, but this was not long-term, just a means of enabling the Fund to get through the challenges of the next few years. It was expected that there will be no more academy conversions after 2020 and that the transfer of data would be taking place more efficiently. However, developments would be kept under review. He and the  Pensions Manager had discussed with the Council’s legal advisers options for passing as much of the administrative burden as possible back to the employers. The Administration Strategy already includes provisions for charging employers for any extra administrative burdens imposed by their acts or omissions, and consideration is being given to increasing the charges, or alternatively recognising that the employers lack resources and offering pension administration services to them. The key legal issue was how this could be done without creating conflicts of interest.

The Chair said that there were some good initiatives in the Plan, and he was pleased that the Board’s advice about the need for extra administrative resources had been heeded.

A Member asked whether staff terms and conditions had been reviewed to increase the attractiveness of posts in Pensions in the current job market. The Head of Business, Finance and Pensions said that some job advertisements had attracted a high number of applicants, others far fewer. The reasons for the difference needed to be reviewed.

The Chair asked about succession planning. The Head of Business, Finance and Pensions replied that there was a view on how staff should be developed; there was a training plan involving in-house training and professional training.

A Member asked whether apprenticeships had been considered. The Head of Business, Finance and Pensions replied that four apprentices would be appointed. It had been found in the case of apprentices appointed by Finance that their abilities varied a great deal. Some were very good, others less so. He would be pleased if two of the four apprentices were good. Responding to a question from the Member about how Brunel had managed with recruitment, he explained that 50% of Brunel employees had come from the funds, leaving the funds with the problem of backfilling posts, which was particularly difficult on the investment side where the skills were highly specialised.

A Member asked whether there would be benefits from a review of the employment package for all administration staff. The Head of Business, Finance and Pensions replied that he had raised such a review with the former Strategic Director, who thought there should be a review of the Fund as a whole, and he now was taking this forward with his successor. This would take some time. The Board would be aware that Pensions was not the only service in the Council with resource issues, and the Council would not wish to set a precedent by establishing a separate pay scheme for an individual service.

RESOLVED to note the 3-year Service Plan and Budget for 2018-21 for the Avon Pension Fund.