Agenda item

The Head of Business, Finance and Pensions updated the Board.

The minutes of the meeting of the Brunel Oversight Board (BOB)of 22 March 2018, inadvertently omitted from the agenda papers, had been circulated to Members.

The Head of Business, Finance and Pensions advised that they had been approved at the meeting of BOB of 18 July. He said that the transition of assets to Brunel was underway, with priority being given to the equity portfolios. Reports would be made to the BOB on the costs of transition and savings in managers’ fees.

The shareholders had agreed to a change in the BOB Terms of Reference to allow fund representatives to be substituted at BOB meetings by a member of the relevant pensions committee. BOB had made recommendations on two reserved matters. The first was that some caps and controls should be included in the remuneration policy. The second related to the private market service developed by Brunel, the costs of which would be quite high including  the appointment of an administrator. The benefit would be that the transition of private market assets could be accelerated. If this were not done, costs would be higher. In reply to a question from a Member, he said that at the moment a pay ratio between highest and lowest salaries had not been proposed, though this and all aspects of equality were under review.

The original Brunel business case was being reviewed, and a revised business plan would be presented to BOB in September.

Policies were being developed on voting at company meetings and stock lending. Key Performance Indicators were being developed. A Member asked how scheme members could make their views known about issues to be voted on at company meetings. The Head of Business, Finance and Pensions explained that all the funds have policies about proxy voting. However, it was a challenge to find ways of representing scheme members’ views at the Brunel level; Brunel’s fiduciary duty was to the funds, not to the members of the funds, but there are member representatives on BOB, with whom issues can be raised. The Chair suggested that there was also an internal channel of communication through the Head of Business, Finance and Pensions.

The shareholder representative had produced an independent report for BOB and had indicated that he was pleased with Brunel’s progress.

A Member said that it would useful to have comparative information of the asset allocation and the returns on assets and investment costs before the business case, at the time of the business case and at transition. This would identify the savings that Avon made before transition, so that the benefits of pooling could be accurately measured. The Head of Business, Finance and Pensions replied that this would be very difficult and complicated, because of the changes in allocations since the business case, and changes in managers and portfolios. However, the information about costs and savings presented to BOB would be shared with the Board.

The Chair commented that Brunel’s first annual report and accounts had been rather brief and uninformative and urged them to produce something more useful.

RESOLVED to note the update.