Agenda item

REVIEW OF GOVERNANCE ARRANGEMENTS

Minutes:

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

 

He said that the presentation of this paper to the Committee had been delayed by about eighteen months, because of the demands of the pooling process and the establishment of Brunel Pensions Partnership on staff time.

 

There were three main aims behind the proposals in the report.  The first was to ensure that the membership of the Committee was appropriate for current circumstances. The number of academies had increased significantly, and they were now the largest group of employers in the Fund without representation on the Committee. There was also the need to achieve the optimum balance between lay members and those with professional investment experience, important if professional investor status under MIFID II is to be maintained. The second was to ensure that that the Committee, Investment Panel and Pension Board work together more efficiently.  At present about 70% of the papers coming to the Committee are simply for noting. Efficiencies could be achieved if the Pension Board dealt with more of the administrative and compliance issues, and if reporting from the Panel to the Committee was formalised. This would free the Committee to focus on core strategic matters. Some of the papers currently coming to the Committee would instead go to the Board or the Panel, but would be available for Members of the Committee to view. There would still be the opportunity for Members of the Committee to raise issues from those papers at Committee meetings. The third aim was to facilitate liaison with Brunel PP. At the moment the main link to Brunel was through the Chair of the Committee and himself. He thought this was insufficient to provide adequate assurance to the Council as shareholder and to the APF as a client fund. It was therefore recommended that an informal Brunel working group be established

 

The addition of an academy representative and another Independent Member with professional experience would need to be offset by a reduction in the number of B&NES Councillors on the Committee. This had been discussed with the leaders of the Council’s political groups, and no significant concerns had been expressed. Members discussed the proposals. The following points were made in discussion:

 

  • An additional Independent Member would be welcome. Those with professional knowledge are able to understand issues more quickly and can help new members get up to speed. An Independent Member with actuarial experience would be a valuable addition to the Committee.

 

  • The large and still increasing number of academies in the Fund justifies the appointment of an academy representative to the Committee, but how will the nomination process work? It would be helpful to see a proposal for this.

 

The Head of Finance, Business and Pensions agreed that a nomination process would have to be worked out taking account of the fact that there are both multi-academy trusts and independent academies. There would need to be some sort of election process. An invitation to nominate would be sent to all academy employers. Details of a proposed process will be tabled at the next Committee meeting.

 

  • A reduction in the number of B&NES councillors on the Committee might lead to a reduction in the diversity of the membership, less chance of minority views being heard, and an increased risk of group think. The reduction of the number of B&NES councillors on the Panel to 2 will make it hard to achieve political proportionality. B&NES is the administering authority of the Fund, so if the number of B&NES councillors is reduced, it might be desirable to review how the Council will discharge its responsibilities in this role.

 

  • A member raised the point that Brunel working group can hardly be ‘informal’, since it will be constituted under section 4 of the Committee’s Terms of Reference. Likewise what does ‘informal’ mean in paragraph 7.2(b) of the report: ‘move some regular reporting to an informal accessible format’? The working group should be established as a formal sub-committee.

 

The Head of Business, Finance and Pensions responded that there is no intention to operate behind closed doors. The proposal is that there should be a small group of Members focussed on Brunel, which would report formally to the Oversight Board, Committee or the Council as shareholder, without, in the interest of efficiency, being constrained by formal procedures all the time. As far as ‘informal’ reporting was concerned, it was the process that would be informal, not the papers themselves. The papers would still be accessible by Members, those that were not exempt would be in the public domain, and Members would still be able to raise issues about them at Committee meetings. The point is that much of the information currently brought to the Committee is just for noting.

 

  • There is no explanation in the report of the proposed reduction in the number of trade union representatives from 3 to 2.

 

The Investments Manager replied that the current number of trade union representatives had reduced to 2 because of union mergers.

 

  • Consideration should be given to having a scheme member representative on the Committee.

 

  • A reduction in the quantity of paper sent to Members will be very welcome.

 

After the discussion was concluded, it was RESOLVED to:

 

  1. agree to consultation on  proposed changes to Committee membership, namely:

 

  1. a reduction in Bath and North East Somerset Council representation from 5 to 3;

 

  1. addition of a further Independent Member to the Committee;

 

  1. addition of an Academy Representative;

 

  1. to consult with Employers over these proposed changes;

 

  1. to defer the consideration of the establishment of a Brunel Working Group until the March 2019 meeting;

 

  1. agree to the proposed changes to Terms of Reference of:

 

  1. the Avon Pension Fund Committee, with the exception of section 4 (Brunel Pension Partnership Working Group);

 

  1. the Avon Pension Fund Board for consultation with the Board;

 

  1. to consult with the Avon Pension Fund Board in respect of these changes.

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