Agenda item

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

He said that the present Committee structure was reasonably representative of the employers in the Fund, with one significant gap, namely the large number of Academies that had become members through the academy conversion programme. So it was proposed to add an academy representative to the Committee membership. In addition, it was proposed to increase the number of Independent Members from 2 to 3 to help maintain the Fund’s status as a professional investor. They also help maintain the continuity and collective memory of the Committee. One of the current Independent Members has a background in administration, the other in investment, and it has been proposed that a new Independent Member with an actuarial background would be a valuable addition. To further redress the balance of the Committee it has been proposed that the number of B&NES councillors should be reduced from 5 to 2. He had consulted the Group Leaders, who had raised no objections, but the change would have to be approved by the full Council.

Another proposal addressed the issue of how to best manage relations with Brunel. APF has a complicated relationship with Brunel and it is considered that there needs to be dedicated group consisting of members and officers to help APF manage this relationship.

A Member expressed concern that a reduction in the number of Councillors on the Committee would decrease democratic accountability. In its response to the consultation the Board had advised that legal advice be taken on the lawfulness of having four unelected members of the Committee taking financial decisions on behalf of the Council. The Head of Business, Finance and Pensions replied that the “democratic backstop” for the Fund was the role of the Council as the administering authority. The Council’s Section 151 Officer also played a role in the governance of the Fund. The Council decided the composition of the Committee and had lawfully chosen to delegate its operational responsibilities to it. There were independent and co-opted members on other Council committees.

Another aspect of the proposals focusses on streamlining current working methods and reducing duplication, by

• enabling the Pension Board to monitor the implementation of the administration Strategy and compliance and provide regular reports to the Committee on these

• moving the responsibility for delivering the investment strategy to the Investment Panel, allowing the Committee to focus on the on the key funding and strategic issues.

• more use of electronic communication to replace the circulation of paper

An updated report and the consultation responses will be circulated with the agenda for the March meeting of the Committee.

The Chair suggested that if certain statutory decisions were delegated to the Investment Panel, the Brunel Working Group Party would not be needed. The Head of Business, Finance and Pensions responded that the Working Group would have no decision-making powers and was only intended to be a channel of communication and would report regularly to the Committee.

The Head of Business, Finance and Pensions responded to suggestions made in the Board’s response to the consultation.

He acknowledged that there were a couple of examples of Joint LPB/Pensions Committee around the country, but he personally could not see how this could be a satisfactory arrangement; how would the scrutiny function performed by the Board be combined with the work of the Committee?

He did not think the Terms of Reference of the Board needed to be changed in their broad content. He felt that the guidance about the role of the Board contained examples of really poor drafting with a confusing mixture of things the Board had to do with things it might do. He believed clarity was necessary to ensure effectiveness.

The Chair pointed out that the statutory guidance on pooling said that the Pension Board could perform a useful role in investment governance. The Head of Business, Finance and Pensions said that this guidance was still in consultation.

The Service Director - One West said that the role and future membership of the Board was under review after its first four years, and Members were invited to comment on this. A Member suggested that the role of the Board would evolve as Brunel developed. Another Member said that he thought scrutiny and, where necessary, challenge, were central to the work of the Board. Another suggested that the Board ought to try to make an understanding of pensions more accessible to scheme members. The Chair felt that there should be a clear distinction between decision-making, which was the role of the Committee, and scrutiny and monitoring, which was the role of the Board.

The Service Director - One West said that two Members had indicated that they wished to continue their membership of the Board, others were considering their positions. He thought that the current makeup of the Board was probably appropriate. There would an external advert for the appointment of the Chair for the next four years after Easter and recruitment of any new Members would take place after the Summer. A Member suggested that the Terms of Reference should explain the role of the Chair in the appointment of the other Members.

RESOLVED:

1. to note the report;

2. to confirm that the Pension Board is concerned about the democratic deficit that would arise from the proposed reduction in elected councillors on the Committee, and the potential legal and other risks arising the proposed increase in the number of externally co-opted voting Members.