Agenda and minutes

To approve the minutes of the meeting held on 10 October 2022 and to receive information arising from them.

The Minutes of the meeting held on 10 October 2022 were approved and signed.

10:05

A copy of the unconfirmed Minutes of the Local Pension Board, which met on  21 October 2022 is attached for information only.

The unconfirmed Minutes of the Local Pension Board held on 20 October 2022 were noted.

10:10

The report sets out the items the Local Pension Board wishes to draw to the attention of this Committee following their last meeting in October 2022.

The Committee was provided with the report of the Local Pension Board, which was introduced by Board Member, Alastair Bastin.

10.20am

This report provides an update on progress against the key priorities set out in the Annual Business Plan for 2022/23, and the initial results of the National Knowledge Assessment. 

The Committee is RECOMMENDED to

a)       review progress against each of the key service priorities as set out in the report;

b)       agree any further actions to be taken to address those areas not currently on target to deliver the required objectives;

c)       note the provisional results from the National Knowledge Assessment and

d)       agree to hold a 2023/24 Business Planning session on the morning of Friday 3 February 2023.

Consideration was given to a report which provided an update on progress against the key priorities set out in the Annual Business Plan for 2022/23, and the initial results of the National Knowledge Assessment. 

The Service Manager for Pensions, Insurance and Money Management reported there were four service priorities each with a number of key measures of success.

Review and Improve the Scheme’s Data – An outstanding issue with common Data was largely missing member addresses.

Develop a holistic approach to technology across Pension Administration Services – There was a full report on this agenda on the future use of technology.

Enhanced Delivery of Responsible Investment responsibilities – Members were informed there was a struggle to recruit the new Responsible Investment Officer. Reference was made to possible solutions such as working with Brunel and it was agreed that the recruitment process should continue and should this be unsuccessful by the next meeting of this Committee, discussions take place on possible options.

Deliver improved and consistent service performance to scheme members - Performance has been steadily improving, however, it does remain below the Service Level Agreement (SLA) targets on a number of measures. If successful in recruiting the additional staffing as set out within the Administration report elsewhere on the agenda, performance standards should be increased and brought back into line with the SLA.

The Chair referred to the National Knowledge Assessment Results, which demonstrated both excellent levels of knowledge and skills of both the Committee and Board, together with good engagement.

In relation to the training programme for Pension Fund Committee and Local Pension Board Members in the Business Plan, the Governance and Communications Manager reported that the training plan would cover issues which had arisen from the assessment of training needs. 

RESOLVED – (1) That the Committee reviewed progress against each of the key service priorities as set out in the report.

(2) That approval be given to the further actions to be taken to address those areas not currently on target to deliver the required objectives.

(3) That the provisional results from the National Knowledge Assessment be noted.

(4) That approval be given to holding a 2023/24 Business Planning session on the morning of Friday 3 February 2023.

10.35am

This report presents the latest position on the Fund’s risk register, including any new risks identified since the report to the last meeting. 

The Committee is RECOMMENDED to note the latest risk register and accept that the risk register covers all key risks to the achievement of their statutory responsibilities, and that the mitigation plans, where required, are appropriate.

The report presented the latest position on the Fund’s risk register, including any new risks identified since the report to the last meeting of the Committee. 

Members were informed that there had not been many changes, however, Risk 15 in relation to Fund officers having sufficient skills and knowledge to carry out their roles effectively, work was taking place with HR as the Fund were struggling to get the roles adequately graded.

The Governance and Communications Manager referred to the recommendation to enhance the risk management processes and reporting which were:

·       Develop a Risk Management Framework for the Fund;

·       Report on ‘Emerging Risks’, which can then subsequently drop off

the register if deemed unnecessary or be incorporated as an inherent

risk to the Fund;

·       Develop a ‘heat-map’ which visually and easily show all risks for the

fund and their impact rating.

RESOLVED – That the latest risk register be noted, and the Committee accepted that the risk register covers all key risks to the achievement of their statutory responsibilities, and that the mitigation plans, where required, are appropriate.

10.45am

This report summarises the responses to the recent consultation on the Funding Strategy Statement and seeks the Committee’s approval to the final document.

The Committee is RECOMMENDED to

a)       review the responses to the consultation exercise,

b)       amend the draft documents to specify a standard likelihood of 90% for cessation calculations, and

c)       approve the final version of the Funding Strategy Statement to support the 2022 Valuation exercise.

The Committee was provided with a report which summarised the responses to the recent consultation on the Funding Strategy Statement and sought approval to the final document.

Members were reminded that at the Committee’s last meeting, consideration was given to the draft Funding Strategy Statement which had been produced by Hymans Robertson alongside officers from the Fund. The document set out the key principles as agreed by the Fund, to set the framework for the 2022 Valuation exercise.

Members were informed there had been a significant change to the way the document was presented, which involved a slimmed down version of the Funding Strategy Statement itself, with some of the more detailed arrangements removed and included in standalone policy documents

Members were informed that by the end of the consultation period there had been 8 responses, plus two further responses after the deadline.  

Reference was made to the inclusion of a specific approach to the calculation of cessation amounts where it was proposed to specify that the likelihood score for a low-risk cessation calculation would normally be set at 90%.

There was disappointment expressed at the number of responses received and whether the Schools Forum represented all schools. This would be added to the framework.

RESOLVED – (1) That the responses to the consultation exercise be noted.

(2) That approval be given to amend the draft documents to specify a standard likelihood of 90% for cessation calculations.

(3) That approval be given to the final version of the Funding Strategy Statement to support the 2022 Valuation exercise.

10.55am

This report updates the Committee on the key administration issues including service performance measurement, the debt recovery process and any write offs agreed in the last quarter. 

The Committee is RECOMMENDED to

a)       determine any actions they would like taken to improve the team performance in meeting standards

b)       note the compensatory payment made in line with Scheme of Delegation and determine any future actions if appropriate to minimise the risk of similar issues going forward

c)       note the release of deferred benefits on grounds of ill-health in line with Scheme of Delegation.

The report updated the Committee on the key administration issues including service performance measurement, the debt recovery process and any write offs agreed in the last quarter. 

The Pensions Service Manager referred to a Scheme Member who had asked for information which had resulted in lengthy correspondence. However, some responses were incorrect and during 2020/2021 tax year these queries were either not answered or not answered in a reasonable time frame which resulted in the member losing the opportunity to make additional pension contributions which meant a loss of tax relief. The Pension Services Manager, in line with the Scheme of Delegation, awarded a compensatory payment of £1,400 for loss of tax relief and the distress caused by this matter.

Reference was made to the data quality score detailed in paragraph 15 of the report and for debt management in the last quarter there had been one overpayment of £10,000 paid back.

There was also a request for the Committee to agree a write off for the last quarter of £23.93. There had been four deaths where monies could not be recovered and in one case where the amount to be repaid was incorrectly stated by £4.60.

RESOLVED – (1) That the compensatory payment made in line with Scheme of Delegation be noted.

(2) That the release of deferred benefits on grounds of ill-health in line with Scheme of Delegation be noted.

(3) That approval be given to the write off for the last quarter of £23.93.

11.10am

This report will report the findings of the project to review the current offerings from the 3 system suppliers on the National Procurement Framework and recommend the Committee to either renew the existing contract for a further 5 years or seek to re-tender the contract.

The Committee is RECOMMENDED to

a)       agree the extension of the current system contract, as allowed for within the contract and

b)       ask officers to bring forward a proposal to the March meeting as part of the 2023/24 Business Plan to identify options to address the current weaknesses in the employer database offering, to maximise the use of the current system functionality and to ensure the Fund is fully prepared to run a full procurement exercise at the end of the agreed extension.

The Committee was provided with a report on the findings of the project to review the current offerings from the 3 system suppliers on the National Procurement Framework and which recommended the Committee to either renew the existing contract for a further 5 years or seek to re-tender the contract.

Members were reminded that as part of the 2022/23 Business Plan, this Committee agreed as a key objective for the current year was to explore the options around improving the system technology currently available to the Fund. The Committee was keen to see a holistic offering where all component parts were fully integrated and offered a seamless service to scheme members,

scheme employers and the Fund’s officers.

The work was timed to coincide with the extension clauses within the current contract which allowed for a 5 year extension to the current contract, which would otherwise end in the summer of 2024. 

The outcomes of the review from Hymans Robertson were included in the exempt items part of the agenda.

After consideration of the confidential information on this item the following was 

RESOLVED – (1) That approval was given to the extension of the current system contract, as allowed for within the contract.

(2) That officers be asked to bring forward a proposal to the March meeting of this Committee, as part of the 2023/24 Business Plan to identify options to address the current weaknesses in the employer database offering, to maximise the use of the current system functionality and to ensure the Fund is fully prepared to run a full procurement exercise at the end of the agreed extension.

11.30am

This report covers an overview of the financial markets, the overall performance of the Fund’s investments against the Investment Strategy Statement and commentary on any issues related to the specific investment portfolios.  The report includes the quarterly investment performance monitoring reports, including the newly designed report from Brunel.

The Independent Investment Advisor submitted a report which provided an overview of the financial markets, the overall performance of the Fund’s investments against the Investment Strategy Statement and commentary on any issues related to the specific investment portfolios. The report also included the quarterly investment performance monitoring reports, including the newly designed report from Brunel.

The Committee was informed that the last quarter had been a strange period. Private market valuations have held up well and public market valuations which had flagged, have had a good recovery.  Reference was made to the political events of the past few months which have impacted on the markets, inflation etc.

Reference was made to the impact interest rates were having on private market commitments, particularly around transactions which would affect activity levels.

Discussion took place on China and the implications on the Chinese economy of China’s worsening relationship with the USA and the implications of this on the Fund. This would be revisited if there were concerns regarding Fund investments.

Members were remined that at the last meeting of the Committee on 2 December, it was agreed that the Pension Fund Committee and the Local Pension Board would be invited to a hybrid meeting on Friday 3 February 2023 to discuss the 2023/24 Business Plan for the Pension Fund.

Members agreed to extend the meeting into the afternoon to discuss the strategic asset allocation as raised under the report from the Independent Investment Advisor.

RESOLVED – (1)   That Members and relevant officers hold an informal session to consider future strategic asset allocation, including ESG and climate change considerations.

(2) That a meeting is then arranged with Brunel to discuss the forthcoming Strategic Asset Allocation review and this Fund’s aspirations, along with any actions required to address a higher inflation environment.

(3) That officers be asked to progress a Brunel led training programme for Fund elected members and others that will provide information about the asset classes that they manage and their processes. 

12.00pm

Members will be updated on any items not covered elsewhere on today’s agenda in respect of their responsibilities in respect of corporate governance and responsible investment.

Members were informed of two consultations which officers had responded to.

·       Climate Risk Reporting – the Climate Change Working Group had formulated a response in consultation with officers

·       Climate Action 100    

The Committee is RECOMMENDED that the public be excluded for the duration of the following items on the Agenda (during discussion on confidential matters) since it is likely that if they were present during those items there would be disclosure of exempt information as defined in Part I of Schedule 12A to the Local Government Act 1972 (as amended) and specified in relation to the respective items in the Agenda and since it is considered that, in all the circumstances of each case, the public interest in maintaining the exemption outweighs the public interest in disclosing the information.

THE REPORTS RELATING TO THE EXEMPT ITEMS HAVE NOT BEEN MADE PUBLIC AND SHOULD BE REGARDED AS STRICTLY PRIVATE TO MEMBERS AND OFFICERS ENTITLED TO RECEIVE THEM.

RESOLVED - That the public be excluded for the duration of the following items on the Agenda (during discussion on confidential matters) since it is likely that if they were present during those items there would be disclosure of exempt information as defined in Part I of Schedule 12A to the Local Government Act 1972 (as amended) and specified in relation to the respective items in the Agenda and since it is considered that, in all the circumstances of each case, the public interest in maintaining the exemption outweighs the public interest in disclosing the information.

12.05pm

The Committee is RECOMMENDED to confirm any further actions to be taken in addition to those identified in the report.

The public should be excluded during this item because its discussion in public would be likely to lead to the disclosure to members of the public present of information in the following prescribed category:

3.       Information relating to the financial or business affairs of any particular person (including the authority holding that information) and since it is considered that, in all the circumstances of the case, the public interest in maintaining the exemption outweighs the public interest in disclosing the information.

The Committee had previously received a report setting out the fund’s approach to cyber security. At the last meeting of this Committee and at the Local Pension Board meeting, Members requested an update on the security of data held and used by third party providers to the fund.  

The Committee agreed that there would be an annual report submitted on cyber security.

RESOLVED – That the information and assurance given in the report be noted.

The public was excluded during this item because its discussion in public would likely lead to the disclosure to members of the public present of information in the following prescribed category:

3.       Information relating to the financial or business affairs of any particular person (including the authority holding that information) and since it is considered that, in all the circumstances of the case, the public interest in maintaining the exemption outweighs the public interest in disclosing the information.

12.20pm

This report updates the Committee on the on-going review into the future AVC provision to scheme members.

The public should be excluded during this item because its discussion in public would be likely to lead to the disclosure to members of the public present of information in the following prescribed category:

3.       Information relating to the financial or business affairs of any particular person (including the authority holding that information) and since it is considered that, in all the circumstances of the case, the public interest in maintaining the exemption outweighs the public interest in disclosing the information.

The Committee was provided with an update on the on-going review into the future additional voluntary contributions provision to scheme members.

RESOLVED – That the progress made in reviewing the Funds AVC provision be noted, and officers be asked to submit a report to the 3 March 2023 Committee meeting setting out a recommended course of action.

The public was excluded during this item because its discussion in public would likely lead to the disclosure to members of the public present of information in the following prescribed category:

3.       Information relating to the financial or business affairs of any particular person (including the authority holding that information) and since it is considered that, in all the circumstances of the case, the public interest in maintaining the exemption outweighs the public interest in disclosing the information.

12.30pm

This report includes the draft report from the Brunel Climate Stocktake reviewing the implementation of the current Brunel Climate Change Policy.  The final report will become a public document and be published in the New Year alongside the Policy Update.

The public should be excluded during this item because its discussion in public would be likely to lead to the disclosure to members of the public present of information in the following prescribed category:

3.       Information relating to the financial or business affairs of any particular person (including the authority holding that information) and since it is considered that, in all the circumstances of the case, the public interest in maintaining the exemption outweighs the public interest in disclosing the information.

The report includes the draft report from the Brunel Climate Stocktake which reviewed the implementation of the current Brunel Climate Change Policy.  The final report will become a public document and be published in the New Year alongside the Policy Update.

RESOLVED – That the report be noted.

The public was excluded during this item because its discussion in public would likely lead to the disclosure to members of the public present of information in the following prescribed category:

3.       Information relating to the financial or business affairs of any particular person (including the authority holding that information) and since it is considered that, in all the circumstances of the case, the public interest in maintaining the exemption outweighs the public interest in disclosing the information.

12.45pm

Confidential final report on Review of Pension Administration System Technology.

The public should be excluded during this item because its discussion in public would be likely to lead to the disclosure to members of the public present of information in the following prescribed category:

3.       Information relating to the financial or business affairs of any particular person (including the authority holding that information) and since it is considered that, in all the circumstances of the case, the public interest in maintaining the exemption outweighs the public interest in disclosing the information.

The Committee was provided with the final report on Review of Pension Administration System Technology.

RESOLVED – That the information contained in the confidential report was noted.

The public was excluded during this item because its discussion in public would likely lead to the disclosure to members of the public present of information in the following prescribed category:

3.       Information relating to the financial or business affairs of any particular person (including the authority holding that information) and since it is considered that, in all the circumstances of the case, the public interest in maintaining the exemption outweighs the public interest in disclosing the information.