Agenda and draft minutes

Apologies for absence were received from Alistair Fitt.

There were none.

Kate Robinson, Staff-Led Climate Action Group, Oxfordshire County Council addressed the meeting on Item 10.

To approve the minutes of the meeting held on 1 December 2023 and to receive information arising from them.

The minutes of the meeting held on 1 December 2024 were agreed as a correct record subject to the following amendments:

Page 2, 48/23, Line 2 should read Alistair Bastin;

Page 7, 57/23, Line 3 should read “The Committee thanked Sally Fox”.

10:20

A copy of the unconfirmed Minutes of the Local Pension Board, which met on 26 January is attached for information only.

RESOLVED: that the minutes of the Local Pension Board were noted.

10:25

Adams Street Partners will present an update on the private equity portfolio the Pension Fund holds with them.

The Committee is RECOMMENDED to note the Private Equity Review.

The Committee Clerk read out the exempt statement.

The Committee RESOLVED that, having been satisfied that the public interest test would be better served by not disclosing relevant information, and in accordance with the provisions of Section 100(A)(4) of the Local Government Act 1972, the public be excluded from the meeting for the following item of business because of the likely disclosure of exempt information as defined in Paragraphs 3 of Part 1 of Schedule 12A of the Act as amended.

RESOLVED to note the Private Equity Review.

10:45

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

The Committee is RECOMMENDED to note the report of the Independent Financial Advisor.

The Independent Financial Advisor, John Arthur, presented the report to the Committee.

The Fund rose by 4.7% in the fourth quarter of 2023 which was slightly below the benchmark of 5%, driven mainly by Private Equity underperforming their benchmarks. This underperformance of the Fund was a continuation of the trend of the past few years. However, the returns of 7.4% p.a. for the last 10 years were above the Funds’ actuarial discount rate assumption.

The Independent Financial Advisor discussed Government Bond Yields and changes in the US and UK economy, including the effects of the rapid rise in interest rates, high inflation and high wage inflation.

The Committee discussed Private Equity markets and the concern that part of the Private Equity business model during the past 10 years had been the use of cheap debt to boost returns.

The Independent Financial Advisor supported Brunel’s work on the UK Equity Mandate as explained on page 27of the report.

A member of the Committee was concerned about the UK Equity Mandate and the exclusion of the FT-100 companies which may align with the Funds’ investment values and strategy and would deliver growth for the Funds’ Portfolio. The Independent Financial Advisor explained that a lower carbon impact was likely to be found in UK Smaller Companies outside of the FT-100 index and most long-term data showed that smaller companies grew at a rapid rate and outperformed over multi decade periods. It was more in line with the Funds’ investment policies.

Within the mandate description to underlying managers was the ability to hold 25% of the portfolio off benchmark. 

The Chair thanked the Independent Financial Advisor for the report.

RESOLVED to:

a)     note the report of the Independent Financial Advisor,

b)     agree that the Committee does not increase its exposure to Private Equity after consideration of the report of the Independent Investment Advisor,

c)    agree to invite M&G Investments UK to the September Committee meeting and receive a presentation from them.

10:55

The Chief Investment Officer, Brunel, will cover the main issues arising from the performance of the Brunel portfolios over the past year and highlight the key issues for the forthcoming year.

The Committee is RECOMMENDED to note the annual review of investment performance.

The Committee received a presentation from David Vickers, Chief Investment Officer, Brunel which covered the main issues arising from the performance of the Brunel portfolios over the past year and highlighted key issues for the forthcoming year.

The Chief Investment Officer, Brunel explained to the Committee that the role of Brunel was to run the portfolios on behalf of the Fund according to the mandates set by the Fund. The advantages of the UK Smaller Companies mandate was a reduced basis risk, they were more likely to be companies with lower carbon impact, gave higher returns and gave 60% exposure to the UK domestic economy.

Officers explained to the Committee that the Fund’s liabilities were UK based because they rise with UK inflation and therefore UK smaller companies were a better match.

A Committee member raised a concern that in excluding all companies within FT-100, a company may be excluded that did reflect the UK economy and was low carbon.

The Chief Investment Officer Brunel explained that within the mandate there was 25% held off benchmark that would allow underlying managers to invest in companies within FT-100 should they wish to.

The Chief Investment Officer Brunel discussed the performance of individual portfolios within Brunel and the rationale behind them, particularly focussing on investments with infrastructure elements.

The Chair thanked the Chief Investment Officer for the Annual Review of Investment Performance.

RESOLVED to note the Annual Review of Investment Performance.

11:25

A review of management fees incurred by the Pension Fund pre- and post-pooling.

The Committee is RECOMMENDED to note the report.

The Committee had before it a report, as requested by the Committee at the last meeting, which provided an analysis of the management fees payable by the Pension Fund pre-and post-pooling.

Gregory Ley, Financial Manager – Pension Fund Investment, presented the report to the Committee.

The Chair thanked the Financial Manager – Pension Fund Investment, for the report.

RESOLVED to note the report.

11:30

This report will present the draft Responsible Investment policy to the Committee for feedback before it is put out for wider consultation.

The Committee is RECOMMENDED to agree the draft Responsible Investment Policy as presented at Annex 1 to this report as the basis of a consultation exercise with key Fund Stakeholders. 

The Committee were in receipt of a report which set out the draft Responsible Investment Policy.

The Chair invited the speaker to address the committee.

The Speaker represented a Staff-led Climate Action Group who endeavoured to keep up to date with the work of Oxfordshire County Council and its Pension Fund to ensure that the Fund were investing in a sustainable and fair future.

The Group was impressed by the Climate Report which the Wiltshire Pension Fund has published to demonstrate its commitment to addressing the climate emergency. They felt that this report was clear, comprehensive, and easily accessible for its pension scheme members to understand. The report showed active scrutiny of the top 10 emitters and a clarity of vision when directing the Brunel Pension Fund to divest from specific companies, such as Suncore and MEG Energy, due to their lack of action in transitioning to, and their core business aims being incompatible with, a zero-carbon future. They were also impressed by Wiltshire’s focus on the positive case studies which showed where investments had been made in local and zero-carbon initiatives, such as delivering 226 modular houses in East Sussex and carbon neutral greenhouses.

The Group appreciated that the Oxfordshire Pension Fund was currently undertaking improvements on communicating with its members on its holdings and approach, for example with the quarterly list of holdings. They observed that the material available did not give the sort of accessible information presented by Wiltshire on ways in which the fund was addressing the challenges posed by climate change.

The Group asked that the Pension Fund reviewed the work it was undertaking in this area and that the Fund consider the benefits of the Wiltshire approach.

Due to the lack of accessible communications from Oxfordshire Pension Fund, the Group were unclear on what the stance was in relation to MEG Energy and Suncore investments, as well as other top emitters.

The Chair thanked the speaker.

Committee members discussed concerns regarding the lack of information on the Oxfordshire County Council Pension Fund website pages and suggested that plans to improve it were added to the Business Plan.

Josh Brewer, Responsible Investment Officer, presented the report to the Committee.

The Fund had identified the following four priorities for its responsible investment activities: Climate Change, Nature and Biodiversity, Human Rights, including Supply Chain Labour Standards and Slavery and Governance.

If approved, the draft policy would go out to formal consultation to stakeholders.

Once approved, a more detailed strategy would be developed to monitor progress and ensure commitments were being met through this policy.

Committee members felt that the draft Responsible Investment Policy was a clear report that reflected the discussions from the workshop and an excellent starting point. It was felt that the Councils excellent Communications Team could be better engaged and used more effectively. Officers noted that whilst greater transparency was always welcomed, there needed to be care when discussing the Fund’s position in relation to individual company holdings to avoid breaching the Market Abuse  ...  view the full minutes text for item 71/24

11:45

The report sets out the items the Local Pension Board would like to draw to the attention of this Committee following their last meeting on 26 January 2024.

The Committee is RECOMMENDED to note the comments of the Board as set out in the report.

Alistair Bastin, Local Pension Board Scheme Representative, gave an update to the Committee.

The Board had reviewed the Regulators General Code of Practice and had asked for a quarterly report to discuss compliance.

The Board raised concerns regarding succession planning following the retirement of a key officer of the Pension Fund and with another key officer retiring this year.

The Chair confirmed that there was a report on compliance with the General Code of Practice on the agenda.

RESOLVED that the Committee noted the comments of the Board.

11:50

This report proposes a Business Plan, Budget and Training Plan for the forthcoming financial year. The report also includes a review against the key priorities set out in the Annual Business Plan for 2023/24.

The Committee is RECOMMENDED to:

a.     Note the progress against the service priorities for 2023/24;

b.    Determine their preferred approach to the proposed activity-based exclusions as set out in Annex 2; and

c.     approve the Business Plan, Budget, Training Plan and Cash Management Strategy for 2024/25 as set out at Annex 1, and authorise the Executive Director of Resources & Section 151 Officer to approve the Special Reserved Matter in respect of the Brunel budget.

Sean Collins, Service Manager Pensions, presented the report to the Committee.

The report set out the business plan and budget for the Pension Fund for 2024/25 and key priorities for the Fund as agreed at the workshop, detailedd the key service activities for the year, and included the proposed budget and cash management strategy for the service. The report also reviewed the progress against the key service priorities included in the 2023/24 Plan as context for setting the key priorities going into the next financial year.

Members asked if there had been feedback from Hymans regarding criticism of the knowledge assessment. Members felt that the test included knowledge that members were not required to know. The Service Manager had contacted Hymans who had argued that it was a difficult balance, and they were expecting government guidance on this. Hymans expected Committee members to have sufficient knowledge & skills to be able to robustly challenge advice from officers and advisors.

Members made the point that there was no opportunity for learning from the test itself and asked for this to be fed back to Hymans.

The Service Manager spoke about having training and knowledge recognised in terms of special responsibility allowances. The Pension Fund Committee members had a training burden that was greater than other committees.

The Service Manager reported to the Committee that an escalation policy leading to selective divestments had been agreed with Brunel and other partner Funds. Specific targets had been agreed for 2024, with more ambitious targets provisionally agreed for 2025. This would be reported to Committee in the June meeting. Some parts of the report may be confidential due to potential impact on individual companies, and the needs to comply with the Market Abuse Regulations.

The Committee went into private session to discuss annex 2.

The committee clerk read out the exempt statement.

The Committee RESOLVED that, having been satisfied that the public interest test would be better served by not disclosing relevant information, and in accordance with the provisions of Section 100(A)(4) of the Local Government Act 1972, the public be excluded from the meeting for the following item of business because of the likely disclosure of exempt information as defined in Paragraphs 3 of Part 1 of Schedule 12A of the Act as amended.

The Committee opened the meeting to the public.

The Service Manager Pensions highlighted 3 priority areas identified in the workshop on 15 January and introduced the first of these as: further improvements to Governance – workforce planning, succession planning for two key posts, code of practice compliance and essential skills and knowledge.

Members enquired about succession planning and were informed that a job advertisement had been drafted to replace key officers and should go out next week. It was hoped that a replacement for the Service Manager Pensions would be able to start before the current officer leaves to enable a hand-over period. The position of Pension Services Manager was being covered by the Service Manager Pensions and the team leaders.  ...  view the full minutes text for item 73/24

12:05

This report will present the latest position on the Funds’ 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. 

Sean Collins, Service Manager Pensions, presented the report to the Committee which set out the current risk scores in terms of impact and likelihood, and a target level of risk and a mitigation action plan to address those risks that are currently not at their target score. The report also set out any progress on the mitigation actions agreed for those risks not yet at target and identified any changes to the risks which had arisen since the register was last reviewed.

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

12:10

This report covers the key governance and communication issues for the Fund, including a report on any breaches of regulation in the last quarter.

The Committee is RECOMMENDED to:

i)      Note the Fund’s update on the Pension Regulator’s General Code of Practice. 

ii)    Review and note the latest quarter’s breaches for the fund.

iii)   Note the communications update regarding the McCloud Disclosure requirements and Member Engagement.

RESOLVED to defer this item due to time constraints.

12:20

The report sets out the preliminary thoughts and ideas for the future workforce planning for the Fund.

The Committee is RECOMMENDED to

i)           Agree to the development of a Succession Plan for both the Pension Services Manager and the Service Manager Pensions;

ii)          Agree to the development of a Workforce Strategy for the fund which:

a)    Covers a short, medium and long-term horizon;

b)    Facilitates the implementation of the appropriate structure, staffing, skills and knowledge to meet new and changing demands;

c)    Makes use of new technologies and new ways of working, including agile working where appropriate;

d)    Considers succession planning, retention, and development of the workforce.

RESOLVED to defer this item due to time constraints.

12:30

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)    Agree the change of contract for two administrators from temporary to permanent posts;

b)    Determine whether to increase in establishment of one administrator post and one assistant post or reduce the SLA requirements; and

c)    Review team performance statistics and determine if any further information is required.

The Service Manger Pensions presented the report which 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.

RESOLVED to:

a)    Agree the change of contract for two administrators from temporary to permanent posts;

b)    increase in establishment of one administrator post and one assistant post and

c)    review team performance statistics and determine if any further information is required.

12:40

This report will present the reviewed Cyber Security policy to the Committee for approval.

The Committee is RECOMMENDED to review this report and determine any further actions to be taken.

RESOLVED to defer this item due to time constraints.

12:50

This report will present the reviewed Scheme of Delegations policy to the Committee for approval.

The Committee is RECOMMENDED to agree the revised Scheme of Delegation contained as Annex 1 to this report, noting the key changes set out in the report below. 

RESOLVED to defer this item due to time constraints.

13:00

This item provides the opportunity to raise any issues concerning Corporate Governance and Responsible Investment which need to be brought to the attention of the Committee.

RESOLVED to defer this item due to time constraints.