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Agenda, decisions and minutes

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Contact: Deborah Miller  Tel: 07920 084239; E-Mail:  deborah.miller@oxfordshire.gov.uk

Items
No. Item

1/20

Apologies for Absence and Temporary Appointments

Minutes:

Apologies for absence were received from Councillor Ian Corkin (Councillor Jeannette Matelot substituting)  and Councillor Roz Smith (Councillor Richard Webber substituting).

2/20

Minutes pdf icon PDF 311 KB

To approve the minutes of the meeting held on 6 December 2019 (PF3) and to receive information arising from them.

Minutes:

The Minutes of the Meeting held on 6 December 2019 were approved and signed as an accurate record, subject to Minute 69/19, 2nd paragraph, last sentence being amended to read ‘This recommendation had been endorsed by the Audit & Governance Committee, but would need to be ratified by Council before becoming effective.

3/20

Petitions and Public Address

Minutes:

The Committee received the following public address:

 

Mr Pete Wallis addressed the Committee as both an LGPS scheme member and as a member of Fossil Free Oxfordshire (FFO), against the proposal in the draft policy which proposed engagement with non-Paris-compliant companies for the next three years.  Although FFO felt that this was fine for most companies, they did nor feel this was acceptable for fossil fuel companies as the world needed to be decarbonised and this could only happen if the world stopped producing and using fossil fuels.  Fossil fuel companies therefore needed to shrink and ultimately cease to exist.  FFO urged the Committee the Committee to transfer a much larger asset allocation that the suggested 5% into Brunel’s passive low carbon fund, bearing in mind that Oxfordshire had committed to achieving a net-zero emission status by 2030.

 

He further urged the Committee to urge Brunel to make sure they had active low or zero carbon funds available and to include exclusion criteria into the Climate Change Policy, such as the Pension Fund of the Church of England which used TPI’s Carbon Performance to exclude the worst polluters.  Lastly, he asked the Committee to note a recent survey of 1132 Unison Members showed that 92% agreed that climate change would have a measurable economic impact within their lifetime and 84% agreed that ethics were more important than returns in investment decisions.  He felt that beneficiaries of the scheme should be consulted when considering investment principals and strategy.

 

Mr Bond speaking as an energy strategist, explained that there was currently an energy transition going on, driven by technology and policy. Solar, wind, batteries, electric vehicles were all on extremely rapid learning curves where costs were falling by 20% per year and their costs had fallen below those of fossil fuels.  There were also increasing actions coming from policy makers, including Oxfordshire County Council to prevent the use of fossil fuels and ban cars from city centres, together with an emerging market energy leapfrogging going on, led by China and India, whereby the emerging markets were going straight to renewable energy to fossil fuels.  The world was shifting from fossil fuels to renewable energy in the same way as two centuries ago it moved from biomass to fossil fuels and a century ago, we moved from horses to cars and twenty years ago from the newspapers to the internet.

 

The energy transition would lead to a significant reallocation of capital (this had been backed up by the world’s largest Fund Manager).  Therefore, the fossil fuel sector was deeply at risk and was a huge super-tanker of a sector with massive fixed costs that now faced structurally declining demand and new competition for the first time in its history.  It had been argued that this was a pendulum and that things would get better.  However, at times of profound change, the efficient market theory breaks down.  This could be argued if it was a cycle but is was a profound structural change.  Since  ...  view the full minutes text for item 3/20

4/20

Minutes of the Local Pension Board pdf icon PDF 432 KB

10:05

 

A copy of the unconfirmed Minutes of the Local Pension Board, which met on 24 January 2020 (PF5) is attached for information only.

Minutes:

The unconfirmed Minutes of the Local Pension Board which met on 24 January 2020 were noted.

5/20

Report of the Local Pension Board pdf icon PDF 199 KB

10:15

 

In a response to a request from the Chairman of Pension Fund Committee to have a dedicated item on each Committee agenda for the work of the Local Pension Board, attached at PF6 is the report by the Independent Chairman of the Local Pension Board.  It invites the Committee to respond to the key issues raised by the Pension Board at is most recent meeting on 24 January 2020.

 

The Committee is RECOMMENDED to note the comments of the Board as set out below, and agree the appointment of the new Head of Pensions at the Gloucestershire Pension Fund to take on the role as the Independent Chairman of the Oxfordshire Pension Board following the retirement of the current Chairman.

 

 

 

Minutes:

The Committee had before it the latest report by the Independent Chairman of the Local Pension Board.  Mr Alistair Bastin, Local Pension Board Member, spoke to the report on the board’s behalf, which invited the Committee to respond to the key issues contained within it.

 

Mr Bastin highlighted reported that the Committee welcomed the fact that 50% of funds had now been transitioned to Brunel and welcomed the inclusion of a Board Member on the Climate Change Workshop, together with the opportunity to review the draft Investment Strategy Statement at their next Meeting.

 

The Chairman reported that the Independent Chairman of the Local Pension Board, Mark Spilsbury was retiring from his role of Head of Pensions at Gloustershire and therefore would be stepping down as Chairman of the Local Pension Board.  The Committee paid tribute to Mr Slilsbury for his excellent work on the Board and formally thanked him.

 

RESOLVED:to note the comments of the Board and agree the appointment of the new Head of Pensions at the Gloucestershire Pension Fund to take on the role as the Independent Chairman of the Oxfordshire Pension Board following the retirement of the current Chairman.

 

6/20

Investment Strategy Statement including the Fundamental Asset Allocation and Climate Change Policy pdf icon PDF 212 KB

10:25

Additional documents:

Minutes:

The Committee reviewed its Investment Strategy Statement on an annual basis and carried out a fundamental review of its asset allocation every three years following on from the tri-ennial Fund Valuation.  The Committee had before it a report (PF7) which brought together the latest review of the Investment Strategy Statement including a new annex covering the Policy regarding Climate Change, and the formal advice of our Independent Financial Adviser in respect of the fundamental asset allocation.

 

In introducing the report, Mr Collins explained that, due to the restrictions on the investment cycles in respect of the allocations to the private market allocations within Brunel, the Committee were asked to approve a number of immediate proposals on asset allocations effective from 1 April 2020, as well as approving the draft Investment Strategy Statement and Climate Policy for formal consultation. 

 

The key change to the Investment Strategy Statement was the addition of a separate annex in respect of the Council’s Climate Change Policy.  This Policy had been informed by the Climate Change Workshop held in November, plus 2 meetings of the Climate Change Working Group established at the December meeting of this Committee.  The draft Climate Change Policy should be seen as an initial position statement which would be subject to regular review reflecting the rapidly changing environment in which this initial policy has been established.  In particular, the Policy itself recognised a number of shortfalls in the current availability of international accepted metrics used to assess the suitability of investments against the requirements of the Paris Agreement, and therefore included commitments to work with Brunel and others in the investment industry to establish such metrics.  This will in turn would allow more specific targets to be set within the Policy in future years.  The Pension Fund should be Carbon Neutral by 2050 and the Council by 2030 and therefore the Fund should be looking at more sustainable options to invest in through Brunel.  The Chairman added that if the Strategy was adopted today by the Committee, it would then go out to consultation to all stakeholders.

 

Councillor Mathew expressed concern over the lack of knowledge of what the other members of Brunel were demanding in relation to Climate Change.  Mr Collins reported that the Climate Change Policy had been signed off by 10 members of Brunel.  There had been a lot of cross working and communication with Brunel and other funds in the partnership and the direction of travel was consistent, timescales remained the only problem.  At the December Meeting the Committee would be looking at responsible investment and climate change.

 

In relation to page 21 of the report, Councillor John Sanders requested that the Committee receive a report on what engagement had taken place, together with the results.  The Chairman reported that Brunel would be attending the next two meetings of the Committee and that the second meeting would be talking about environmental issues.

 

The Committee expressed the need for reliable metrics.

 

 

Jo Robb felt that the Pension Fund pegging  ...  view the full minutes text for item 6/20

7/20

2019 Valuation and funding Strategy Statement pdf icon PDF 207 KB

11:40

 

Under the current regulatory framework, the Pension Fund is required to arrange for a Valuation of the Pension Fund every three years.  The latest Valuation is based on the position as at 31 March 2019, with a requirement for the Fund Actuary to produce their report and certify the employer contribution rates for 2020/21 onwards by 31 March 2020. This report updates the Committee on the work to date on the 2019 Valuation and recommends the Committee approves the revised Funding Strategy Statement.

 

The Committee is RECOMMENDED to note the latest position on the 2019 Valuation and approve the Funding Strategy Statement.

Minutes:

Under the current regulatory framework, the Pension Fund was required to arrange for a Valuation of the Pension Fund every three years.  The latest Valuation was based on the position as at 31 March 2019, with a requirement for the Fund Actuary to produce their report and certify the employer contribution rates for 2020/21 onwards by 31 March 2020. This report updated the Committee on the work to date on the 2019 Valuation and recommended the Committee approved the revised Funding Strategy Statement.

 

In introducing the report, Mr Collins reported that on the whole employers were happy, only the Further Education Colleges were concerned as they had less security than other members in the Fund, due to a proposed increase in the total contribution rate of up to 8% and a proposal to shorten the deficit recovery period to 15 years compared to a standard 20 years, reflecting the weaker financial covenant of the FE sector as a whole.

 

RESOLVED:to note the latest position on the 2019 Valuation and approve the Funding Strategy Statement.

8/20

Annual Business Plan pdf icon PDF 538 KB

11:50

Additional documents:

Minutes:

The Committee had before it a report which set out the business plan for the Pension Fund for 2020/21.  The Plan set out the key objectives of the Fund, detailed 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 2019/20 Plan as context for setting the key priorities going into the next financial year.

 

Mr collins reported that the key objectives for the Oxfordshire Pension Fund were set out on the first page of the Business Plan for 2020/21 (contained in annex 1), and remained consistent with those agreed for previous years.  These were summarised as:

·            To administer pension benefits in accordance with the LGPS regulations, and the guidance set out by the Pensons Regulator

·            To achieve a 100% funding level

·            To ensure there are sufficient liquid resources to meet the liabilities of the Fund as they fall due, and

·            To maintain as near stable and affordable employer contribution rates as possible.

 

Part A of the plan set out the broad service activity undertaken by the Fund.  As with the key objectives, those were unchanged from previous years.  The service priorities for the forthcoming financial year were then set out in more detail in Part B.  These priorities did not include the business as usual activity which would continue alongside the activities included in Part B.

 

Mr Collins sought the Committee’s view regarding all members of the Committee and Board undertaking the knowledge and Framework Assessment Survey.  The Committee agreed that it was useful tool for training.

 

The Committee felt that the knowledge and Framework Assesment had been a very useful training tool in the past and indicated that it would wish to see all members of the Committee and the Local Pensions Board undertake the training.

 

RESOLVED:to:

(a)       approve the Business Plan and Budget for 2020/21 as set out at Annex 1;

(b)       approve the Pension Fund Cash Management Strategy for 2020/21.

(c)        delegate authority to the Director of Finance to make changes necessary to the Pension Fund Cash Management Strategy during the year, in line with changes to the County Council’s Treasury Management Strategy;

(d)       delegate authority to the Director of Finance to open separate pension fund bank, deposit and investment accounts as appropriate;

(e)       delegate authority to the Director of Finance to borrow money for the pension fund in accordance with the regulations;

(f)         agree that all members of the Pension Fund Committee and Local Pension Board complete the Knowledge and Assessment Framework Survey.

9/20

Risk Register pdf icon PDF 206 KB

12:05

 

This report updates the Committee on the Fund’s Risk Register, updating the position on risks reported to the last meeting and adding in new risks identified in the intervening period.

 

The Committee is RECOMMENDED to note the changes to the risk register and offer any further comments.

Additional documents:

Minutes:

The Committee had before it a report which updated the Committee on the Fund’s Risk Register, updating the position on risks reported to the last meeting, together with any new risks identified in the intervening period.  Mr Collins reported that one new risk had been added to the register as risk number 20.  The risk covered the potential implications of the current Employment Tribunals which were looking to identify appropriate remedies following the court decisions in the age discrimination cases brought by McCloud and Sargeant.  It was likely that the required remedies would involve bringing a wider group of scheme members within the current protection arrangements, initially only offered to those with 10 years of retirement.  This would produce a massive backlog of work and the LGPS Fund were looking for staff to carry out the work.  Mr Collins reported that he had been instructed to put money into the Administration Budget to allow for a fast response to the situation.

 

Councillor Charles Mathew requested that further clarification be added to the Risk Register at 20 on the significant legal requirement to recalculate retrospective member benefits, presently the basis of which was not yet clear.

 

RESOLVED:to note the changes to the risk register and offer any further comments, subject to further clarification being added to Reference 20 of the Risk Register on the significant legal requirement to recalculate retrospective member benefits, presently the basis of which was not yet clear.

10/20

Administration Report pdf icon PDF 726 KB

12:10

 

This report updates the Committee on the latest position on administration issues.

 

The Committee is RECOMMENDED to:

 

(a)         note the report;

(b)         agree the Fund meets the tax cost associated with the late payment of death grant arising from administrative error as set out in parapraph1 11-12;

(c)         determine payment of the death grant for the case set out in paragraphs 13-18;

(d)         confirm changes to administration strategy as set out in paragraph 31.

Additional documents:

Minutes:

The Committee had before it a report which updated members on scheme administration and date issues.

 

In relation to paragraphs 2 – 3 of the report, Mrs Fox reported that there had been two resignations, with potentially another.  Recruitment to replace the staff had already started and in view of the end of year work, one team member had been seconded from benefits to the employer team until August 2020.

 

In relation to paragraphs 9-17 of the report, Mrs Fox drew to the Committee’s attention two Death Grant cases for decision.  On the first case, unfortunately due to an administrative error, permission was sought from the Committee to agree that the fund should pay £12,671.65 tax, which had resulted from a death grant being paid late and therefore incurring 45% tax charge.

 

The second case requiring a decision from the Committee was that of a member who had died in service on 21 September 2019, who had not registered any next of kin details on file including an ‘expression of wish’ form.

 

However, the employer subsequently provided the name and contact details for a daughter who duly completed a pension declaration form stating that she was the only person with an interest in the death grant payable from the fund. However, during several telephone calls it found that there was also a son, living in Australia.  Initially, the son informed Pension Services that he did not have any interest in receiving part of any death grant payment but later conversations revealed that this decision was based on incorrect information supplied by his sister and so he then made declaration as an interested party. He also included a granddaughter (daughter of deceased sister) on this declaration.

 

The member’s will leaves her estate to be split between the five grandchildren when they attain the age of 25. The death grant does not form part of the estate and was payable at Pension Fund discretion. This was a significant amount in excess of £100,000, and there were various options in how payment could be made:

 

·            50/50 split between sister and brother

·            A percentage paid to sister and brother with the remainder being split between grandchildren

·            Payment split equally between grandchildren only

 

It should be noted that the fund had been advised that the initial claimant has paid £700 in respect of funeral costs out of her own funds.  The Committee was asked to consider how the Death Grant should be paid.

 

The Committee requested that measures be put in place to ensure that the oversight did not happen again and that the importance of taking written notes be reiterated to the staff.  Mrs Fox reported that they were reviewing all other cases to check death tasks and that staff has been reminded of the importance of accurate recording.

 

Councillor Mathews felt that the death grant should be a 3 way split to include the granddaughter in her own right.  District Councillor Jo Robb felt that the middle option of a percentage paid to  ...  view the full minutes text for item 10/20

11/20

EXEMPT ITEMS

The Committee is RECOMMENDED that the public be excluded for the duration of items PF13, PF14 and PF15 in the Agenda 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.

 

NOTE: In the case of items 14 and 15 there are no reports circulated with the Agenda. Any exempt information will be reported orally.

Minutes:

The Committee RESOLVED that the public be excluded for the duration of items PF13, PF14 and PF15 in the Agenda since it was 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 outweighed the public interest in disclosing the information.

12/20

Overview and Outlook for Investment Markets pdf icon PDF 424 KB

12:25

 

Report of the Independent Financial Adviser (PF13).

 

The report sets out an overview of the current and future investment scene and market developments across various regions and sectors. The report itself does not contain exempt information and is available to the public. The Independent Financial Adviser will also report orally and any information reported orally will be exempt information.

 

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, in that such disclosure would prejudice the trading activities of the fund managers involved and would prejudice the position of the authority's investments in funding the Pension Fund.

 

The Committee is RECOMMENDED to receive the report, tables and graphs, to receive the oral report, to consider any further action arising on them and to bear the Independent Financial Adviser’s conclusions in mind when considering the Fund Managers’ reports.

Minutes:

The Committee had before it a report of the Independent Advisor setting out an overview of the current and future investment scene and market developments across various regions and sectors. The report itself did not contain exempt information and was available to the public. The Independent Financial Adviser would also report orally and any information reported orally would be exempt information.

 

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 was considered that, in all the circumstances of the case, the public interest in maintaining the exemption outweighed the public interest in disclosing the information, in that such disclosure would prejudice the trading activities of the fund managers involved and would prejudice the position of the authority's investments in funding the Pension Fund.

 

RESOLVED:  to receive the report, tables and graphs, to receive the oral report, to consider any further action arising on them and to bear the Independent Financial Adviser’s conclusions in mind when considering the Fund Managers’ reports.

13/20

Overview of Past and Current Investment Position

12:40

 

The Independent Financial Adviser will review the investment activity during the past quarter, present a summary of the Fund’s position as at 31 December 2019, and highlight any key performance issues, with reference to Tables and Graphs. 

 

The Committee is RECOMMENDED to receive the tables and graphs, and that the information contained in them be borne in mind, insofar as they relate to items on the agenda.

 

Additional documents:

Minutes:

The Independent Financial Advisor reviewed the investment activity during the past quarter, presented a summary of the Fund’s position as at 31 December 2019, and highlighted any key performance issues, with reference to the attached tables and graphs.

 

Mr Davies reported that the Fund

 

 

14/20

Summary by the Independent Financial Adviser

12:55

 

The Independent Financial Adviser will, if necessary, summarise the foregoing reports of the Fund Managers and answer any questions from 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, in that such disclosure would prejudice the trading activities of the fund managers involved and would prejudice the position of the authority's investments in funding the Pension Fund. 

Minutes:

The Independent Financial Adviser gave a final word regarding Legal & General and reported that he had no frther information to add to the previous reports.

15/20

Corporate Governance and Socially Responsible Investment

13:00

 

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