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Agenda and minutes

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Contact: Khalid Ahmed  Tel: 07990 368048; E-Mail:  khalid.ahmed@oxfordshire.gov.uk

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Items
No. Item

31/22

Apologies for Absence and Temporary Appointments

Minutes:

Apologies for absence were received from Councillor Nick Field-Johnson and Steve Moran. 

32/22

Minutes pdf icon PDF 344 KB

10.15am

 

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

Minutes:

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

 

In relation to Minute No. 26/22 – Changes to the Constitution of the Pension Fund Committee, the Committee was informed that Council approved the appropriate changes to the Terms of Reference and Constitution of the Committee. On the recommendation on allowances being paid to both Pension Fund Committee and Local Pension Board Members, this would be looked at in more detail as part of a wider review of allowances paid to all Members.        

33/22

Minutes of the Local Pension Board pdf icon PDF 299 KB

10:20

 

A copy of the unconfirmed Minutes of the Local Pension Board, which met on 8 July 2022 is attached for information only.

Minutes:

The unconfirmed Minutes of the Local Pension Board held on 8 July 2022 were noted.

34/22

Report of the Local Pension Board pdf icon PDF 609 KB

10:25

 

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

Minutes:

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

 

Reference was made to the Board’s request to the Pension Fund Committee  that the Committee review the risk scores for both risks 16 and 17 and the recommendation that an over-arching policy document in respect of cyber security be introduced. 

 

RESOLVED - (1).    That the Committee agreed the following:-

a)       to note the comments of the Board contained in the report as set out below,

b)       to note the suggested changes to the risk register which have been incorporated into the risk register report elsewhere on this agenda.

35/22

Funding Strategy Statement and the 2022 Valuation pdf icon PDF 391 KB

10.35

 

This report will set out the high-level results for the whole Fund following the 2022 Valuation, with further work required before the results for the individual scheme employers are available. The report will also set out the revised Funding Strategy Statement which sets the ground rules on which the Valuation is based.

 

Members will be asked to approve the draft Funding Strategy Statement as the basis for consultation.

 

The Committee is recommended to note the position on the 2022 Valuation and agree the draft Funding Strategy Statement and accompanying annexes as the basis of consultation with scheme employers

Additional documents:

Minutes:

Robert McInroy and Tom Hoare of Hymans Robertson attended the meeting and presented the report.

 

Members were provided with a report which set out the high-level results for the whole Fund following the 2022 Valuation, with further work required before the results for the individual scheme employers are available.

 

The report also set out the revised Funding Strategy Statement which sets the ground rules on which the Valuation is based.

 

Reference was made to the worsening future economic outlook, particularly in relation to rising inflation, which would impact on the cost of future benefit accrual and was a risk.

 

RESOLVED – That the position on the 2022 Valuation be noted and approval be given to the draft Funding Strategy Statement and accompanying annexes as the basis of consultation with scheme employers.

36/22

Review of the Business Plan 2022/23 pdf icon PDF 282 KB

10.55

 

This report will provide an update on progress against the key priorities set out in the Annual Business Plan for 2022/23.

 

The Committee is RECOMMENDED to

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

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

Minutes:

The Committee was provided with an update on progress against the key priorities set out in the Annual Business Plan for 2022/23.

 

Review and Improve the Scheme’s Data

 

The Committee was informed that three measures of success were amber:

 

·       Data of a standard to support delivery of all service KPIs as reflected in quarterly performance reports – There had been limited work undertaken on developing data for the standard service KPIs to be included in the quarterly performance reports

·       No data security breaches reported and Cyber Security Policy is updated (where required) with clear information on roles and responsibilities – There had been two data breaches which were detailed later in the agenda. Members were informed that from analysis undertaken, several gaps in the current approach had been identified, particularly in respect of monitoring compliance with the various policies. 

 

Develop a holistic approach to technology across Pension Administration Services 

 

The Committee was informed that three measures of success were amber. Members were informed that insufficient work has been completed on the project to move the risks against completing this project from Amber. 

 

Progress had been made on the managing of the project and on a time-line which would enable the Committee to make a decision on whether to re-tender the contract or extend the initial arrangements. More work needed to be completed to provide the assurance that the specification could be completed in time to complete the research into what was currently available, and a decision made on the most appropriate way forward. 

 

A full report would be presented to the December Committee.

 

Enhanced Delivery of Responsible Investment responsibilities 

 

The Service Manager for Pensions, Insurance and Money Management reported that there had been delays in the recruitment for the new Responsible Officer, with the need to go through an appeal process in respect of grade set through the Job Evaluation process. 

 

There were concerns at being able to attract a suitable candidate at the revised grade agreed, but the decision had been made to test the market rather than delay the recruitment process any further.

 

Reference was made to the work on the engagement policy and improved reporting which was directly tied into the current Climate Change Stocktake exercise being run by Brunel and the Funds in the partnership. 

 

The one area shown as Amber against this objective related to a successful application in respect of the Stewardship Code.  This work required the successful appointment of the additional resources, and Members were informed that from other Funds who have already completed the process there was a lot of work involved.  It was not possible to confirm the target could be met this financial year.

 

Deliver improved and consistent service performance to scheme members

 

The Committee was informed that performance had been improving, however it remained below Service Level Agreement (SLA) targets on a number of measures.  With the successful recruiting of additional staffing, performance standards should be increased and brought back into line with the SLA. Reference was made to  ...  view the full minutes text for item 36/22

37/22

Risk Register pdf icon PDF 203 KB

11.15

 

This report will present 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.

Additional documents:

Minutes:

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

 

Reference was made to the request from the Local Pension Board at their meeting on 8 July 2022, that the risks scores for Risks 16 and 17 should be increased until such time the Fund had a comprehensive cyber security policy in place. Therefore, the risk score for both Risk 16 in respect of system failure (potentially through malware) and Risk 17 in respect of data security breaches, have been increased and are now shown as Amber.

 

There were three Amber risks which related to the skills and knowledge of the key groups involved in the administration of the Pension Fund, namely the Members of this Committee, Members of the Local Pension Board and the Pension Fund Officers. 

 

The Service Manager for Pensions, Insurance and Money Management reported that an email had been sent out to Committee and Board Members to enable the National Knowledge Assessment to be carried out to assess skills and knowledge of Members.

 

The Chair referred to the impact of staff turnover and the loss of expertise being the main reason for the amber rating of the risk of insufficient skills and knowledge amongst Pension Fund Officers.     

 

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

38/22

Administration Report pdf icon PDF 570 KB

11.25

 

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) agree the change to wording of the fund’s discretionary statement relating to trivial commutation and small pots.

Additional documents:

Minutes:

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.

 

Members were updated on staffing within the Team, together with performance. On performance statistics Members were updated that there were 33 admission agreements to be finalised.

 

The Chair welcomed the listing of complaints and the way they were being dealt with.

 

In relation to Data Quality, the scores were currently lower than the previous year which was due in part to utilising a new reporting tool which appeared was overstating current data issues.  It was expected that these issues would be resolved, and a number of the outstanding data issues would be cleared before the final scores were submitted to the Pension Regulator.

 

The Committee was informed that there had been little progress in relation to Debt Management as there had been no progress in finding an officer to monitor and chase outstanding payments. Last quarter the total of outstanding invoices reported was incorrect as it excluded amounts due from scheme employers for early release of pension.

 

Reference was made to pension overpayments following ten deaths in the quarter which could not be recovered. Therefore, the Committee was asked to approve writing off the debt of £37.46.

 

RESOLVED -  (1) That approval be given to the change to wording of the fund’s discretionary statement relating to trivial commutation and small pots.

 

(2) That approval be given to the write off of £37.46 of irrecoverable debt.

39/22

Cyber Security pdf icon PDF 221 KB

11.40

 

This report sets out the approach for managing the cyber security risks facing this Committee and how the Committee can monitor the success of this approach.

 

The Committee is RECOMMENDED to comment on the actions proposed in this report and to advise if any other actions should be taken.

 

Additional documents:

Minutes:

Consideration was given to a report which set out the approach for managing the cyber security risks facing this Committee and how the Committee can monitor the success of this approach.

 

The Committee was informed that in relation to the Pension Fund, there were cyber security measures in place, however, it was acknowledged that there needed to be better communication with IT and the Fund’s suppliers to ensure compliance.

 

The report contained a number of actions which would take place to ensure the Fund was fully compliant.

 

Discussion took place on the contents of the report and reference was made to the need of assurance from suppliers. There was discussion on potential breaches and the Committee was assured that such incidents would be reported to the Committee as a matter of urgency.

 

RESOLVED – That the actions outlined in the report be noted and it was agreed that a further report be submitted to the Committee providing assurances from suppliers of the measures put in place to combat cyber incidents to the Fund.  

40/22

Annual Report and Accounts 2021/22 pdf icon PDF 2 MB

12.00

 

The Committee will be recommended to endorse the Annual Report and Accounts

Minutes:

The Committee was asked to note this report presenting the Annual Report and Accounts for the Pension Fund and highlight any issues raised by external audit.

 

Members were informed that the total for investments in Bonds on page 211 of the agenda pack had been duplicated across both 2021/22 and 2020/21.  The correct figure for 2021/22 should be amended to read 80,934.

 

A Member asked for the reason for the almost £1m additional costs in administration and officers undertook to provide this information.

 

In relation to liquidity risk, reference was made to Academies which formed a large part of the Pension Fund and the liquidity risk this posed due to shifts in the number of employees. Members were informed that pension deficits associated with academies were underwritten by the Government.  The numbers of LGPS members in academy schools did not relate directly to pupil numbers but would vary in line with the decisions of individual Governing Bodies around the mix of teaching and non-teaching staff and the support arrangements for pupils with special education needs.  The risk of a significant reduction in LGPS membership as a result of a fall in pupil numbers was not felt to warrant a specific line in the risk register, although consideration could be given to adding a general “Cash Flow” item to the Risk Register.

 

RESOLVED – That the Committee endorses the Annual Report and Accounts.

41/22

Taskforce for Climate-Related Financial Disclosures Report 2021/22 pdf icon PDF 773 KB

12.05

 

The report will set out the performance of the Pension Fund on the Implementation of its Climate Change Policy and the priorities for the forthcoming period.

 

NB The total for investments in Bonds on page 211 of the agenda pack has been duplicated across both 2021/22 and 2020/21.  The correct figure for 2021/22 should be amended to read 80,934.

 

The Committee is recommended to a) approve the draft Task-Force for Climate-related Financial Disclosures Report 2021/22, and b) delegate to the Director for Finance responsibility for submitting a response to the Government on their recent consultation of future Task-force for Climate-related Financial Disclosures reporting, having first taken the advice of the Climate Change Working Group.

Minutes:

The Committee received a report which set out the performance of the Pension Fund on the Implementation of its Climate Change Policy and the priorities for the forthcoming period.

 

RESOLVED – (1) That approval be given to the draft Task-Force for Climate-related Financial Disclosures Report 2021/22

 

(2) That delegated authority be given to the Director for Finance for responsibility for submitting a response to the Government on their recent consultation of future Task-force for Climate-related Financial Disclosures reporting, having first taken the advice of the Climate Change Working Group.

42/22

Report of the Independent Investment Adviser pdf icon PDF 615 KB

12.20

 

This report will cover 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 standard quarterly investment performance monitoring reports.

Additional documents:

Minutes:

The Fund’s Independent Investment Adviser 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 standard quarterly investment performance monitoring reports.

 

The Committee was informed that the value of the Fund in the quarter had fallen to £3.05bn, a decrease of £215m compared to the end March value of £3.26bn.

 

Reference was made to the conflict in Ukraine which was impacting on public markets. With an increasingly inflationary environment, with higher energy and food prices which were driving CPI even higher. Future strategy would have to make provision for the likelihood of a higher level of inflation beyond the short-term outlook.

 

There were concerns expressed regarding Brunel’s lack of transparency concerning the management of their sub-funds, particularly in relation to performance of their managers. Members noted that Brunel held around 80% of Oxfordshire Pension Fund assets and Members requested that Brunel be asked to give the Independent Investment Adviser to the Fund, access to the relevant information. [Action: Service Manager for Pensions, Insurance, and Money Management]

 

The Independent Investment Adviser informed the Committee that in relation to currencies in quarter 3 there would be big differentials. With the strength of the US dollar and the pounds current weakness, there were recession fears, rising living costs, inflation and the threats of public sector strikes. Rising inflation was not good news for the Fund.

 

In relation to interest rates which were continuing to rise, it was expected that they would continue to rise as the Bank of England try to counter rising inflation.

 

RESOLVED – (1) That depending on the feedback from Hyman Robertson’s knowledge assessment, Brunel be asked to produce a training programme for Fund elected members and others that will provide information about the asset classes that they manage and their processes.

 

(2) That Brunel be asked to support the forthcoming Strategic Asset Allocation review, to ensure that the Fund’s developing requirements can be accommodated. 

43/22

Corporate Governance and Socially Responsible Investment

12.50

 

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.

Minutes:

Members were informed that officers had responded to consultation on Climate Action 100+ providing feedback on issues discussed previously by the Committee around asking them to have more focus on companies delivering actual emission reductions, rather than just plans and targets.

 

Also, suggestions were asked for workstreams and they were asked to look at the Investor State Dispute Settlement process.

 

The Committee noted the information reported.