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Agenda and minutes

Venue: Room 3 - County Hall, New Road, Oxford OX1 1ND. View directions

Contact: Julie Dean  Tel: 07393 001089; Email:  julie.dean@oxfordshire.gov.uk

Items
No. Item

29/19

Welcome by Chairman

Minutes:

The Chairman welcomed all to the meeting.

30/19

Apologies for Absence

Minutes:

Councillor Johnston asked what was happening regarding the vacancy on the Board following results in the recent district council elections..

 

Members were advised that the process to appoint a replacement had started and it was expected that the situation would be resolved soon.

31/19

Declarations of Interest - see guidance note opposite

Minutes:

There were no declarations of interest.

32/19

Minutes pdf icon PDF 155 KB

To approve the minutes of the meeting held on 26 April 2019                  (LPB5) and to receive information arising from them.

Minutes:

The minutes of the meeting held on 26 April 2019 were approved and signed as a correct record.

 

With regard to Minute 22/19 Employer Management - Improvement Plan Mr Collins confirmed that the Plan had not been updated since June as requested as targets had been amended. It was anticipated that that would be done by September.

33/19

EXCLUSION OF PRESS AND PUBLIC

The Committee is RECOMMENDED that the public be excluded for the duration of item 7 in the Agenda since it is likely that if they were present during this item 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 REPORT RELATING TO THE EXEMPT ITEM HAS NOT BEEN MADE PUBLIC AND SHOULD BE REGARDED AS STRICTLY PRIVATE TO MEMBERS AND OFFICERS ENTITLED TO RECEIVE IT.

 

 

Minutes:

RESOLVED: that the public be excluded for the duration of item 7 in the Agenda since it was likely that if they were present during that item 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 had been considered that, in all the circumstances of each case, the public interest in maintaining the exemption outweighed the public interest in disclosing the information.

 

34/19

EXEMPT MINUTES

To approve the exempt Minutes of the Local Pension Board meeting held on 26 April 2019 (PF7).

 

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 distort the proper process of free negotiations with another party.

 

READMISSION OF PRESS AND PUBLIC

Minutes:

The exempt minutes of the meeting held on 26 April were approved and signed.

 

Mr Collins gave an update with regard to Edwards and Ward.  There had been a number of late returns which had been accepted and work was continuing to validate those. The issue was now between staff members and Edwards and Ward and he would be contacting Unison to see how they wished to proceed and undertook to copy in the Branch Chairman.

 

35/19

Annual Report of the Local Pension Board pdf icon PDF 104 KB

This report (LPB8) presents the work of the Local Pension Board for the last year, for inclusion within the Fund’s Annual Report and Accounts, as well as being published on the Board’s web pages. It sets out the key issues considered during 2018/19 and the work programme for 2019/20.

 

The Board is RECOMMENDED to approve the Local Pension Board Annual Report for 2019/20/

Minutes:

The Board considered (LPB8) a report setting out the work of the Local pension Board for the last year and the key issues considered during 2018/19 and the work programme for 2019/20.

 

RESOLVED: to approve the Local Pension Board Annual Report for 2019/20.

36/19

Employer Management - Improvement Plan pdf icon PDF 165 KB

The attached report (LPB9) is the latest in the series of reports to the Pension Fund Committee and this Board. It sets out the latest position against the objectives and milestones, as set out in the Improvement Plan. The Board will be given a verbal update on the situation since the Pension Fund Committee meeting.

Additional documents:

Minutes:

The Board considered (LPB9) a report setting out the latest position against objectives and milestones as set out in the Improvement Plan.

 

Some concern regarding the availability of key performance indicators to enable the Board to assess progress. Performance against standard KPIs had dropped whilst the backlog of work had been addressed. Interim targets had been set to allow progress to restoring performance to be addressed.  Regular reports are to be made on KPIs.

 

Mr Collins highlighted continuing problems with the standard of returns with 46% failing to meet basic tolerance tests and needing to be returned. There were still a number of mistakes being repeated all of which had put a great deal of pressure on staff resources.

 

His team had worked closely with HR in order to address issues with recruitment and retention. Regarding turnover of staff there was no common theme for staff leaving but it been difficult to deal with workload over the last few years.

 

RESOLVED: to note the latest position regarding implementation of the Improvement Plan.

37/19

Review of the Annual Business Plan pdf icon PDF 154 KB

The Board is invited to review the latest position against the Annual Business Plan for 2019/20 (LPB10), as considered by the Pension Fund Committee at its meeting on 7 June 2019.

Additional documents:

Minutes:

The Board considered (LPB10) a review of the latest position against the Annual business Plan for 2019/20 as considered by the Pension Fund Committee in June 2019.

 

Mr Collins updated on the development of the Brunel partnership and the appointment of a new CEO there.

 

Board members discussed the development of the Brunel portfolios and the desire to switch assets from the current portfolio to low carbon portfolios, transparency around the work of the fund in delivering its ESG policy as included in the Investment Strategy statement; the possibility of mandatory training for members and appointment of named substitutes who would be required to receive the same training as Committee members.

 

RESOLVED:

 

(a)          note progress against the key service priorities included within the 2019/20 Business plan; and

 

(b)          approve the amendment to the measure of success in respect of Service Priority 5 – Improve Scheme Member Communications as set out in paragraph 19 of the report LPB10

 

 

 

 

38/19

Risk Register pdf icon PDF 129 KB

The latest Risk Register, as considered by the Pension Fund Committee on 7 June 2019 is attached at LPB11. The Board is invited to review the report and to offer any further views back to Committee.

Additional documents:

Minutes:

The Board had before it the latest Risk Register as considered by the Pension Fund Committee on 7 June 2019 with an invitation to review and offer any further views.

 

Mr Collins advised that it was proposed to move back to a system of traffic lighting issues in the next version.

 

RESOLVED: to note the changes proposed to be made to the risk register.

39/19

Annual Review of Fund Policies pdf icon PDF 180 KB

The report (LPB12) covers the annual review of the Fund’s policy documents, as agreed by the Pension Fund Committee at its meeting on 7 June 2019. The report has been amended to reflect the revised recommendations agreed by the Committee. For the information of the Board, the decisions made by the Committee were as follows (for confirmation at the September Committee):

 

‘to approve the revised Investment Strategy Statement as set out in Annex 2, noting the changes as discussed in the report and

 

(i)            endorse the current approach and direction of travel as set out in the Addressing Climate Change Position Statement, including:

·         the integration of consideration of environmental and social risks, as well as good governance and stewardship into all decision-making processes

·         contributing to a more sustainable and resilient financial system in alignment with the UN Sustainable Development Goals

·         ensuring all portfolios across all asset classes are carbon and climate aware

·         decarbonising the listed portfolios, and developing measurable objectives and targets

·         accessing positive climate impact investment opportunities. such as the 35% investment in renewable energy funds within the infrastructure portfolio 

·         active engagement with the underlying companies through asset managers, engagement and voting specialists and collaborative forums with other investors

·         improving the transparency of reporting including carbon footprinting and fossil fuel exposure and the impacts of our engagements

 

(ii)          ask Officers to set up a Climate Change Workshop in the Autumn to define timescales, milestones and reporting mechanisms for the above approach and to contribute to the Climate Change Policy being developed by Brunel, seeking participation from a wide range of stakeholders to ensure a balanced discussion; and

 

(iii)         note the view of Brunel that in light of the above approach, they do not consider a top down approach to divestment to be an appropriate strategy for its clients.

 

 

(b)  In relation to Annex 3 – the Governance Policy and Governance Compliance the Committee discussed the proposal put forward by the Local Pension Board at its last meeting that consideration be given by the Committee to mandating attendance by Committee members at certain training events. During discussion of this proposal, the Committee considered that a form of mandatory training was desired, however, that further thought was required and investigation carried out into this matter. It was therefore AGREED to refer these changes to the next meeting of Committee in September following further work;

 

(c)  to APPROVE the revised policy documents as set out in Annexes 1, 4, 5 and 7, noting the changes in the documents as discussed above;

 

(d)  AGREE the delegation to the Service Manager (Pensions) the responsibility for exercising the new discretionary decisions as set out in paragraph 47 above, and the subsequent changes in the scheme of delegation to ensure it is consistent with the schedule of Administering Authority Discretions; and

 

(e)  note that no new changes have been made to the Scheme of Delegation and the Procedure for Reporting Breaches of Law to the Pension Regulator’.

 

 

 

Additional documents:

Minutes:

The Board had before it a paper (LPB12) which covered the annual review of the Fund’s policy documents as agreed by the pension Fund Committee on 7 June 2019 and which had been amended to reflect the revised recommendations agreed by the Committee.

 

Mr Collins presented the report.

 

He confirmed the Funding Strategy Statement would be reviewed again this year and brought back to the Board at its next meeting.

 

Regarding the Triennial Valuation and Strategic Asset Allocation Review he confirmed that he would be contacting scheme member representatives on the Board to arrange a meeting to feed views in as appropriate.

 

Board members highlighted a potential area of concern regarding the need to provide continuity particularly as the end of the current 4-year cycle was approaching.

 

Councillor Johnston referred to an added pressure arising from the potential for political change in what were volatile political times as evidenced by the recent local elections.

 

Mr Collins advised that a period of office could be extended and staggered so not all board members reached the end of their tenure at the same time.

 

RESOLVED: to note the Statement and amendments to it.

40/19

Monitoring Fund Manager Fees pdf icon PDF 139 KB

This report has been included as a result of a request of the Board for a report every 6 months on the latest data on Fund Manager fees (LPB13).

 

The Board is invited to consider the information contained in this report; determine what conclusions it can draw from the data; and advise Pension Fund Committee accordingly.

Additional documents:

Minutes:

The report (LPB13) set out the latest data on Fund manager Fees.  The report had been submitted following a request by the Board for a report every 6 months.

 

Mr Bastin tabled a spreadsheet highlighting a number of underperforming fund managers to an alarming level quoting one example to 5.2% below target with a loss to the fund of some £8.2 million as opposed to £13million profit if it had hit its benchmark. Some managers had underperformed for the last 5 years. Consequently the fund could be missing out on tens of millions.

 

Mr Collins accepted there were annual fluctuations and the Pension Fund Committee had felt that it was not always the best move to change managers to frequently for those reasons and in some years we were well above the benchmark and annual figures did not always present the best picture.  The benchmark was the aggregate figure of all managers.

 

The Chairman advised some caution insofar as some managers outperformed others over a 5 year period and under the Brunel arrangements there should be more of a balance from a wider more diversified range.  Also 2 of the underperformers in the table spreadsheet would moving to Brunel.

 

Mr Collins advised that the next big Asset Management review would be presented to Committee next March.

 

Agreed to consider the information set out in the table papers and bring it back to Board members with a report setting out possible options for a 3 or 5 year review basis.

41/19

Items to Include in Report to the Pension Fund Committee

The Board is invited to confirm the issues it wishes to include in its latest report to the Committee.

Minutes:

The following items were agreed for report to the Pension Fund Committee:

 

1.         The Board noted that the Oxfordshire Pension Fund had invested in the Brunel Pension Partnership passive global and UK equity portfolios but not in the low carbon portfolio. The Board requested that the Oxfordshire Pension Committee considers investing in the low carbon portfolio, in the context of reducing the Fund’s carbon footprint and reducing climate risk, possibly funded by a reduction in the level of investments made in the global and UK equities passive portfolios.

 

2.         Regarding the Pension Fund Business Plan 2019/20, the Pension Board was pleased that the Pension Committee had supported the change to the measure of success for service priority 5 to improved customer satisfaction.

 

3.         Following a discussion of the Fund’s Governance Policy and Governance Compliance Statement, the Board indicated its support for the proposition of having named substitutes for Pension Committee members. It also supported the need for a training plan for Committee members.

 

4.         The Board requested that the Pension Committee consider the performance analysis (to follow), produced by a member of the Pension Board in relation to the agenda item on investment management fees, which was discussed at the Board meeting.

 

42/19

Items to be included in the Agenda for the next meeting of the Board

Members of the Board are invited to identify any issues they wish to add to the Agenda for the next meeting of this Board.

Minutes:

Issues to be added to the Agenda for the next meeting of the Board:

 

Employer training

Valuation.