There will be an oral report on the latest position in respect of the development of the Brunel Pension Partnership, including an update on the development of the new investment portfolios.
Minutes:
Sean Collins gave an oral report on the latest position on the development of the Brunel Pension Partnership (BPP), including an update on the development of the new investment portfolios. He reported as follows:
- The Oversight Board (OB) had endorsed the Services Agreement Strategy subject to any minor changes. There was now a Services Agreement and Schedule to provide services to the Fund (providing Brunel had received the relevant approvals from the Financial Conduct Authority);
- The Business Plan for 2018/19 had now been signed off by all ten funds. Minor changes had been made by the OB, the principle one being the addition of a Code of Conduct for all Board members;
- A portfolio pack had been produced in order that Pension Fund Committee could make their indicative allocations. This had been unchanged since the first draft drawn up by the Client Group. Tender arrangements were currently in the process of production - therefore by 1 April 2018 the passive manager should be known.
Sean Collins confirmed that the Minutes of the OB meeting would be made available to Board and Committees once the Chairman had agreed them. He added that the Minutes of previous OB’s were already available.
With regard to a query concerning decision-making, Sean Collins reported that the nominated shareholder representative for this Pension Fund was the Council’s Director of Finance, Lorna Baxter, following consultation with the Chairman of the Committee and himself. The Committee had discussed this arrangement at length and had wanted to keep it under review. All decisions were to be reported to Committee, but retrospectively. Currently the Chairman of Pension Fund Committee was happy to be advised in this way.
Sean Collins reported that a decision had been made by HMRC that there would be no relief on stamp duty on other taxes payable during the transition of assets. Brunel had therefore been working with Alpha, PwC and Russell Investments on proposals to mitigate the potential tax liability. The Client Group had agreed, an outline proposal and a further detailed report would be considered by the Client Group at the end of February.
In response to a query about the costs incurred by the setting up of Brunel and when it was expected that there would be net savings from pooling, Sean Collins stated that, at this stage there were few variations in the figures included in the approved Business Case. To date all had been developed in line with the Business Case, with a small variation in respect of cash flow regarding the custodian, but expectations were that the final savings would be greater than initially assumed. The Chairman confirmed that the need for the Company to monitor fees in detail as it went forward had been raised by the Oversight Board and the Board had been reassured that arrangements would be put in place to track savings once the asset transitions started.
In response to a query about why the Fund membership had not been consulted on the Investment Strategy Statement (ISS), Sean Collins stated that this was an issue for the Scheme Member representatives to think about how this could be done. Members of the Board then considered the various ways in which the Member consultation process could be improved including:
· via the use of member self-service when in operation;
· a rider to be placed on the bottom of the Annual Benefit Statement;
· via newsletters to scheme members and employers via the website; and
· via the Annual Report.
Sean Collins pointed out that ESG issues were highly complex, thus making it very difficult to have a meaningful conversation with the full membership of the scheme. It was his view that the conversations with Employer/Scheme representatives at this Board about what action was to be taken, if any, about various issues should be sufficient.
The Chairman pointed out that as the three-yearly ISS had only just been agreed by the Committee, it would, in his view, be worthwhile waiting until consideration of the next version of the Statement in the context of the last two years to determine any changes to the consultation arrangements. On the basis of this advice, the Board AGREED that more consideration would be required in advance of the publication of the next Investment Strategy Statement on consultation mechanisms, and therefore it would be prudent to begin to start thinking now. In the meantime, Sean Collins stated that if Board members wished to draft some consultation questions, he would be more than happy to conduct any conversations here at meetings of the Board.