MINUTES of a meeting of the Pension Committee held at Council Chamber, County Hall, Lewes on 30 November 2022.
|
PRESENT |
Councillors Ian Hollidge, Paul Redstone (Chair), David Tutt, Georgia Taylor and Penny di Cara |
|
|
|
|
ALSO PRESENT |
Ian Gutsell, Chief Finance Officer Sian Kunert, Head of Pensions Russell Wood, Pensions Manager: Investment and Accounting William Bourne, Independent Adviser to the Pension Committee Andrew Singh, ISIO Barry McKay, Barnett Waddingham Paul Punter, Head of Pensions Administration Michael Burton, Pensions Manager: Governance and Compliance Mya Khine, Pensions Accountant Dillon Piggott, CIPFA Trainee Elitsa Iskrenova, Pensions Accounts Assistant Bekki Freeman, Solicitor Councillor Nick Bennett Ray Martin, Chair of the Pension Board Georgina Seligmann, Governance and Democracy Manager
|
32. Minutes
32.1The Committee RESOLVED to agree the minutes of the meeting held on 20 July 2022 as a correct record with two points noted:
1)
26.6 Clarification required about
the use of the word significant.
2) 26.7 An update is required to reflect the wording of the Independent Adviser.
33. Apologies for absence
33.1Cllr Gerard Fox sent his apologies and Cllr Redstone was nominated to act as meeting Chair.
33.2Cllr Penny Di Cara substituted for Cllr Gerard Fox.
34. Disclosure of Interests
34.1 The Committee
noted that Cllr David Tutt and Cllr Penny Di Cara are District and
Borough Councillors for Eastbourne.
35. Pension Board Minutes
35.1 The
Committee considered the minutes of the Pension Board meeting held
on 15November 2022.
35.2The Committee RESOLVED to note the minutes.
36. Governance Report
36.1The Committee noted that the Governance Committee will consider a paper about
Committee membership at the meeting of 24 January 2023.
36.2The Committee RESOLVED to note the report.
37. Pensions Administration report
37.1 The Committee considered a report providing an update on matters relating to Pensions Administration activities led by Paul Punter, Head of Pensions Administration.
37.2The Committee NOTED the following points:
1) The Performance of the team, which is still under-resourced, returned to 95% in October.
2) Recruitment has been challenging but there have been positives with 3 internal promotions, October 4 new staff, interviews pending with appointments expected. The team is carrying 2 vacancies. Remote working has posed a challenge as pay rates must be competitive and many organisations allow full remote working, but the team is making progress on recruitment.
3) The Helpdesk has seen good performance though it was noted that Surrey are separating their service from Orbis. This will result in a smaller support team which will benefit from focusing on specialist ESPF support. Assurance has been given that the service will not be impacted however this will be reviewed in the summer to ensure continuity.
4) The team are on track to resolve all outstanding matters relating to annual benefit statements by March.
5) The team are making progress regarding McCloud with systems starting to be adapted ready for implementation in October 20 and have collected a significant amount of data The McCloud working group will convene in the near future to start to analyse data with the support of Haywards.
37.3The Committee RESOLVED to note the report.
38. Internal Audit report
38.1The Committee considered the Internal Audit Report introduced by Danny Simpson, Principal Auditor and noted that the following points:
1) The report gave substantial assurance but that the training matter needs resolving.
2) The figure of 107% relates to the Funding at the end of the 2019 actuarial valuation.
38.2 The Committee RESOLVED to note the report
39. Quarterly budget report
39.1The Committee considered a report providing an update on the
2021/22 Forecast Financial Outturn.
39.2The Committee RESOLVED to note the report.
40. Annual Report and Accounts 2021-2022
40.1 The Committee considered a report containing a draft Annual Report and Accounts 2021/22 for approval introduced by Sian Kunnert Head of Pensions, who thanked the team for the hard work on the report and drew the Committee’s attention to the following points:
1) The annual report will be published on 1 December 2022 subject to the Committee’s approval.
2) There are some national infrastructure issues resulting in delays to the audit opinion being provided. LGA have advised publishing as a draft by the deadline.
3) The valuation information has been rolled forward from the 2019 valuation so it is produced before new analysis has been done.
4) LGPS Monitor, an optional service that can be provided by the Fund Actuary, allows for tracking of surplus and deficit of the underlying pension fund funding positions of employers, it would give more insight ahead of cessation.
ACCESS
6)
The independent advisor highlighted
that the governance structures of the ACCESS pool restrict the
Fund’s ability to manage it effectively.
7) There is some oversight lost when working within a pool and compromise is required. Officer’s have had some challenges around the speed of operation. There are mechanisms and opportunities for improvement.
8) There have been some improvements such as an ACCESS governance manual in the last year, but there is limited transparency on some activity and the assets are held by an external FCA regulated operator which add complexity in the pooled model chosen.
9) A request will be taken to the next Joint Committee meeting for an independent governance review of the pool.
40.2The Committee RESOLVED to:
1) Approve the draft Pension Fund Annual Report and Accounts 2021/22;
2) Note the update from the External Auditor.
41. Annual Training Plan Report
41.1 The Committee considered a report providing an update on training needs, opportunities undertaken and planned events.
41.2The Committee RESOLVED
to:
1) Note the outcome of the self-assessment knowledge and survey skills
2) Note the training made available in the past year
3) Note the type if events planned for the year ahead
Identify areas Committee members would like training on as a priority.
42. Risk Register
42.1The Committee considered the ESPF Risk Register.
42.2The Committee RESOLVED to note the Pension Fund Risk Register.
43. Investment Report
43.1The Committee considered a report introduced by Russell Wood,
Pensions Manager and Andrew Singh, ISIO.
43.2The Committee’s discussion included the following key issues:
1)
The Committee are asked to note that the
United Nations Principles for Responsible Investment (PRI) is not
accepting submissions in 2022, so the Fund’s first submission
will be deferred until 2023.
2)
The Quarterly Performance Report for Q2
2022 and Q3 2022 are attached as Appendix 2 and 3. Since the last
reported position, the valuation of the Fund has decreased from
£4.7bn as at 31 March 2022 to £4.50bn as at 30
September 2022 (a decrease of £0.2bn). This is a small
partial recovery from the unreported 30 June 2022 value of
£4.49bn. This performance reflects a negative absolute return
of 4.0% in the quarter to June and a positive absolute return of
0.2% in the quarter to September. The Fund marginally outperformed
the benchmark in both periods.
3) The
fall in gilt values caused significant liquidity concerns for UK DB
pension schemes. Most growth asset
classifications have struggled with the market volatility. The Bank
of England have given a strong statement and markets have been
trying to find the best way to respond.
4) The
report details the increase in gilt yields and the upwards trend
following the interest rate rise. The
impact of the governments October 2022 Kwasi Kharteng mini-budget
has largely passed.
5) The
Fund’s assets delivered a positive return over Q3,
performance across the Fund’s mandates was predominantly
positive with equity and infrastructure markets in particular
increasing in value. Fixed income
portfolios performed the least well due to rising interest
rates.
6)
The outlook for the next 3 – 5
years is positive.
7)
Following the Committee’s agreement
at the February 2022 meeting to appoint IFM to mandate, the Fund
has successfully onboarded and estimated time to deployment to be
in the region of 3-9 months.
8) Schroders have had some staff changes, the impact of which will be monitored along with the property portfolio.
9)
It is sensible to review the overall
asset allocation following the market volatility though there
should be consideration given to the timing of implementing
changes.
10) There will be a revised strategy for the
Committee to consider in 2023 in response to the new
valuation.
11) Sustainable funds have been affected by limited exposure to the energy sector.
12) Osmosis is not linked to a traditional market index
but have a proprietary sustainable approach looking at companies
who make the most efficient use of their resources. The returns
will lag against the value of fossil fuel companies.
13) There was a discussion on what the performance of funds were being benchmarked against. The Committee would welcome any further data available in future to further illustrate the progress being made by each fund against its benchmarks.
14)The rebalancing policy is aimed at the liquid assets on a quarterly basis in a range set around the fund’s strategic asset valuation (ISIO give steer on range) and designed to work at a time of volatility.
15)The revised policy includes a proposal to give the CFO discretion to invest 5% of the portfolio outside of strategy in order to take advance of market situations as they occur, in addition to the emergency powers already in place.
43.3The Committee RESOLVED to
1) Note the investment report
2) Approve the rebalancing policy
44. Work programme
44.1The Committee considered its work programme.
44.2The Committee RESOLVED to agree the work programme.
45. Exclusion of the public and press
The Committee RESOLVE to exclude the public and press from the meeting for the remaining agenda item on the grounds that if the public and press were present there would be disclosure to them of exempt information as specified in paragraph 3 of Part 1 of the Local Government Act 1972 (as amended), namely information relating to the financial or business affairs of any particular person (including the authority holding that information).
46. Investment Report
46.1 The Committee considered a report introduced by Russell Wood, Pensions Manager and Andrew Singh, ISIO.
46.2 The Committee RESOLVED to:
1) Note the update on the triennial valuation and initial whole
Fund results.
2) Approve the actuarial assumptions.
3) Agree the draft Funding Strategy Statement for consultation with
employers.
4) Approve the revised Exit Credit Policy.
47. 2022 Triennial Valuation and Funding Strategy Statement
47.1 The Committee considered a valuation report which provides an update on the 31 March 2022 Triennial Valuation results and assumptions.
47.2 The Committee RESOLVED to:
1) Note the update on the triennial valuation and initial whole
Fund results.
2) Approve the actuarial assumptions.
3) Agree the draft Funding Strategy Statement for consultation with
employers.
4) Approve the revised Exit Credit Policy.
48. Breaches Log
48.2 The Committee RESOLVED to:
1) Note the breaches of law and steps being taken.
2) Note the new IDRP complaint raised and the offer to be made to resolve it.
49. Employer Admissions and Cessations
49.1 The Committee considered a report on the latest admissions and cessations of employers within the Fund.
49.2 The Committee RESOLVED to:
1) Note the ongoing proceedings for the admission of admitted bodies to the Fund.
2) Note the ongoing proceedings for the cessation of employers from the Fund.
3) Approve the recommendation regarding distribution of funding surplus in respect of the cessation listed in the report.
The meeting ended at 2.00 pm.