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2022/23
 

 

 

 

 

 

 

 

 

 


Business Plan & Budget

 

 

 

 

 

 

 

 

 

 

 

 

1.            Business Plan

 

1.1          It is anticipated that 2022/23 will see some key activities within the following themes:

 

·                    Pension Fund Oversight and Governance activities: Creation of Decision Making Matrix, development of Business Continuity Plan, provision of training, Fund Annual Report and Accounts, achievement of the Statutory Annual Benefit Statement, review of Admission Agreement process, review of bonds and security and employer covenant reviews, i-Connect implementation, contribution monitoring, communications strategy including a review of communications platforms, Triennial Valuation and contribution setting for employers, Funding Strategy Statement updates.

 

·                       Investment activities: Review investment strategy, continue develop the Fund’s Environmental, Social and Governance (ESG) credentials, submission under UK Stewardship Code 2020, review and implement any agreed changes to the Fund’s credit structure, Investment Governance, implementation of Illiquid strategies, Cost Transparency, Cost Management, Manager engagement.

 

·                       ACCESS activities: ACCESS support unit (ASU), Actively managed listed assets, Alternative/ non-listed assets, passive assets, Governance.

 

·                       Pension Board/Committee Training: Implementation of the agreed training strategy for the Board and Committee, Attendance at third party provided Local Government Pension Fund (LGPS) related training, focus on training throughout Triennial Valuation process.

 

·                       Pension Administration: Recruitment to key vacancies, data management activities from i-Connect submissions, Maintaining Member Data, Data Improvement, finalisation of GMP reconciliation project, Annual Benefit Statement (ABS) production, complete rectification of historical Annual Allowance cases, development of robotics.

 

1.2          Each theme within the Business Plan includes activities planned for the year. The strategic nature of East Sussex Pension Fund (ESPF or the Fund) objectives means that a number of the 2022/23 activities build on work previously undertaken and will in turn provide the foundation for further milestones in subsequent years.

 

2.            Budget

A budget totalling £7,141k (£7,205k 2021/22) to support the business plan for 2022/23 is detailed below in Table 1:


 

Table 1 Pension Fund Management Expenses

2020/21 Outturn

Item

2021/22 Budget

2021/22 Forecast Outturn

2022/23

Budget

£000

£000

£000

£000

 

Pension Fund Staff Costs

 

 

 

592

Fund Officers1

1,756

1,234

1,900

53

Recruitment costs

12

2

645

Sub Total

1,768

1,236

1,905

 

Pension Fund Oversight and Governance

 

 

 

341

Actuarial Fund Work2

250

52

200

87

Actuarial Employer Work

100

79

80

(64)

Employer reimbursement

(100)

(66)

(80)

-

Communications

-

-

42

2

Training Costs

10

15

30

40

External Audit – Grant Thornton

30

35

35

190

East Sussex County Council Recharges3

286

243

249

285

Legal Fees

165

65

78

157

Subscriptions and Other Expenses

72

79

72

1,038

Sub Total

813

502

706

 

Investment activities

 

 

 

221

Investment Advice

192

195

135

37

ESG Advice

25

25

50

61

Custodian

75

151

136

80

ACCESS

93

103

125

2,365

Investment Manager Fee Invoices

3,313

2,874

2,872

2,764

Sub Total

3,698

3,349

3,318

 

Pension Administration

 

 

 

894

Orbis Business Operations Support Services

-

-

-

-

East Sussex County Council Recharges3

237

203

281

282

System Services and License

346

89

346

90

Consultancy & Service Providers - Benefits

100

234

100

 -

Other Administration projects

-

-

150

-

Admin operational support services

225

244

289

183

Other Expenses

18

46

50

-

Other Income

-

(5)

(4)

1,449

Sub Total

926

812

1,212

5,896

Total 

7,205

5,898

7,141

1This is assuming a full team it is in place

2As we are moving into a valuation year we expect the actuarial cost to increase in 2022/23

3Overheads allocated based on staffing levels have been separated from the direct staffing costs to provided greater clarity on costs.

 

Key budget assumptions

2.1         The key budget assumptions are set out below

 

·        ACCESS cost based on the budget set by the ACCESS Joint Committee.

·        Manager fees based on invoiced fees only. Fees are based on the assets under management no movement has been included in this figure.

·        The 21/22 Pay Award is anticipated to be 1.75% and the 22/23 Pay Award budgeted at 2%. Figures also include an increase in employer National Insurance contributions which comes into effect in April 2022.

·        Administration staffing costs do not reflect potential changes of staffing moving from TUPE (Transfer of Undertakings Protection of Employment regulations) contracts to East Sussex County Council (ESCC) Terms and Conditions of Employment.

·        It is assumed that vacancies within the Administration team will be filled on or before 1 April 2022

·        The overhead rate from ESCC will stay at its current rate

 

 

3.            Business plan deliverables by key theme

Theme

Tasks

2022/23 activity

Fund Oversight and Governance activities

Decision Matrix

 

 

 

 

 

 

 

 

Business Continuity Planning (BCP)

 

 

 

 

 

 

 

 

Provision of training

 

Triennial Valuation

 

 

 

 

 

 

 

 

Pension Fund Annual Report and Accounts

 

 

External audit/

Internal audit

 

Admission Agreement process

 

 

 

 

Bond and security review

 

 

 

Covenant review

 

 

 

Policy review

 

 

i-Connect implementation

 

Contribution monitoring

 

Communications strategy

 

 

Development of matrix showing decision making levels across the Fund

 

 

Identify areas for potential improvement

 

Recommendations to Board/Committee as appropriate to cover next steps for making identified improvements

 

Engage with IT Team to discuss existing levels of protection

 

Identify ways to improve liaison with key BCP contacts across the Local Authority

 

Fully documented procedures for the Fund rolled out to all staff and decision makers to enact if required.

 

Test BCP

 

See training section

 

 

Engage with Actuary to understand its requirements and timetable

 

Liaise with Employers over their contribution rates for the next three years.

 

Update the Funding Strategy Statement and consult wit employers on changes

 

Production of Fund Financial Statements and Audit Working papers and creation of the Annual Report

 

 

 

Liaise with auditor as appropriate

 

 

Embed new Admission Agreement processes and improve where required.

 

Implement Admission portal for simple population of agreements to speed up execution of documents

 

 

Review existing security held

 

Ensure process in place for early identification of expiring security

 

Work with specialist adviser to ensure good understanding of employer covenant strength and identify potential risk to cashflow from weaker employers

 

Update policies as per schedule or where change in law requires action

 

To roll out the i-Connect employer interface module to all employers to simplify data submission and validation.

 

Continue to develop contribution monitoring and  reconciliation in conjunction with the roll out of i-Connect.

 

To develop and implement a revised communication strategy so that we are proactive in providing information to employers and members.

Investment activities

 

 

 

Review investment strategy

 

 

 

 

 

 

 

 

 

 

Develop the Fund’s Environmental Social Governance (ESG) credentials

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Implement strategic changes agreed at the 2021 strategy review which have not yet been enacted.

 

Implement any investments into the Fund’s private markets programmes to achieve the Funds strategic asset allocation for these.

 

Review the cashflow of the Fund investments and create a cash management policy.

 

Review effectiveness of the current strategy at the strategy meeting.

 

 

UK Stewardship Code Report created with a view to the Fund becoming a signatory.

 

Complete reporting of Fund Activities to Principle of Responsible Investment (PRI) as part of requirements of being a signatory.

 

Undertake a review of the ESG credentials of all managers and develop appropriate analytic metrics to monitor the Fund.

 

Collate quarterly analysis of fossil fuel exposure and voting & engagement records.

 

Continue to develop the Funds reporting in line with Taskforce for Climate related Financial Disclosures (TCFD) requirements including scenario analysis

 

 

ACCESS

Actively managed listed assets

 

 

 

 

 

 

 

 

 

 

 

Alternative / non listed assets

 

 

 

 

Passive assets

 

 

 

Governance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ACCESS Support Unit (ASU)

Launch of Tranche 5b – Fixed Income sub funds

 

Launch of Tranche 5c - Equities

 

Determine, approval & launch of Tranche 6 – Emerging Markets equities

 

Scheduled Business as Usual (BAU) evaluation

 

Continued implementation outcomes of Scheduled BAU evaluation including the commencement of an Inter Authority Agreement (IAA) review in September 2022

 

Initial implementation of approach to pool illiquid assets

 

Following the appointment of the pool’s Implementation Adviser in 2021/22 The first pooled illiquid vehicles will be launched

 

Ongoing monitoring of assets managed on a passive basis

Further engagement and exploration with UBS will continue throughout the year

 

Meetings and oversight

Arrangements will be made to support meetings of the Joint Committee (usually each quarter)

 

Meetings of s151 Officers will also be held

 

Operational protocols

The implementation of the revised Governance Manual

 

Engagement with HM Government I Department for Levelling UP, Communities & Housing (DLUCH)

ACCESS will liaise with the Scheme Advisory Board as

Appropriate

 

Periodic reports will be provided to DLUCH as required

The Pool will actively participate with any Cabinet Officer / DLUCH pooling related consultations

 

Joint Polices & guidelines

Continued activity will take place on implementing the

Communications plan.

 

The implementation of revised ESG / Responsible Investment (RI) guidelines on ESG / RI.

 

A procurement will be completed for RI reporting support

 

A third-party review of the ASU will be undertaken

Pension Board/

Committee

Training

Implementation of training strategy

 

 

 

Third party training

Provision of speakers to deliver East Sussex Pension Fund led training.

 

Testing of existing knowledge and understanding levels

 

Identifying useful third party provided session that will be useful for ESPF to attend.

Pension Administration

Recruitment to key vacancies

 

Maintaining Member Data

 

 

 

Data Improvement

 

 

 

Annual Benefit Statement (ABS) production

 

Data projects

 

 

 

 

 

 

 

 

 

 

 

 

 

Development of Robotics

Job Description completion and evaluation complete for all posts in the department with recruitment to vacancies

 

Day to day imputing of data into the pension system to ensure the records are up to date.

 

Management of data submitted through i-Connect

 

Identifying areas where data within the pension system can be improved and developing plan of redress.

 

Full roll out of new Key Performance Indicators (KPIs)

 

Annual Benefit Statements need to be produced by statute. Ensuring the data is up to date to be able to provide an accurate statement to Members.

 

Group to work through the redress of benefit calculations in relation to the Guaranteed Minimum Pension (GMP)

 

Rectification of historical Annual allowance errors.

 

Review of casual workers with zero pay for 2 years to highlight with employers

 

Audit of Altair user access

 

Mortality and Address tracing completed in 2022

 

Preparation for Pensions Dashboard

 

Investigation of and development of robotics to automate processes and provide improved functionality

 


 


 

4.         Pension Board/Committee Training

 

4.1 Addressing the ESPF Business Plan

 

It is vital that training is relevant to any skills gap or business need and training should be delivered in a manner that fits with the Business Plan. The training plan will therefore be regularly reviewed to ensure that training will be delivered where necessary to meet immediate needs to fill knowledge gaps. The training necessary to achieve the required knowledge and skills is set out in the training strategy.

 

Consideration will be given to various training resources available in delivering training to the Board and Committee. The Fund will commit to providing a minimum of 4 formal training sessions per year for Board and Committee. Regular training options accessible to Board and Committee members will be circulated at least monthly.

Committee and Board members should commit sufficient time in their learning and development and be aware of their responsibilities immediately they take up their position.  The Fund will therefore provide induction training for all new Committee members.

The proposed budget includes sufficient funding to provide training to those involved in administering the Fund.

4.2 The Pensions Regulator E-learning toolkit

The Regulator has developed an on-line tool designed to help those running public service schemes to understand the governance and administration requirements in the public service schemes code of practice. The toolkit is an easy to use resource and covers 7 short modules. 

These modules are designed to apply to all public service schemes and are not LGPS specific. It does however provide a good grounding in some general areas.