Agenda and minutes
PDF 212 KBVenue: Council Chamber, County Hall, Lewes. View directions
Contact: Georgina Seligmann Governance and Democracy Manager
Media
| No. | Item |
|---|---|
|
Minutes of the meeting held on 30 November 2022 Additional documents:
Minutes: 50.1 The Committee RESOLVED to agree the minutes of the meeting held on 30 November 2022 as a correct record.
|
|
|
Apologies for absence Additional documents: Minutes: 51.1 Cllr Georgia Taylor attended remotely as a participant.
|
|
|
Disclosure of Interests Disclosures by all Members present of personal interests in matters on the agenda, the nature of any interest and whether the Members regard the interest as prejudicial under the terms of the Code of Conduct.
Additional documents: Minutes: 52.1 The Committee noted that Cllr David Tutt is a District and Borough Councillor for Eastbourne, trustee of Southfields Academy Trust (part of the ESPF).
52.2 The Committee noted that Cllr Redstone is a member of the Fire Authority.
|
|
|
Pension Board Minutes Additional documents: Minutes: 54.1 The Committee noted the Pension Board notes from the discussion held on 07 February 2023. |
|
|
Valuation Report and Results and Funding Strategy Statement Additional documents:
Minutes: 54.1 The Committee considered the reports introduced by Barry McKay, Barnett Waddingham and NOTED the following:
1) The full valuation report is the conclusion of all information, discussion, methodology and the applied assumptions.
2)
The Section 13 valuation is required by
the Government Actuaries Department and
its purpose is for all English and Welsh funds to be set with the
same methodology so that comparators can be applied. The 138% Funding level on a SAB basis is reflective of the different assumption factors
applied.
3)
The Fund is in a very health position
particularly in terms of the surplus, with a Funding level of
123%. 4) The approach to amending cessation payments needs to be agreed and will depend on how gilt yields perform, the new methodology will be fairer and more consistent with prudence built in.
5)
The climate risk report is a new
requirement for the LGPS valuation process and needs more data and
analysis as this area develops. The 3 year time period of the
valuation is very short in terms of pensions so climate
risk is unlikely to change contribution
rates in the short term. The fund has a 20 year forward view so
longer term concerns will not necessarily be reflected in the
valuation. Further work is being undertaken on assessing the impact
of Climate related risk on financial assets. 6) There have been some changes made to the Funding Strategy Statement compared to the 2019 statement including a new methodology due to the change in Fund actuary, revised assumptions and the introduction of the Academy Pool for contribution rate setting.
54.2 The Committee RESOLVED to:
1) Approve the draft 2022 Valuation report (Appendix 1) 2) Approve the revised Funding Strategy Statement (Appendix 2) 3) Approve the draft Contribution review policy for consultation (Appendix 3) 4) Approve the draft Deferred Debt and Debt Spreading Agreement policies for consultation (Appendix 4)
|
|
|
Additional documents:
Minutes: 55.1 The Committee considered a report introduced by Michael Burton who drew the Committee’s attention to the following points:
1)
Governance updates, a further
consultation has taken around the annual revaluation date proposal
to move from the 1st to 6th April, the Funds
response in currently in draft and once issued will be shared with
the Committee and the Pension Board. The timelines are very short
with a twoweek consultation window. 2) Following Stephen Osbourne’s departure, it is hoped that a new employer representative recommendation will be made to the Governance Committee in April to join the Pension Board.
3)
GMB have been asked to propose a
replacement for Nicoletta Palermo and a name has not yet been put
forward, the wider membership will be asked if no recommendation
from GMB.
4)
There are District and Borough elections
and Brighton and Hove City Council will be holding elections in May
which will impact Board membership as the current representatives
are standing down. Senior officers can be appointed as well as
councillors which would increase continuity. 5) Applications have been received for the post of Chair of Pension Board.
6)
Costs will be introduced to employers for
processing multiple early retirement form enquiries. Officers are
reviewing whether this is general practice in the wider market and
the Committee noted that some Funds do charge for the work
undertaken by their administration teams. A number of Local Authorities are looking into
this and as part of the drive towards self service, there are
online tools provided for free to members and employers. 7) More detail has been added to the Administering authority discretions against current processes following a request from the Pension Board.
8) The Pension Administration Strategy requires a review every three years and the draft report will go out to employers for consultation. Significant reformatting was required in order to meet accessibility requirements which means it is harder to provide track changes, the cover report therefore outlines the changes to the strategy for ease of reference.
55.2 The Pension Committee RESOLVED to:
1) Note the updates 2) Approve the updated Administering Authority
Discretions policy 3) Approve the draft Pensions Administration Strategy for consultation with employers
|
|
|
Pensions Administration report Additional documents:
Minutes: 56.1 The Committee considered a report providing an update on matters relating to Pensions Administration activities led by Paul Punter, Head of Pensions Administration who drew the Committee’s attention to the following points:
1)
The administration team met its 95%
target for performance and the Helpdesk also performed well against
KPIs. 2) Two additional appendices were shared; one relates to benchmarking to KPIs compared against the Local Authorities in the region. Overall ESPF’s targets are shorter and more stretching and should offer reassurance to the Committee that excellent service is sought for members. Another appendices relates to recruitment which outlines that only two open vacancies remain.
3)
Project progress is detailed within the
report. Pension increases for this year are significant due to the
CPI increase of 10.1%
4)
Data was received late for BHCC members
however at least 95% of active member annual benefit statements
were issued.
5)
There is significant automation through
the Heywoods software, all processes
are being reviewed and where there are simple tasks with limited
touchpoints the aim is to use robotics for those processes. The
intention is not to cut jobs but to free up staff for more complex
tasks and resolve queries from members, the help desk will not
change but the intention is to add capacity through robotics if
possible. 6) Data quality is tracked as required by the regulator, there is a live tool on the system so analysis can be undertaken into any discrepancies, the data is currently at about 95% which was also checked by the Actuary as part of the triennial valuation. There will be further changes required with the implementation of the national dashboard, where training will be provided to the Committee.
56.2 The Committee RESOLVED to note the report.
|
|
|
Internal Audit reports Additional documents:
Minutes: 57.1 The Committee considered the Internal Audit Report introduced by Danny Simpson, Principal Auditor and noted that the following points:
57.2 The Committee RESOLVED to:
1)
Note the i-Connect IT Application Audit
report (Appendix 1); and 2) approve the 2023/24 Internal Audit Strategy for Pensions and Annual Plan (Appendix 2).
|
|
|
Business Plan and 2023/24 Budget and Quarter 3 Budget Report Additional documents:
Minutes: 58.1 The Committee considered a report on the 2022/23 Q3 forecast financial outturn position and the Business Plan and Budget for 2023/24 introduced by Russell Wood, Pensions Manager, who drew attention to the following points: Full cost outturn 1) There is a reduction due to staff vacancies not being filled as early as anticipated and on investment related items due market conditions Business plan and budget
2) Investment manager fees
have removed as they obscured the position and cannot be controlled
by Committee.
3) There are increases to staffing costs based on the County Council’s assumptions,
one off IT costs and inflation increases on contracts.
There is an allocation of £50k for the divestment report for the July strategy day.
Additional spend items are partially offset by it being a
non-valuation year.
4) Investment Fees are deducted from source by many
of the Investment managers with only a handful directly invoicing
and therefore the new reporting method is more transparent. The
Budget categorisation has been changed to better reflect activities
and figures reported in the Fund’s financial
statements. Overheads have also
increased which are linked to the number of staff
employed. 58.2 The Committee RESOLVED to: 1) Note the 2022/23 Q3 forecast financial outturn position
|
|
|
Additional documents: Minutes: 59.1 The Committee considered the ESPF Risk Register and noted the following points:
1)
The Governance risk has increased due to
change over in board membership and related quoracy
issues.
2)
The Investment pooling risk has
increased, a government consultation is still outstanding and there
are two contracts associated with pooling which are adding to
uncertainty. 3) The risk associated with employer data will be added to an exempt risk register ahead of the next meeting to reflect the increased concern of one employer.
59.2 The Committee RESOLVED to note the Pension Fund Risk Register
|
|
|
Additional documents:
Minutes:
60.1 The Committee considered a report introduced by Russell Wood, Pensions Manager and Andrew Singh ISIO, who drew the Committee’s attention to the following points:
1) The Investment work plan has focused on the divestment report, UK stewardship code submission which was successful with the report now published on website. The Committee congratulated officers on being listed as a signatory to the UK Stewardship Code which puts the ESPF ahead of many other Local Authority funds. 2) The new infrastructure investment through IFM is not in quarterly report as funding was allocated in early January 2023. 3) ACCESS have agreed their budget and business plan and is included in the appendices to the report. 4) Quarter 4 market conditions were more positive, UK equities performed strongly, there has been a bounce back following mini budget in October 2022 and stability returned to the bond market, and there was a slight drop in inflation. 5) It is a very difficult market for UK commercial properties, the position has improved from 6 months ago but still muted, so officers and advisers are closely watching for appropriate ting to reduce the property mandate to the revised strategic asset allocation target. 6) Since the last reported position, the valuation of the Fund has decreased from £4.502bn as at 30 September 2022 to £4.496bn as at 31 December 2022 (a decrease of £0.006bn). This performance reflects a negative absolute return of -0.1% in the quarter to December. The Fund marginally underperformed its benchmark in the period by -0.2%.
7)
Despite negative returns over recent
quarters, longer term returns at Fund level remain strong, with
equity assets adding significant value over the last decade, and
unhedged exposure also having benefited from the depreciation in
Sterling. 8) Regarding the overall asset allocation position; property and private credit are underweight and there will be further discussion on private credit later in the year. The Schroders property fund, although posted a significantly negative absolute return over Q4 the portfolio outperformed the benchmark by 6% over the period. Some further price falls expected within the commercial property market before stabilisation later in the year. A discussion took place on valuation of the asset class where it was discussed that some information is not publicly listed, independent valuers will make their own assumptions and have different levels of prudence. 9) Longview and Atlas provided strong absolute returns (5.3% and 9.3% respectively) and relative returns to the benchmark (3.5% and 7.7%) for the quarter. 10) The Committee welcomed the asset allocation information 11) Regarding the performance of utility companies including water companies, as regulated utilities the Regulator has a role to moderate returns if they get too high, companies fall into two categories and the effective companies generate better returns 12) Regarding the Strategy re-test; following the shift in market regime to a higher interest rate environment over 2022, ISIO prepared a short paper on the potential opportunity within the Index-Linked Gilts market. The yield triggers to exploit this opportunity, should it ... view the full minutes text for item 60. |
|
|
Additional documents:
Minutes:
61.1
The Committee considered its work
programme. 61.2 The Committee RESOLVED to agree the work programme.
|
|
|
Exclusion of the public and press To consider excluding 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).
Additional documents: Minutes: The Committee RESOLVED 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).
|
|
|
Investment Report Minutes: 63.1 The Committee considered a report introduced by Russell Wood, Pensions Manager and Andrew Singh, ISIO.
63.2 The Committee RESOLVED to note the report.
|
|
|
Governance Report Minutes: 64.1 The Committee considered a report introduced by Michael Burton.
64.2 The
Pension Committee RESOLVED to: 1) Note the updates 2) Approve the updated Administering Authority Discretions policy
3) Approve the draft Pensions Administration Strategy for consultation with employers
|
|
|
East Sussex Pension Fund (ESPF) Breaches Log Minutes:
65.1
The Committee received an update on the
Breaches Log, introduced by Michael Burton, Pensions Manager, who
provided an update on outstanding or new Internal Dispute
Resolution Procedure (IDRP) cases. 65.2 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.
|
|
|
Employer Admissions and Cessations Minutes: 66.1 The Committee noted a report on the latest admissions and cessations of employers within the Fund.
<AI5> REPRPEPEFDGKMD66.2 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.
|