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11.1.      The Board considered a report on the ESPF Budget for 20/21 and on ill-health early retirement risk.

11.2.      The Chair noted that the budget of 30k for training had not been spent for 19/20.

11.3.      MK agreed that this would not happen again, as it was important the training budget was spent in full each year.

11.4.      MK explained that Link is not providing details of management fees for the funds pooled under ACCESS, as they are now deducted at source and the individual LGPS provided with a statement of assets only. This means it is not possible to provide an accurate figure on the cost of Investment Managers to the Fund.  She said this was not transparent, but the Scheme Advisory Board’s Cost Transparency Code is expected to require them to provide this information.  GF agreed with this assessment.

11.5.      GF said that the Committee is likely to be recommended to agree additional resources for the pension team as a result of the governance review. This would be ‘investing to save’, as the current resource is insufficient to provide all services needed to run the Fund effectively, resulting in additional costs incurred hiring consultants. The Chair agreed that budget for the Fund management team of 0.01% of its total assets was exceptionally low. CA added that she would want there to be a competent and able team managing the Fund.

11.6.      DP asked for the current Quarter 1 outturn figures for the Data Improvement Programme to see how the costs were progressing.

11.7.      MK introduced the matter of the funding of ill-health retirement cases, and Robert McInroy (RM)  from Hymans Robertson explained the financial issues employers faced, which would be particularly acute for a small employer, if one of their employees became eligible for an ill-health benefit.

11.8.      The Chair asked whether the Committee would be recommended to make a decision in the future about whether ill-health retirement costs should continue to be paid directly by each employer or via a small portion of the contribution rate of all employers covering the cost – or whether external ill-health insurance should be sought.

11.9.      MK said that a proposal would be presented to the Committee in the future, after the views of the Board had been sought.

11.10.   LW said she would be concerned about leaving the decision whether to insure themselves for ill-health payouts up the individual employers, as this could lead to them not taking out insurance. This would leave the whole Fund at risk if the employer could not meet the costs of having to pay an employee for ill health early retirement out of current income.

11.11.   The Board RESOLVED to:

1) note the report on the 2020/21 Budget, Business Plan, Work Programme and Annual Training Plan;

2) request the quarter 1 outturn figures for the Data Improvement Programme are provided; and

3) Support the review of the ill-health retirement funding by the Pensions Committee.