Agenda and minutes

Local Pension Board
Wednesday, 23rd October, 2019 10.00 am

Venue: Committee Room 1, Civic Centre, Hanbury Road, Pontypool NP4 6YB

Contact: Geraint Thomas  Senior Business Support Officer - Democratic Services

Items
No. Item

1.

Attendance and apologies / Croeso ac ymddiheuriadau

Presented By: Chair

Minutes:

1.1       There were no apologies.

2.

Declarations of interest / Datganiadau o fuddiant

Presented By: Chair

Minutes:

2.1       The CLO asked the Board Members to confirm their personal interests in the Greater Gwent Pension Fund.

 

Board Member

In Receipt of Pension

Contributor

Bob Campbell

Self

 

Steve Harford

Self

Sister

Rhian Hayden

Mother

Self and sister

Ian Reese

Self

 

Clive Rogers

 

Self

Meirion Rushworth

 

Self

Jane Waters

Brother

Self

Anthea Wellington

Self and husband

Daughter

John Wright

Self and wife

Daughter

 

2.2       The CLO left the meeting.

3.

Minutes 24/7/19 / Cofnodion 24/7/19 pdf icon PDF 466 KB

Presented By: Chair

Minutes:

3.1       It was agreed that the minutes were an accurate record of the meeting.

4.

Action Sheet / Taflen Weithredu pdf icon PDF 192 KB

Minutes:

4.1       Regarding the second action point, the PM suggested that the issue referred to the legislation change in 2014 around entitlements to refunds or transfers. The qualifying period was changed from 3 months to 2 years. She confirmed that the Fund ran monthly reports in order to identify these individuals and made efforts to contact them.

 

4.2       The Pension Board noted the Action Sheet.

5.

Pensions Committee 9/9/19 / Pwyllgor Pensiynau 9/9/19

Minutes:

5.1       The Pension Board considered the agenda papers for the Pensions Committee held on 9 September 2019:

 

5.2       Agenda Item 5 – Quarterly Investment Performance Report to 30/6/19

The HoP provided the following update:

  • The Fund reported a positive investment return of +4.52% for Quarter 2 and at the end of June 2019 the value of the Fund had increased by £130 million to £3,058 million. At the end of September 2019 the value of the Fund was £3,112 million.
  • Investment performance was marginally below the benchmark over 1 year; however performance was healthy and ahead of the benchmark over 3 years, 5 years and 10 years respectively.
  • The trade wars and relations between the US and China had an effect on the markets, as did issues around Brexit. UK performance was less robust than other regions.
  • At the end of September 2019, the Fund had moved approximately £423 million of its investments into UK Equities within the Wales Pension Partnership (WPP). Following this move, 48% of the Fund’s investments were now in collaborative arrangements.
  • Fixed interest investments would be moved into the WPP by early 2020 and approximately 58% of the Fund’s investments would then be in collaborative arrangements.

 

5.3       Following questions from the Board, the HoP made the following points:

  • Government required 100% of investments to be in collaborative arrangements, unless there were exceptional circumstances; however they did not give a timescale for this change.
  • Once the above was achieved, the Pension Board would still retain a purpose, particularly around the governance and administration of the Fund. He added that the Pensions Committee would retain responsibility for the Fund’s investment strategy.
  • He agreed that 10% of the Fund’s investments in US Equities appeared light; however he explained that approximately 15-16% of the Fund’s investments were actually in US Equities once the global mandate was factored into the equation.

 

5.4       Agenda Item 6 – Responsible Investment Working Group Update

The HoP provided the following update:

  • The report provided an update in respect of the work of the Responsible Investment Working Group (RIWG) and the Pensions Committee approved the draft Policy documents put forward by the Group for proposed adoption by the Fund, in respect of the Fund’s Responsible Investment Policy Framework and Climate Change Policy.
  • Paragraph 5 of the report illustrated some of the actions already taken to support the policy direction and paragraph 7.5 of the report identified more specific immediate requirements.
  • The overall thrust of policy decisions were meeting government guidelines; however UK Government and Welsh Government were setting slightly different and changing targets.
  • Previous estimates around Climate Change focused on the estimated damage if average temperatures were to rise by 2°C; however in 2018 the UN Intergovernmental Panel on Climate Change (IPCC) issued a report which showed that many adverse impacts of climate change would come via an increase of 1.5°C of global warming. As a result, the Fund wanted to be well below the 2°C target.

 

5.5       The Pension board agreed that the Pensions Committee  ...  view the full minutes text for item 5.

6.

Key Performance Data Update / Diweddariad ar Ddata Perfformiad Allweddol pdf icon PDF 257 KB

Minutes:

6.1       The PM highlighted the following key headlines from the report:

  • The report provided a brief update on the key performance indicators that the Fund was required to use to manage pension administration within the fund.
  • The legal reporting requirements and timescales could be seen in paragraph 5.1 of the report and paragraph 6.1.3 of the report outlined the suggested timescales that the Fund was proposing for its internal targets.
  • The Fund’s results could be seen in paragraph 7 of the report and these results were published in the Fund’s Annual Report.
  • The Fund was only able to report on 7 out of the 13 key performance indicators during 2018/19.
  • There were some processes that the Fund would be unable to report on due to the functionality of the system; however discussions were taking place with the software provider to ensure that the system could be developed to enable the Fund to report on its legal requirements.

 

6.2       Following questions from the Board, the HoP and the PM made the following points:

  • The PM did not expect the Fund to be in a position to report on all key performance indicators for 2019/20; however she was confident that the Fund would be able to do this in the future.
  • The PM agreed that some of the results relied on employer data and that administrative strategies and service level agreements could help to ensure employers met deadlines.
  • The HoP agreed that narrative and context around performance would be helpful, such as a comparison with other LGPS funds; however it was important to recognise that not all funds were at the same place and the context could therefore be patchy.
  • The HoP explained that there was currently no consequence for not meeting legal targets; however this could change in the future as the role of the Pensions Regulator was changing.
  • The PM suggested that a progress report could be presented to the Pension Board in six months’ time.

7.

Admission Agreements / Cytundebau Derbyn pdf icon PDF 310 KB

Additional documents:

Minutes:

7.1       The PM highlighted the following key headlines from the report:

  • The Pension Board Draft Work Plan 2019/2020 included an item on the Employer Admission Agreements and Bonds that were in place within the Fund and this report addressed that requirement.
  • The report outlined the groups of employers within the Fund who fell under Parts 1, 2 and 3 of Schedule 2 respectively and provided detail regarding how each group differed in terms of the legislation and what they were required to offer to their employees.
  • In paragraph 5.4.7.3 of the report, two employers did not have a bond or guarantee in place; however this was probably because they were set up prior to the new regulations.
  • The Fund was currently reviewing all existing employer arrangements. Whilst admission agreements were in place for virtually all necessary employers, the position in respect of bonds and guarantees was less comprehensive as this was a relatively recent requirement. Work was therefore ongoing to meet and fill any gaps in the employer covenant arrangements in accordance with any regulatory requirements.

 

7.2       Following questions from the Board, the HoP and the PM made the following points:

  • The PM confirmed that Caerphilly and Blaenau Gwent Citizens Advice Bureau should have been included in the report and she would send an updated list to members of the Pension Board.
  • The HoP confirmed that Newport Transport offered a closed scheme only to existing staff who were transferred to them in 1986.
  • The PM confirmed that an employer could decide to close the scheme; however they would be required to provide an alternative scheme. The HoP added that this would be an affordability issue for the relevant organisation, who would need to consider their specific liabilities.

 

7.3       Meirion Rushworth left the meeting.

8.

Governance & Administration Risks In Public Service Pension Schemes (Pensions Regulator Report) / Risgiau Llywodraethiant a Gweinyddiaeth mewn Cynlluniau Pensiwn yn y Gwasanaethau Cyhoeddus (Adroddiad Rheolydd Pensiynau) pdf icon PDF 205 KB

Additional documents:

Minutes:

8.1       The PM highlighted the following key headlines from the report:

  • The purpose of the report was to enable the Pension Board to consider the Pension Regulator’s September 2019 Engagement Report on Governance and Administration Risks in the LGPS and to consider and invite comments regarding the Fund’s initial draft risk assessment.
  • The Pension Regulator had conducted engagement sessions with 10 LGPS funds between October 2018 and July 2019 to understand scheme managers’ approaches to a number of key risks, as they related to governance and administration of LGPS funds.
  • The key issues addressed within the Pension Regulator’s report were outlined in paragraph 4 of the report.
  • The initial assessment would suggest that of 52 good practice requirements to manage risks, the Fund was compliant on 32, partially complaint on 6, with 14 non-compliant.

 

8.2       Members of the Pension Board commented that it was a positive and proactive self-assessment; however they would have appreciated more information around what led officers to make their respective decisions around green, amber and red coding. The HoP agreed to consider the above comments for future versions of the self-assessment.

 

8.3       Following questions and comments from the Board, the HoP and PM made the following points:

  • The HoP confirmed that it was not a comprehensive evaluation and should not replace the audit or regulatory requirements; however it would be short-sighted to ignore the Pension Regulator’s report as it was clearly identified as good practice.
  • The HoP confirmed that complaints were received against the Fund and he suggested that they could be reported to the Pension Board anonymously, which may assist in improving processes. Members of the Pension Board agreed that compliments should also be considered by the Board, in order to provide a balanced view.
  • The HoP explained that work may have been undertaken by the Shared Resource Service (the Fund’s IT provider) around cyber security; however it was categorised as red on the risk register because the Fund was not aware of the work. The PM added that this area would be explored with the Shared Resource Service.

 

8.4       The Chair confirmed that the self-assessment provided a basis on which to move forward.

 

8.5       The Pension Board agreed that the draft risk assessment required narrative and that the red and amber items should be developed into an action plan for the Board to agree, with progress reporting thereafter.

9.

Training to Meet Knowledge and Understanding Requirements / Hyfforddi i Gwrdd â Gofynion Gwybodaeth a Dealltwriaeth pdf icon PDF 364 KB

Minutes:

9.1       The HoP confirmed that this was a standard report and that the upcoming LAPFF Conference in Bournemouth and the LGPS Governance Conference in York had been added to the training log.

10.

Any other business / Unrhyw fater arall

Minutes:

10.1    Ian Reese confirmed that he was aware of a Unison colleague who may be interested in joining the Pension Board. The HoP encouraged Ian Reese to ask his colleague to contact either the HoP or the Governance and Communications Officer to discuss the matter further.

11.

Date of next meeting 22/1/20 / Dyddiad y cyfarfod nesaf 22/1/20

Presented By: Chair

Minutes:

11.1    The next meeting of the Pension Board will be on Wednesday 22 January 2020.

12.

Exclusion of Press and Public / Gwahardd y Wasg a'r Cyhoedd

To agree the exclusion of the press and public from the meeting as presentations and meeting papers are not for publication because in accordance with paragraphs 12 and 14 of part 4 of Schedule 12a of the Local Government Act 1972 (as amended by the Access to Information Variation Order Wales 2007), it contains information about a particular individual and information relating to the financial and business affairs of particular persons including the Council and in all the circumstances of the case the public interest in maintaining the exemptions outweighs the public interest in disclosing the information.

 

Cytunogwahardd y wasg a'r cyhoedd o'r cyfa rfod gan nad yw cyflwyniadau a phapurau cyf arfod i'w cyhoeddi oherwyddyn unol â pharag raffau 12 a 14 o Ran 4 o Atodlen 12A Deddf Llywodraeth Leol 1972 (fel y'i diwygiwyd gan OrchymynMynediad i Wybodaeth (Amrywiad) Cymru 2007), ei fod yn cynnwys gwybodaeth am unigolyn penod ol a gwybodaeth ynymwneud â materion aria nnol a busnes unigolion penodol yn cynnwys y Cyngor a than holl amgylchiadau'r achos, maelles y cy hoedd o ran sicrhau'r eithriadau yn gorbwyso'r budd i'r cyhoedd yn nhermau datgelu'r wybodaeth.

Minutes:

12.1    The Board agreed to the exclusion of the press and public from the meeting as presentations and meeting papers were not for publication because in accordance with paragraphs 12 and 14 of part 4 of Schedule 12a of the Local Government Act 1972 (as amended by the Access to Information Variation Order Wales 2007), it contained information about a particular individual and information relating to the financial and business affairs of particular persons including the Council and in all the circumstances of the case the public interest in maintaining the exemptions outweighs the public interest in disclosing the information.

 

12.2    The Chair invited Councillor Caron to remain in the meeting.

 

Items 13 to 15 were exempt from the press and public.

13.

Exempt Minutes 24/7/19 / Cofnodion Eithriedig 24/7/19

14.

Exempt Minutes of the Pensions Committee 10/6/19 / Cofnodion Eithriedig y Pwyllgor Pensiynau 10/6/19

15.

Strategic Asset Allocation Review / Adolygiad Dyraniadau Asedau Strategol