Agenda and minutes

To note that Cllr Gordon King replaces Cllr Mark Packard on the Wiltshire Pension Fund Committee and Investment Sub-Committee.

It was noted that Cllr Gordon King had replaced Cllr Mark Packard on the Wiltshire Pension Fund Committee and Investment Sub Committee.

To note the attendance of any non-members of the Committee.

There were no non-members of the Committee present.

To receive any apologies for absence or substitutions for the meeting.

Apologies for absence were received from Cllr Steve Weisinger, Cllr Gordon King, Michael Hudson (Treasurer to the Fund) and Jim Edney (Independent advisor) who was substituted by Bob Summers.

To confirm the Part 1 (public) minutes of the meeting held on 30 June 2016.

Resolved:

To confirm the Part 1 minutes of the meeting held on 30 June 2016.

To receive any declarations of disclosable interests or dispensations granted by the Standards Committee.

There were no declarations of interest.

To receive any announcements through the Chairman.

The Chairman considered the benefits of working electronically.

Resolved:

To request that external attendees be given access to electronic Committee papers.

The Council welcomes contributions from members of the public.

Statements

If you would like to make a statement at this meeting on any item on this agenda, please register to do so at least 10 minutes prior to the meeting. Up to 3 speakers are permitted to speak for up to 3 minutes each on any agenda item. Please contact the officer named above for any further clarification.

Questions

To receive any questions from members of the public or members of the Council received in accordance with the constitution. Those wishing to ask questions are required to give notice of any such questions in writing to the officer named above (acting on behalf of the Corporate Director), no later than 5pm on 22 September 2016 in order to be guaranteed a written response. Questions received after this deadline and no later than 5pm, two clear working days before the meeting will receive a verbal response. Please contact the officer named on the first page of this agenda for further advice. Questions may be asked without notice if the Chairman decides that the matter is urgent.

Details of any questions received will be circulated to Committee members prior to the meeting and made available at the meeting and on the Council’s website.

There was no public participation.

To receive an update and consider recommendations arising from the Local Pension Board meeting held on 20 July 2016.

The current Local Pension Board Work Plan is available here.

The Committee considered the minutes and recommendations arising from the Local Pension Board meeting held on 20 July 2016. It was highlighted that Counsel view was that the Board was not a Committee of the Council and therefore not covered by the Council’s insurance indemnity cover. The Committee agreed this presented minimal risk and it was noted that further advice from the Scheme Advisory Board on insurance indemnity cover was awaited. The Committee noted the Board’s recommended upgrading for PEN020 on the Risk Register and the Head of Pensions advised that the Board’s recommendations in respect of the Business Plan would be included as part of the Risk Register. Members noted the Board’s request that an exit-strategy for Brunel Pension Partnership be developed; however commented that the intention behind pooling arrangements was that there would be an element of permanency.

Resolved:

To note the recommendations arising from the Local Pension Board meeting held on 20 July 2016.

To note the current work plan for the Board.

A report by KPMG presenting the Final Audit report on the 2015-16 Annual Report for the Wiltshire Pension Fund for information.

The Committee was presented with the final Audit report for the Fund and noted there were no issues arising.

Resolved:

To note the final audit report.

A report presents the Annual Report for financial year 2015-16 for approval.

Members considered the Fund’s annual report and noted the Local Pension Board annual report included as an annex. The annual report contained the financial statements approved at the June meeting and would be uploaded to the Fund’s website. The Fund’s independent advisor commented that the content in the report was of a very high standard.

Resolved:

To approve the draft Wiltshire Pension Fund Annual Report 2015-16, with the inclusion of a link to the Local Pension Board Annual Report.

To thank officers for their hard work in supporting the Fund and in producing the report.

The Committee is asked to consider a report from the Strategic Pension Manager on an additional fund for the suite of AVC products available to Members.

The Committee is asked to approve the addition of the Prudential Ethical fund as an option to the range of funds offered to members by Prudential.

The Committee was asked to consider adding an additional fund choice to the range of Additional Voluntary Contribution (AVC) options currently offered to members. An AVC provided members the option to increase their benefits upon retirements and any return on their investment; deductions were taken from pay before tax and sent across to the provider making it a tax efficient way to save. Pension fund members were currently able to choose from a range of investment options depending on their risk profile, one additional fund from Prudential had been highlighted as of potential interest. The Prudential Ethical fund invested in shares of UK companies which demonstrated good environmental, social and governance policies. The fund would be actively managed against its benchmark, the FTSE4Good UK INDEX, which was limited to those companies in the FTSE All-share Index which met set ethical criteria.

Officers advised that the option had a medium-to-high risk rating and so complimented additional options, however did not pose risk to the Fund itself. Following questions from members it was confirmed that officers were in early stage discussion with Scottish Widows about giving legacy Clerical Medical members the option of more choice of funds.

Resolved:

To approve the addition of the Prudential Ethical Fund as an option to the range of funds offered to members by Prudential.

A report on the latest budget monitoring position for the Wiltshire Pension Fund is circulated for consideration.

Officers presented the Fund’s Budget Monitoring report for 2016/17 and advised that the Fund was £411,000 overspent as a result of a performance management fee from Baillie Gifford (due to outperformance) and commissioning resource to support Brunel Pension Partnership. It was noted that the costs incurred through Brunel were recorded as ‘Investment Consultancy’ and a breakdown of the returns the Fund would expect to see from Brunel would be provided at the next ordinary meeting.

Resolved:

To note the report on the latest budget monitoring position for the Wiltshire Pension Fund.

The Head of Pensions will provide an update on the Annual Benefit Statement exercise for 2016 for Committee consideration.

The Head of Pensions updated the Committee on the 2016 Annual Benefit Statement exercise. Although some Annual Benefit Statement’s had been sent by the August deadline, the majority were sent two weeks later due to printing issues. This was not considered to be a significant breach of regulations however it would be reported to the Local Pension Board for consideration.

Resolved:

To note the update on the Annual Benefit Statement exercise.

The Committee is asked to note the attached Risk Register and measures being taken to mitigate risks.

The Head of Pensions advised on updates and additions to the Risk Register. Five key changes had been made since the last report on 30 June 2016.

The main change was the grading of ‘PEN020: Pooling of LGPS assets’ which had been upgraded from medium to high as Brunel Pension Partnership project presented a risk to the Fund through increased workload and officers having less time to devote to other administrations activities. Similarly, Brunel presented the potential for the movement of staff out of the Fund to become involved in the future pooling arrangements, impacting upon ‘PEN012: Over-reliance on key officers’ and ‘PEN011: Lack of expertise of Pension Fund Officers’; consequently these two risks had been raised to medium. The Fund’s independent advisor commented that he supported the changes to the Risk Register as he continued pooling to carry high risk.

‘PEN002: Failure to collect and account for contributions from employers and employees on time’ had been increased from low to medium risk as a result of increased pressure of monitoring contribution due to a greater number of employers in the fund. ‘PEN017: Lack of expertise on the Pension Fund Committee’ had recently been graded medium following the resignation of one long standing member and advice that the Vice Chairman would not seek re-election in 2017.

The Chairman advised that he had raised the issue of Committee succession planning with the Leader of the Council. Following questions it was confirmed that two employers were currently behind on their contributions payments however this was considered to be an administration error rather than intentional. Officers also advised that they were awaiting further guidance on the implications of the public sector exit cap which would come into force in April 2017; once guidance was received this would also be provided within the newsletter the Fund sent to employers.

Resolved:

To note the Risk Register and measures being taken to mitigate risks.

A special meeting of the Committee will be held on 13 October 2016, the next ordinary meeting of the Committee will be held on 15 December 2016.

It was noted that a special meeting of the Committee was to be held on 13 October 2016, the next ordinary meeting of the Committee would be on 15 December 2016.

There were no urgent items.

To consider passing the following resolution:

To agree that in accordance with Section 100A(4) of the Local Government Act 1972 to exclude the public from the meeting for the business specified in Item Numbers 18 – 25  because it is likely that if members of the public were present there would be disclosure to them of exempt information as defined in paragraphs 1 & 3 of Part I of Schedule 12A to the Act and the public interest in withholding the information outweighs the public interest in disclosing the information to the public.

Resolved:

That in accordance with Section 100A(4) of the Local Government Act 1972 to exclude the public from the meeting for the business specified in Minute Numbers 74- 81 because it is likely that if members of the public were present there would be disclosure to them of exempt information as defined in paragraphs 1 & 3 of Part I of Schedule 12A to the Act and the public interest in withholding the information outweighs the public interest in disclosing the information to the public.

To confirm the Part 2 (confidential) minutes of the meeting held on 30 June 2016.

Resolved:

To confirm the Part 2 minute of the meeting held on 30 June 2016.

The Committee is asked to consider the draft Part 2 (confidential) minutes and recommendations arising from the meeting of the Investment Sub Committee held on 15 September 2016.

Reports are attached for Members’ consideration in respect of Sub-Committee recommendations on risk management.

Members were presented with an update from the Investment Sub Committee meeting held on 15 September 2016 and requested to consider recommendations arising from that meeting.

Resolved:

·       To note the minutes of the Investment Sub-Committee and report from Mercer on effectiveness of the Sub-Committee

·       To note the report on risk management options.

·       To agree that the Committee takes a training session on the use of LDI which sets out the nature and size of the risks the Fund is facing; and

·       To explore in more detail by way of an initial training session on the options available for equity protection strategies in comparison to investing in a lower volatility equity strategy; and

·       To note the recommendations of the Investment Sub Committee in relation to currency hedging and consider these as part of the formal review of Berenberg dynamic currency hedging mandate.

A verbal update from the Head of Pensions on the potential class action case considered at the previous meeting of this Committee for members to note.

The Head of Pensions updated on the latest position of a class action case the Fund was participating in.

Resolved:

To note the update from the Head of Pensions on the class action case.

The Committee is asked to review and approve an updated Funding Strategy Statement.

Report to follow.

Members were presented with a Funding Strategy Statement which had been updated.

Resolved:

To approve the draft Wiltshire Pension Fund Funding Strategy Statement 2016 as attached in the Appendix.

To publish the Funding Strategy Statement following the completion of the consultation period and update to the Committee on 15 December 2016.

A verbal update from the Head of Pensions outlining a series of funding metrics being submitted to the Shadow Advisory Board by 30 September, ahead of the formal valuation results being reported to this Committee in October.   

The Head of Pensions updated on funding metrics being submitted to the Shadow Advisory Board ahead of the formal valuation results being reported to Committee in October.

Resolved:

To note the update on funding metrics and request that officers report concerns to Hymans Robertson and seek advice from the Actuary on the requirement to report this figure to the Scheme Advisory Board.

To decline the submission of funding metrics to the Shadow Advisory Board by 30 September, unless advised by the Section 151 officer that there are legal reasons requiring the release of the metrics by this deadline, and to reconsider funding metrics as a high priority on 13 October  2016 valuation meeting.

A verbal update by the Head of Pensions on the progress of the Brunel Pension Partnership for the pooling of Local Government Pension Scheme  assets. 

The confidential minutes of the Local Pension Board meeting held on 20 July are attached for the Committee to consider, in respect of recommendations relating to asset pooling.

The Committee received an update on the Government’s proposals on the pooling of investment assets.

Resolved:

To note the update by the Head of Pensions on the progress of the Brunel Pension Partnership.

To request that the independent assurance report be circulated as part of the Full Business Case for pooling to Committee members.

To note the recommendations of the Local Pension Board in respect of pooling.

Confidential papers outline the recommendations from the Investment Sub Committee following the review of the Berenberg Dynamic Currency Hedging mandate for Committee consideration. 

The Head of Pensions introduced a review of the Berenberg Dynamic Currency Hedging Mandate and related recommendations from the Investment Sub Committee.

Resolved:

To request that the Berenberg dynamic currency hedging mandate is terminated; and

The strategic dynamic currency overlay programme is replaced with a 50% passive currency overlay on its overseas equity exposure; and

That 50% of the overseas equity exposure is hedged through the use of Legal and General hedged global equities and Legal & General hedged RAFI 3000 pooled vehicles.

Three confidential reports are circulated updating the Committee on the performance of the Fund’s investments as to the end of June 2016.  These were considered by the Investment Sub-Committee at its meeting on 15 September 2016 are circulated for information only.

The Committee was presented with the Investment Quarterly Progress Report for information.

Resolved:

To note the report on performance of the Fund’s investments as to the end of June 2016.