Agenda and minutes

To note any changes to the membership of the Committee.

There were no impending changes to the membership of the Wiltshire Pension Fund Committee.

The Committee noted that Mark Spilsbury would take over from Howard Pearce as Independent Chair of the Local Pension Board on 01 April 2020.

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

Apologies were received from Chris Moore, Cllr Christopher Newbury, Cllr Brian Ford, Howard Pearce and Barry Reed.

To confirm the Part 1 minutes of the meeting held on 17 December 2019.

Resolved

To confirm as a true and correct record the Part 1 minutes of the previous meeting held on 17 December 2019.

Resolved

To note the key points from the action log. 

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

There were no declarations of interests.

To receive any announcements through the Chairman.

The Committee agreed that Item 16 (Budget 2020/21) would be brought forward and discussed after Item 10 (Business Continuity), and that Item 26 (Final Valuation Report) be brought forward and discussed after Item 16.

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 on the front of the agenda 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 on the front of this agenda no later than 5pm on 19 March 2020 in order to be guaranteed of a written response. In order to receive a verbal response questions must be submitted no later than 5pm on 23 March 2020. Please contact the officer named on the front 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 were no statements or questions from the public.

To consider the Part 1 minutes, and recommendations arising, from the Local Pension Board meeting held on 13 February 2020.

Resolved

To note the Part 1 minutes of the Local Pension Board.

To consider the Part 1 minutes, and recommendations arising, from the Investment Sub Committee meeting held on 27 February 2020.

Resolved

To approve the Part 1 minutes of the Investment Sub Committee.

To consider the Fund’s response to the current situation regarding COVID-19 and proposals to ensure its continued operation.

Libby Johnstone, Democratic Governance Manager, presented a report on the Fund’s response to the current situation regarding COVID-19 and proposals to ensure its continued operation.

It was noted that under the Local Government Act 1972, local authorities must hold meetings to make decisions and that, at present, the Council’s Constitution makes insufficient delegation for decision-making in the event a meeting of the Wiltshire Pension Fund being unable to take place.

It was also noted that, should the proposal be adopted, feedback would be sought from Committee members where possible in advance of a decision being taken by the Director of Finance and Procurement. The Local Pension Board would also continue to have a role in reviewing the governance of the Fund during this period and would need to be assured that the delegation above was only being used where absolutely necessary.

Resolved

To agree to the proposed delegation.

To receive a report proposing the Fund’s budget for 2020/2021 for approval by the Committee. This with include the forecast spend for 2019-2020 and approval of the Local Pension Board budget for 2020/2021.

The Head of Pensions Administration & Relations and Head of Pension Fund Investments presented a report proposing the Fund’s budget for 2020/2021 for approval by the Committee. This included the forecast spend for 2019-2020 and approval of the Local Pension Board budget for 2020/2021.

It was noted that the budget for the Fund’s expenditure would now be shown in three sections, to bring consistency with SF3 reporting and industry practice. There would now be a third category called Governance and Oversight in addition to the existing Scheme Administration and Investment and Accounting Administration categories. Due to the change in budget presentation, officers had also realigned previous years’ figures accordingly.

The Fund’s “controllable” budget proposed for 2020/21 was a six per cent increase from 2019/20. The reasons for this included additional staffing allocation, an increased total scheme membership and potential administration complications such as the McCloud case and GMP rectification.  There was also some additional proposed spend on consultancy work, as agreed at the latest Investment Sub-Committee.  It was also noted that the Fund’s budget did not make any allowance for additional spending in response to the COVID-19 situation. While there may be additional spend, there have been no material complications as of yet.

The Fund’s Investment and Accounting Administration budget proposed a small increase to fund an increase in staff working hours. The largest proportion of the budget was investment managers fees which were largely dependent on the value of assets being managed, and the investment return performance which depends on market conditions. This also included annual fees for the Brunel Partnership. This part of the budget was presented as indicative spend for information.

Resolved

1.    To note the Pension Fund Investment Fees and related costs budget of £15.247m as indicative spend on this area (which officers will continue to monitor)

2.    To approve the Pension Fund Administration, Investment and Governance Controllable budgets for 2020-21 shown in the Appendix totalling £2.795m (0.1% of total fund value).

To receive a presentation by Hymans Robertson of the final valuation report and a review of the process, including the level of data quality.

The Head of Pensions Administration & Relations and Barry Dodds, Actuary at Hymans-Robertson, presented a report summarising the completion of the 2019 Actuarial Valuation exercise for the Wiltshire Pension Fund.

It was noted that employers had been written to regarding their contribution rates. They were provided with details of their results and to request that each employer confirm their agreement to the contribution rates to be paid over the next three years. Officers had agreed alternative employer rates with 13 employers, which was in line with expectations and all revised rates were within the parameters agreed by the Committee. Most decreases that had been requested were modest in size. For those that did not respond, the rates put into payment from 01 April 2020 would be those that have been proposed by the Actuary. If an employer were to miss its contribution payment, it would be considered a breach and be either recorded or reported in accordance with the regulator’s guidance on such matters.

In response to a question from the Committee, it was noted that only a small percentage of employers are funded privately. For all employers that had joined in the last ten years, the Fund had insisted that should a private sector organisation be admitted the previous employer (usually Wiltshire Council or Swindon Borough Council) must be its guarantor.

In response to a question from the Committee, it was noted that only a small percentage of employers are funded privately. For all employers that had joined in the last ten years, the Fund had insisted that should a private sector become involved, Wiltshire Council or Swindon Borough Council must be its guarantor.

In response to concerns raised by the Chairman, it was noted that contribution rate decisions are taken on a case by case basis and repayment plans are implemented if needed. The Fund, in consultation with the Actuary, planned to circulate a survey in the coming days to understand the position of employers in the current economic climate. This would allow the Fund to identify the employers most at risk to the financial implications of COVID-19, whilst being conscious of the fact that some employers would have a guarantor.

Resolved

1.    To note the Valuation update provided, including the appendices and to note the valuation report will be published.

2.    To note that officers & actuary will be providing valuation information to the SAB, MHCLG & GAD.

3.    To note the risks as outlined in the report.

To receive a report from the Governance and Performance Manager updating members on the plan for this year and providing further details of the training and qualifications undertaken by officers.

Resolved

To note the officer training plan update for 2020-21.

To receive a report from officers updating the Committee on various developments.

Resolved

To note the scheme, legal, regulatory and Fund update.

To receive a report summarising the latest KPIs for the period 1 October 2019 to 31 December 2019.

Resolved

To note the current situation and the Fund’s plans for improvement.

To receive a report setting out the progress of the Fund’s data improvements since the plan was approved 12 months ago.

Resolved

To note the progress against the Data Improvement Strategy and Plan.

To receive a report reviewing the progress of actions set for 2019/2020 and proposing new actions for the 2020/2021.

The Head of Pensions Administration & Relations introduced a report on the progress of the actions set for 2019/20 and the proposals for new actions for 2020/21.

It was noted that officers had agreed in 2019 to set actions for one year at a time only, despite the plan running from 2019 until 2022. This approach was partly in recognition of the difficulty in setting specific actions for a period of up to three years and in response to feedback that the development of key events may not be reflected in triennial action setting. Moreover, the approach is to focus only on actions which are improvements, developments and changes - business as usual actions would not be covered even though they make up the vast majority of work in the section.

It was explained that Appendix 1 showed the Fund’s progress of the desired actions for 2019/20. Most actions were complete, or would be completed in the 2019/20 period, although some had been carried forward for the reasons stated in the Appendix.

The Committee noted that the 2020/21 plan was ambitious in its objectives. The Head of Pensions Administration & Relations pointed out that some actions are aspirational, and that the Appendix indicates the service priority and resourcing requirement of each action. That said, some actions with a lower service priority may be less resources intensive and could still be completed instead of some higher service priority actions.

Resolved

1.    To note the Fund’s progress against the actions from 2019/20

2.    To approve the proposed actions from 2020/21.

3.    To receive an updated report on the progress of the Business Plan at the next meeting.

An updated Risk Register will be brought to the Committee for its consideration, including an explanation of the Fund’s business continuity arrangements.

The Head of Pensions Administration & Relations introduced an updated Pension Fund risk register, including an explanation of the Fund’s business continuity arrangements.

It was noted that during the last quarter three new risks were identified, as detailed in the report. One such risk was related to COVID-19, which could cause significant issues to the Fund. The Committee was assured that officers were well equipped to work from home and cover any staff absences that may result. The Fund’s key service providers were largely office-based, and officers had been assured that their business would continue as normal. Recent investment performance had been poor due to increased market volatility, with wider than usual spreads making trading challenging. Investment managers were seeing strong negative returns, and in many cases, money was being moved into cash to adopt a more defensive position. Officers were in close contact with Hymans-Robertson to understand the funding level and develop an appropriate response.

Resolved

1.    To note the attached Risk Register and note the changes/actions made by officers in points 7 to 10 to the Committee

2.    To note the officers’ approach to the Fund’s key person risk.

To receive a verbal update from the Governance and Performance Manager regarding the member effectiveness review.

Resolved

To note the progress of the member effectiveness review.

To receive an update on the progress of external audits.

Resolved

To note the update.

Following a recent change to the LGPS Regulations (on 20 March 2020 but backdated by 2 years) in relation to cessations, we are required to make a change to our FSS. The proposed changes will be presented.

The Head of Pensions Administration & Relations introduced a report on the updated employer cessation policy.

It was noted that following recent regulatory changes which came into force in March 2020, the Fund now had some discretion over whether to make a complete, partial or nil payment out of any cessation surpluses to employers ceasing participation in the Fund, after consideration of their circumstances had been completed. The main area of change within the policy was to Section 8 which sets out the approach the Fund would normally take to the discretion given to it. In the interest of transparency, officers had sought to set outline its approach to decision-making in this regard.

The application of the policy generally aimed to reduce the risk that the Fund enters into in a dispute with an employer over how to settle its exit position. However, in general, the legislation increases the risk of challenge to the Fund’s decision because it introduces a discretion which did not previously exist and typically different parties will have different views on what they see as the correct outcome. As such, there was a need to be robust in setting this policy to allow the Fund to push back on any challenge.

It was noted that the policy had been produced in consultation with Hymans-Robertson and that it would go out to consultation with the Fund’s employers in due course.

Resolved

To approve this policy subject to a consultation with employers being undertaken in April 2020 and no material issues being raised.

To receive a report from officers outlining the current Treasury Management Strategy.

Resolved

To approve the attached Treasury Management Strategy.

To consider the draft plan for 2020/21.

The Governance and Performance Manager gave a verbal update on the look forward work plan for 2020/21.

It was noted that officers had reformatted the Committee’s work plan for 2020/21 to align with it the new budget planning structure, be consistent with the business plan for 2020/21 & create a comments column to provide additional background notes for members.

Resolved

To note the draft plan.

To note that the next regular meeting of the Committee will be held on Thursday, 16 July 2020.

The next meeting of the Wiltshire Pension Fund Committee will be held on Thursday 16 July 2020.

Any other items of business which, in the opinion of the Chairman, should be considered as a matter of urgency. Urgent items of a confidential nature may be considered under Part II of this agenda.

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 26-32  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

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 141-147 because it was 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 receive a report by the Investment Manager on the progress of the implementation of the Brunel Pension Partnership budget and business plan.

The Head of Pension Fund Investments introduced a report updating members on the Brunel budget and business plan.

Three confidential reports are circulated updating the Committee on the performance of the Fund’s investments. These were considered by the Investment Sub-Committee at its meeting on 27 February 2020 and are circulated for information only.

The Head of Pension Fund Investments introduced a report on the Fund’s quarterly investment progress.

The Head of Pension Fund Investments introduced the minutes and key decisions of the Investment Sub Committee held on 27 January 2020.

Resolved

To approve the minutes and key decisions of the Investment Sub-Committee held on 27 January 2020.

To consider the finalised and draft minutes of the most recent meeting of the Brunel Oversight Board.

Resolved

To note the finalised and draft minutes of the most recent meeting of the Brunel Oversight Board.

To receive an update on the assurance framework surrounding the Brunel Infrastructure Portfolio.  

The Head of Pension Fund Investments gave an update on on Brunel’s infrastructure portfolio.

To confirm the Part 2 (confidential) minutes of the meeting held on 17 December 2019.

Resolved

To confirm as a true and correct record the Part 2 minutes of the meeting held on 17 December 2019.

Any areas of outstanding business were discussed.