Agenda and minutes

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

Apologies were received from Councillor Jonathon Seed.

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

There were no declarations.

To receive any announcements through the Chairman.

There were no announcements.

To approve and sign the minutes of the meeting Part I minutes of the committee meeting held on 24 June 2021, and the Investment Sub-Committee meeting on 2 September 2021.

The minutes of the meeting held on 24 June 2021 were presented for consideration. The minutes and recommendations of the Investment Sub-Committee meeting held on 2 September 2021 were also received and considered.

In relation to the minutes of the meeting held on 30 March 2021, an update was received on amendments which had been prepared following deferral of their approval at the last meeting.

After discussion, it was,

Resolved:

1)    To approve and sign the minutes of the meeting held on 24 June 2021 as a true and correct record.

2)    To receive the minutes of the Investment Sub-Committee meeting held on 2 September 2021, and approve the recommendations as follows:

Responsible Investment Update Report

i.       To use the report as a basis for monitoring the progress that is being made towards implementing responsible investment related issues;

ii.      To note the progress made against the Responsible Investment Plan 2021/22 actions and discuss whether any additional actions are needed at the current time;

iii.       To approve that Pensions for Purpose be invited to deliver a follow-on session on impact investing, at a cost of £1,700 (not included in the budget);

iv.       To approve that Brunel are invited to deliver a training session on the new Paris-aligned benchmark

Investment Quarterly Progress Report

i.           To use the investment reports and the update provided by officers and advisers at the meeting as a basis for monitoring the investment performance and implementation of the strategic asset allocation;

ii.          To use the report as a basis to ask questions of Magellan;

iii.           To approve that the Fund transfer the low carbon passive portfolio to the Paris-aligned passive portfolio on its inception in November 2021, in line with the net zero by 2050 ambition set out in the Investment Strategy Statement;

iv.           To approve that the Fund publicise the decision to be an initial investor in the Paris aligned passive portfolio, and the collaboration work done with other Funds to develop this benchmark;

v.          To approve the approach taken towards the property transition, and agree the milestones set before this can proceed

Protections Assets Review

i.           To approve that the Fund makes a 5% strategic long-term allocation to renewable infrastructure and a 5% strategic long-term allocation to impact affordable housing;

ii.          To approve that the strategic long-term allocation to secured income is reduced to 8% and the strategic long-term allocation to gilts is reduced to 7%;

iii.           To approve that the strategic interim allocation to bank loans is increased to 10.8%, and the strategic interim allocation to gilts is reduced to 21.7%, and that this is implemented by transferring £100m from the gilts portfolio to the bank loans portfolio;

iv.           To approve that officers begin work, in consultation with advisers, to bring a recommendation back to the Committee on how the new strategic allocations should be implemented.   

3)    To approve and sign the minutes of the meeting held on 30 March 2021 as a true and correct record, following circulation of textual changes to the Committee.  ...  view the full minutes text for item 35.

To review progress on any actions requested by the Committee in previous meetings.

The Committee considered a report on actions arising from previous meetings. It noted that all actions were either completed or scheduled for future action.

It was then,

Resolved:

To note the action log.

To consider the Part I (public) minutes, and recommendations arising, from the meeting of the Local Pension Board held on 24 August 2021 and Investment Sub-Committee held on 2 September 2021.

The Committee considered the minutes and recommendations of the Local Pension Board meeting held on 24 August 2021. It noted the recommendations particularly in relation to Fund Cyber Security and the Risk Register.

It was then,

Resolved:

To note the minutes of the Local Pension Board meeting and the recommendations as set out in the report.

The Council welcomes contributions from members of the public, however, to ensure Covid-19 public health guidance is adhered to, physical attendance at this meeting will be limited. Please contact the officer named on this agenda no later than 5pm on 28 September 2021 if you wish to attend this meeting.

Statements

If you would like to make a statement at this meeting on any item on this agenda, please register to do so by 5pmon 28 September 2021. 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 23 September 2021 in order to be guaranteed of a written response. In order to receive a verbal response questions must be submitted no later than 5pm on27 September 2021. 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 questions or statements received.

To consider a proposal to amend the meeting arrangements for the Wiltshire Pension Fund Committee and the Investment Sub-Committee.

The Chairman introduced a report proposing that the Committee stand down its Investment Sub-Committee, and instead arrange additional meetings of the Committee to consider investment items. It was proposed this would avoid duplication, delay and ensure all Committee members were involved in decision making.

The Committee discussed the proposals, noting that as it had been non-decsion-making meetings of the Investment Sub-Committee had taken place online, while meetings of the Committee were legally required to have Members attend in person. It was considered whether training or other items could possibly take place online in order to keep agendas as manageable in length as possible.

Some Members did not consider there was a need to alter the arrangements of the Committee or investment Sub-Committee, or that any issues had arisen as a result of the arrangements. In response to queries it was confirmed that any constitutional changes to remove formal delegations to the Investment Sub-Committee would need to be approved by Full Council, and that delegations to Fund Officers remained in place. There were also comments on being flexible in what each meeting of the Committee focused upon, and the need for all Members to engage with training to properly consider all Investment and other matters.

It was then,

Resolved:

1)    That the Investment Sub-Committee should be stood down with immediate effect, to be replaced with an equal number of additional meetings of the Wiltshire Pension Fund Committee, leaving eight full Committee meetings per year in total.

2)    That the Wiltshire Pension Fund Committee meets with a separately-focussed agenda on alternate dates: An investment agenda and a non-investment administration agenda. Exceptions for urgent items will still be able to apply where it is necessary to break this cycle.

3)    To request the Standards Committee progress recommended changes to the constitution as appropriate.

4)    To delegate to the Chairman and officers to explore and agree any desirable changes with MJ Hudson which are possible under the existing contract (and to make alterations when re-tendering).

A report for the committee’s ongoing oversight of:

·        Scheme, Regulatory, Legal and Fund Update

·        Key Performance Indicators (KPIs) – 1 April 2021 to 30 June 2021

·        Annual Benefit Statement Update

·        Fund Audits – Assessibility Regulations

·        Risk Register

·        Budget monitoring

A report was received to update the Committee on key issues and developments across a range reports, including in relation to the Risk Register, Training, Scheme, Regulatory and Legal Updates, budget monitoring, and others as detailed in the agenda.

Points discussed including the annual benefits statement, that the administration key performance indicator update was up to the end of June 2021 but that a similar pattern was expected for the next quarter.

It was then,

Resolved:

1) To use the information in the report as a basis for monitoring the Fund’s core activities
2) To use the report as a basis to discuss training requirements, discuss whether any additional training needs to be arranged, and share feedback from any recent training events attended
c) To approve the changes to the Risk Register and accept the recommendations for changes/actions made submitted by the Board

LPB Recommendation

To note the updated Risk Register and recommend the changes/actions proposed at paragraphs 5-9 of the report to the Committee.

5.       During the last quarter no “new risks” were identified.

6.       The evidence-based review of the register identified the following risks had changed or need to be re-categorised;

•         PEN058: Service disruption is created during the implementation of the Council's Evolve Programme on the Fund (From Green to Amber) A potential lack of co-ordination between the Evolve & Altair payroll project management timetables could increase the risk of success of this migration. Regular communication between project managers should be established.

•         PEN052: COVID-19: (From Red to Amber) An infectious global virus which WHO has classed as a pandemic. The impact of COVID-19 is being largely managed and there are signs that the nation is returning to normal. Recommend that this risk be moved to ongoing.

•         PEN055: Failure by Brunel Pension Partnership to properly address shareholder concerns via the governance review: (From Red to Amber) The governance arrangements by which BPP will operate have been set out in a terms of reference and Wiltshire along with all the shareholders are satisfied with the breadth and depth of the resulting changes. Recent communications suggest progress is beginning to be made. Recommend that this risk be monitored and moved to ongoing.

•         PEN024: The implementation of Brexit causes investment volatility or unexpected legislative changes: (From Amber to Green) Any impact which would have been caused by Brexit has now been built into investment valuations. Recommend that this risk be moved to dormant.

•         PEN012: Over-reliance on key officers: (From Amber to Green) A full complement of staff are now appointed to roles enabling suitable cover. The majority of appointments are experienced and have served in their positions for quite some time. Recommend that this risk be moved to dormant.

•         PEN011: Lack of expertise of Pension Fund Officers and Service Director, Finance: (From Amber to Green) Senior Officer appointments are experienced and have served in their positions for quite some time. Recommend that this risk be moved to dormant.

•         PEN009: Failure to comply with Data Protection  ...  view the full minutes text for item 40.

To receive a verbal update on training.

An update on training was provided by the Fund Governance and Performance Manager. A four-year strategy had been developed to be implemented following the May 2021 local elections. Knowledge assessments completed by the Committee would be used to develop a specific list of training needs and to identify training packages to address those needs.

Other issues raised included developing a document library for use by Committee Members, developing technical expertise, and the need to deliver proportionate training taking account of necessary skills and the availability of Members.

The Committee thanked officers for the update on training.

To receive a verbal update from the Head of Pension Fund Investments.

A verbal update was received in respect of a review of Additional Voluntary Contributions, plans set up for scheme members to make further contributions to their pensions. Due to the Fund’s provider (Prudential) experiencing some IT system issues there had been some subsequent service issues in late 2020, but these were being addressed and the service issues should be resolved for 2022. The Committee was informed scheme members had not been financially dis-advantaged by administrative delays.

The Committee thanked officers for the update.

A report on the progress of this project by the Head of Pension Administration and Relations

The Committee received a further update on the ongoing reconciliation progression between the pension administration system and the pensions payroll system, as well as the project to move to an integrated pensioner payroll system.

It was stated that each case that remained was taking a long time to resolve, with peer reviewing, as officers wanted to ensure sufficient thoroughness and controls existed to reach the correct conclusions. Work was being undertaken to align with the council’s Evolve programme for a new payroll system. Details were sought on remaining issues with the reconciliation, how dependent the project was on wider council projects and that further updates would be provided.

At the conclusion of discussion, it was,

Resolved:

To note the update.

To receive a report on the progress of this project by the Head of Pension Administration and Relations.

A report was received on the current staffing structure for the Fund, requesting that the budget set for 2021-2022 to appoint three staff for 12 months be made permanent. It was stated this would not affect the current years’ budget.

The Committee discussed the report, seeking confirmation that they could approve the proposal within the council budget, with the Fund having exceptions on wider recruitment pauses. The risk register was discussed in relation to key officers, and details were sought on staffing costs.

At the end of discussion, it was then,

Resolved:

That budget approval be granted to allow the three current temporary roles in the staffing structure to be made permanent.

A break was taken from 1120-1125

A report from officers on the Fund’s Data Improvement Plan. Members are asked to approve an updated strategy

A report was received providing an update to the Data Improvement Strategy and Plan, which was originally approved in March 2019, and to present proposed changes to the strategy and plan. The Pension Regulator recommends that all funds should review their data quality at least annually.

The Committee discussed the update. In response to queries it was confirmed that the pension regulator was primarily concerned with integrity and accuracy of data not access or security, ensuring compliance with appropriate data protection legislation. Details were sought on when the Fund last participated in the National Fraud Initiative. It was also confirmed that a strategy for long term storage of data would be reviewed in 2022/23.

At the conclusion of discussion, it was,

Resolved:

To approve the Data Improvement Strategy and Plan as detailed in the appendix to the report.

An update on the Fund’s responsible investments arrangements,

A report was received updating the Committee on Responsible Investment issues, following approval at the last meeting of a Responsible Investment Plan and providing updates on the actions agreed as detailed in the agenda.

Representatives from Mercers then provided a detailed presentation and update on their analysis and proposals relating to setting a pathway to net zero, identifying time periods to meet the targets approved by the Committee at previous meetings to achieve net zero by 2050. This included interim targets for carbon reduction andanalysis of emissions for specific companies.

The Committee discussed the presentation. Some Members considered that the targets proposed were more demanding than the Committee had committed to, and whether the financial prospects of the fund were appropriately considered in the proposals, and whether further information was available on the likely financial impacts of the different target options. Questions were also raised on modelling the financial impacts, with it stated that modelling had been undertaken and would be reviewed at least every three years. The Fund would retain flexibility within its strategy in order to generate the financial returns that it was aiming to generate.

During discussion it was noted that the Committee had considered climate scenario analysis and approved that setting a target of net zero by 2050 would be in the best financial interests of the Fund, and that it was necessary to set interim targets to ensure the agreed objectives were achieved. It was noted that the investment options in relation to low carbon passive benchmarks had developed significantly recently. There was also discussion of Paris agreement aligned benchmarks and how these could be calculated, and of internal legal advice previously raised at Committee.

There was then a proposal that a decision be deferred pending the outcome of the consultation on making TCFD (Task Force on Climate-related Financial Disclosures) mandatory for Local Government Pension Scheme funds,  which is shortly anticipated to be launched by the now Department for Levelling Up, Housing and Communities. Following a vote the motion was lost.

The recommendation as set out in the report was then moved and seconded, and it was then,

Resolved:

1)    To use the report as a basis for monitoring the progress that is being made towards implementing responsible investment policy;

2)    To note the progress made against the Responsible Investment Plan 2021/22 actions and discuss whether any additional actions are needed at the current time;

3)    To approve the Investment Sub-Committee’s recommendation that Pensions for Purpose be invited to deliver a follow-on session on impact investing, at a cost of £1,700 (not included in the budget);

Councillor Christopher Newbury requested his vote in opposition to the motion due to fiduciary concerns be recorded.

To consider a new Responsible Investment policy with climate change statementby the Head of Pension Fund Investments.

Following the previous item, a report was received setting out a proposed Responsible Investment Policy. This followed approval in June 2021 of a Responsible Investment Plan to include the development of a policy including a climate statement and action plan.

The Policy contained information from the existing Investment Strategy Statement, the Responsible Investment Plan, and some new information, including some updated investment beliefs, and the interim decarbonisation targets and other findings from the Mercer work discussed in the previous item.  Officers explained that following advice from Mercer, the draft appended to the paper would be amended to refer to “well below 2°C”, and that reference to signing up to the UN PRI would be removed as that was not possible at the current time.  Officers explained that the Policy was being graphically designed, and that following Committee approval, it would be shortly published on the Fund’s webpage and circulated to Committee members.

It was then,

Resolved:

To approve the Responsible Investment Policy.

To review the work plan for the committee 2021-22.

The Committee received the forward work plan. It was noted that an amended meeting schedule would be arranged following the decision in relation to the committee structure.

It was then,

Resolved:

To approve the Committee Forward Work Programme

To determine the date of the next committee 

The date of the next meeting was confirmed as 25 November 2021.

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 Numbers 21 - 26  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.

It was,

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 21 - 26  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 approve and sign as a true and correct record the Part II (private) minutes of the previous meeting held on 24 June 2021

The Part II minutes of the meeting held on 24 June 2021 were presented for consideration, and it was,

Resolved:

To approve and sign the minutes as a true and correct record.

To consider the Part II (private) minutes, and recommendations arising, from the Investment Sub-Committee meeting held on 2 September 2021 and the Local Pension Board meeting held on 24 August 2021.

The Part II minutes of the meeting of the Investment Sub-Committee held on 2 September 2021 and the Local Pension Board meeting held on 24 August 2021 were received, and it was,

Resolved:

To note the minutes and recommendations of the Investment Sub-Committee and Local Pension Board.

To consider a report from the Head of Pension Fund Investments.

A report was received in relation in infrastructure investment, including potential nuclear energy investment. It was confirmed any potential investment, if recommended, would be made cautiously and financial risks carefully assessed.

It was then,

Resolved:

1)     To approve that the Fund exclude investing in nuclear projects via the unlisted infrastructure portfolios, unless officers and advisers have been given an opportunity to review the investment specifics, and have the power to opt-out of taking part in the investment if the risks are assessed to be too high;

2)     To approve that officers should continue to work with Brunel with the aim to ensure that Wiltshire is able to review any proposed nuclear investments in the infrastructure portfolio, and have the power to opt out.

To consider proposals for the Fund arrangements with its two key software providers & its current compliance with the Regulator’s guidance.

A report was received in relation to Fund Cyber Security. The need for updates from those with appropriate technical expertise was raised, and it was,

Resolved:

To defer consideration of the item to the December meeting of the Committee, to include officers from ICT.

A update by the Head of Pension Fund Investments outlining the operational accounting arrangements in place.

A report was received on key financial controls. Details were sought in relation to treasury limits and the approval of the 2021 accounts.

At the conclusion of discussion, it was,

Resolved:

1)    To increase the limits for holding cash within the 3 liquid funds used to hold cash locally from £6m each to £10m.

2)    To note the issues identified within the report, and to use the information within the report to monitor the progress made to rectify problems and develop improvements.

A verbal update on the BPP governance arrangements by the Head of Pension Fund Investments.

A verbal update was received stating that most previous governance issues with Brunel had been resolved, though officers would continue to challenge as appropriate on any operational issues.