Agenda and minutes

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

Apologies for absence were received from Cllr Jonathan Seed and Tracy Adams.

To approve and sign the minutes of the investment focused meeting on 3 March 2022.

The Part I (public) minutes of the previous meeting of the Wiltshire Pension Fund Committee held on 3 March 2022 were considered.

Resolved:

The Committee approved and signed the Part I (public) minutes of the previous meeting held on 3 March 2022 as a true and correct record.

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 reported that Ellen Ghey, Democratic Services Officer, had Covid and was unable to be at the meeting. On behalf of the Committee, the Chairman wished her a speedy recovery, and welcomed Stuart Figini, Senior Democratic Services Officer to the meeting in her place.

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

To update the Committee on the Fund’s audit plan for 2022/23 (Minute 80 – 16 December 2021)

The Committee reviewed the progress of actions arising from previous Wiltshire Pension Fund Committee meetings.

Resolved:

That progress on actions arising from previous meeting be noted.

To receive the minutes of the meeting of the Local Pension Board held on 17 February 2022. To review the summary of the recommendations made by the Board.

The Committee received and reviewed the summary of recommendations of the Local Pension Board meeting held on 17 February 2022.

The Chairman commented on item 7 – Risks remaining ‘Red’, high risk, and in particular point one – PEN018: Failure to set in place appropriate Cyber Security measures. He asked for the minute to be amended to reflect that sufficient assurance should be sought from an independent party rather than the Council’s IT Department as currently recorded in the minutes.

Resolved:

That the summary of recommendations of the Local Pension Board meeting held on 17 February 2022 be approved as a true and correct record, subject to the amendment detailed above about assurances being sought from an independent party.  

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 29 March 2022 in order to be guaranteed of a written response. In order to receive a verbal response questions must be submitted no later than 5pm on31 March 2022. 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 was no public participation.

To receive a report from Hymans Robertson LLP on the key assumptions for the triennial valuation.

The Committee is asked to approve the approach to assumption setting. This includes training on assumption setting.

The Committee received a presentation from Hymans Robertson LLP representatives and considered their report which provided an actuarial valuation to 31 March 2022.

The Hyman Robertson representatives provided detail and commented on the following:

·       The Valuation Process

·       Assumptions Advice

·       The reasons for assumptions and how they are set

·       Financial Assumptions

·       Longevity Assumptions

·       Other Demographic Assumptions

·       Decisions and Next Steps

In response to comments and queries from the Committee, Hymans and officers provided the following feedback:

·       Mercer would report on alternative strategies for investment return and discount rate assumptions and the concept of Strawman 1, 2 and 3 at a future meeting.

·       CPI modelling assumptions were made over the next 20 years.

·       Hyman’s provided assurances in relation to Committee engagement in the decision making process, and that officers would make decisions based on their level of delegated authority. These would be reflected in the Forward Plan.

·       The impact of the war in Ukraine on financial trends and higher inflation levels, may produce similar financial figures to those experienced pre-covid.

·       The importance of providing improvements to the tools used in the collection of accurate data.

·       The impact of covid on contribution rates and the potential for the introduction of flexible contributions.

Resolved:

1.    Agree the prudence level in the assumptions

2.    Confirm the approach and choice of financial assumptions (salary and pension increases)

3.    Agree the life expectancy assumption, including how much weight is placed on recent years affected by COVID-19

4.    Agree all other demographic assumptions

5.    Approve the stated CPI assumptions, subject to the successful outcome of a discussion between the Independent Adviser and the Actuary.

To receive areport on the Committee’s ongoing oversight of:

·       Budget monitoring

·       Training update

·       Risk Register

·       Key Performance Indicators (KPIs) – 1 October 2021 to 31 December 2021

·       Scheme, Regulatory, Legal and Fund Update

The Committee considered the report presented by Jennifer Devine, Head of Wiltshire Pension Fund, Richard Bullen, Fund Governance & Performance Manager and Andy Cunningham, Pension Administrative Lead, which provided information highlighting key issues and developments to enable the Committee to fulfil its monitoring role.

In response to issues raised during the item, officers explained that there is no process for the auditing of recharges, and is an area that needed more clarity. They confirmed that the matter is actively being progressed.

Resolved:

a)    Use the information in the report as a basis for monitoring the Fund’s core activities.

b)    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 submitted by the Board.

d)    To approve the recommendations in the training update concerning the change in review period for the Fund’s breach policy.

To receive a report from the Head of Wiltshire Pension Fund on the Fund Business Plan and Budget. To include:

a)    A presentation by SWAP on their recent internal audit

b)    A presentation by Aon on their review of the Fund

c)     An update from the S151 Officer on the staff restructure

The Committee considered the report of the Treasurer of the Pension Fund, seeking approval for the 2022/23 Business Plan and Budget for the Wiltshire Pension Fund. In addition, the Committee received presentations from SWAP on their recent internal audit, Aon on their review of the Fund’s administration function, and an update from the Section 151 Officer on the staff restructure.

The Section 151 Officer explained that there were serious issues to reflect upon, and as part of this he undertook a review of the management structure which resulted in the appointment of Jennifer Devine to her current role as Head of Pension Fund.

The Head of Pension Fund reported that she was keen to research the issues to be addressed, recruiting Aon to undertake an independent review of the Fund and SWAP to undertake an annual internal audit. 

The report detailed the need for significant improvements to the operation of the Fund, as identified by the Aon review and SWAP. The recommendations from these reviews and other known actions were incorporated in the development of the Business Plan for the coming year.

The Committee noted that the Business Plan focussed on delivering the required improvements and highlighted the budgetary impact for each action. It was set for one year only in order to tackle immediate service priorities, but also contained information on the desired longer-term deliverables.

In response to comments and queries from the Committee in relation to the report and presentations from Aon and SWAP, officers and representatives from the Council, Aon and SWAP provided the following feedback:

·       It was confirmed that management had an opportunity to comment on the proposed actions arising from SWAP findings and these would have been incorporated within Appendix 1 of the report.

·       Officers would proceed with the purchase of the Altair one-off payment module to reduce the risk of errors between SAP and Altair  and eliminate the need to carry out as many checks.

·       Detail about recharges to the Fund would be considered at a future meeting of the Committee.

·       SWAP would be asked if they would be able to provide an update on Fiduciary Duty for members of the Committee.

·       Monitoring systems were not currently up to standard in their current state, some areas had been addressed and the remainder would be addressed. Once complete systems would have the functionality required.

·       A further report detailing the actions arising from recommendations in the SWAP report would be reported to the Audit Committee on 27 April 2022. 

·       Concern about delays in signing off accounts for the Council and their impact on Pension accounts.

·       Apart from the Pension Fund struggling to retain trained staff, there were only anecdotal figures available in relation to the impact of Covid following Aon’s 2018 LGPS survey.

·       Staff engagement in responding to surveys would not be likely to achieve 100%, and the response rate which had been received was considered to be very positive. 

·       An additional two full time equivalent employees had been assigned to the rectification project.

·       Aon noted  ...  view the full minutes text for item 119.

To receive an update by the Senior Investment and Accounting officer concerning the operational accounting arrangements in place

The Committee considered the report of the Head of Pension Fund, as presented by Chris Moore, Pension Fund Accounting and Investments Officer, which highlighted the significant issues in relation to the Pension Fund’s key financial controls.

The report detailed the key areas to be reviewed and monitoring of progress against planned improvements. It was noted that the report format would evolve and develop into a dashboard over time. The report highlighted the key considerations, risk assessment and financial implications for the following areas:

·       Accounts and Annual Report

·       Payroll reconciliations

·       Integrated systems

·       Internal Audit and Specialist Reviews

·       Planned improvements and key items to monitor

Resolved:

That the report be used to monitor progress against resolving identified issues, and progress made to develop accounting and control improvements.

To receive an updated policy from the Senior Investment and Accounting Officer.

The Committee considered the report of Jennifer Devine, Head of Pension Fund, presented by Chris Moore, Pension Fund Accounting and Investment Officer, seeking approval for a revised Treasury Management Strategy and approval for the associated procurement process to appoint an investment manager to provide a liquidity sleeve.

The Committee were reminded that the purpose of the Treasury Management Strategy is to ensure sufficient cash is available to pay liabilities when they fall due whilst minimising lost investment returns from holding assets in cash, outside of strategic investment allocations.

The report indicated that the greatest change in the Strategy is the introduction of a ‘liquidity sleeve’, an investment portfolio providing liquidity within 1 day whilst matching the overall investment return of the whole portfolio. The Committee noted how this would be achieved and that this solution was also in use by another Brunel client Local Government Pension Scheme fund to manage their liquidity requirements.

In response to questions about the Strategy, officers explained that a small fee is payable for holding cash in money market funds, they also indicated that the cost of having cash in the Liquidity Sleeve was small. Officers explained the benefits of the Liquidity Sleeve and that it would be tailored to the Pension Funds asset allocation. It was noted that a good forecasting model had been developed and that the Strategy is being kept under constant review with the investment management costs reported annually to the Committee (i.e. not included in the Fund’s operational, controllable budget). 

Resolved:

a)    Approve that officers, through the Head of Wiltshire Pension Fund, conduct a procurement exercise to appoint an investment manager to provide a Liquidity Sleeve to fulfil the Treasury Management Strategy.

b)    Approve the Treasury Management Strategy attached to the report.

c)    Approve that the attached Treasury Management Strategy should be implemented when the procurement exercise is completed.

The Head of Wiltshire Pension Fund will present the completed Stewardship reporting for approval, prior to submission to the FRC, and the Responsible Investment Plan for 22/23.

The Committee considered a report of Jennifer Devine, Head of Pension Fund which provided an update summary on responsible investment issues.

The Committee were informed that a full update would be reported to the Pension Fund Committee at their next meeting on 26 May 2022.

The report detailed the actions taken from recent Committee meetings, and updates in relation to the Responsible Investment Plan 2022/23, reporting and disclosure and training and engagement.  The Fund’s first report in line with the 2020 Stewardship Code was appended to the report, along with a mini-magazine version containing the highlights.  It was explained that once the Committee had approved the report, it would be submitted to the FRC in order to be assessed for signatory status, a process which would take several months.

Cllr Gordon King congratulated Wiltshire Pension Fund on receiving an award for ‘Best approach to responsible investment’ at the Local Authority Pension Fund Investment Awards on 29 March 2022.

Resolved:

a)    Use this report as a basis for monitoring the progress that is being made towards implementing responsible investment policy.

b)    Approve the draft stewardship report (appendix 1) and ‘highlights’ summary report (appendix 2).

c)    Approve the Responsible Investment Plan 2022/23 (appendix 3).

d)    To congratulate Wiltshire Pension Fund on receiving an award for ‘Best approach to responsible investment’ at the Local Authority Pension Fund Investment Awards on 29 March 2022.

To receive an update from the Head of Wiltshire Pension Fund.

The Committee considered a report of Jennifer Devine, Head of Wiltshire Pension Fund, presented by Andy Cunningham, Pensions Administration Lead, providing an update on the reconciliation project between the pension administration system (Altair) and pensioner payroll system (SAP).

The Pensions Administration Lead highlighted the increase in officer workloads and administration costs in relation to the under £5 per month cases, which were initially out of scope of the project, with the potential work involved in investigating each case being similar to those of the over £5 per month cases. As a result, the Committee noted that these categories of discrepancies would not be reviewed to the same depth as over £5 cases, and where appropriate, an approach of equalising the two systems on mass would be implemented in such a way that the member is not disadvantaged. 

In response to questions the Pensions Administrative Lead noted that it was a possibility the £5 cases could conceal a larger figure although officers would try to mitigate this as indicated above. It was suggested that the issue could be added to the risk register for monitoring purposes.

Resolved:

1.    To approve an approach for under £5 per month cases whereby a simplified review process will take place, using the principle that members will not lose out financially.

2.    To approve a delegation for formulating and approving a policy on the exact details to the Head of Wiltshire Pension Fund (seeking further advice as necessary).

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

The Committee considered their Forward Work Plan.

The Chairman commented on (i) the Actuarial valuation due on 31 March 2022 – it was noted that the detail of the valuation would be included in the next Plan (2022/2023) to be considered by the Committee; (ii) reporting of progress on outsourcing projects – reports would be progressed to Committee when available; and (iii) KPI review – detail of the review will be included in the next Plan for 2022/2023.

Resolved:

To note the Forward Work Plan.

The next meeting of the Committee would be an investment focused meeting on 26 May 2022. The next administration focused meeting would be 28 July 2022.

The next meeting of the Committee would be held on 26 May 2022, focussing on investment matters. The next administration focused meeting would be held on 28 July 2022.

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 19-22 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 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 19-22 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 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 3 March 2022.

The Part II (private) minutes of the meeting held on 3 March 2022 were presented for consideration.

Resolved:

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

To receive the Part II (Private) Minutes of the Local Pension Board meeting on 17 February 2022.

The Part II (private) minutes of the Local Pension Board meeting held on 17 February 2022 were presented for consideration.

Resolved:

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

To receive a verbal update on the report circulate in December 2021 summarising the Brunel Governance Review.

The Committee received a verbal update summarising the Brunel Governance Review.

Resolved:

To note the update.

To receive a report proposing extension of the Mercer’s contract for provision of investment advice.

The Committee considered a report requesting a 2 year extension to the investment consultancy contract with Mercer.

Resolved:

a)    Use this report as background information to the decision to extend the Investment Consultancy contract with Mercer.

b)    Approve the 2 year contract extension.