The Head of Pensions will provide a verbal update on the recent consultations published since the last meeting along with an update in respect of the on-going activity surrounding the July budget announcement and proposed pooling of assets.
Minutes:
David Anthony, Head of Pensions, updated on consultations published since the last meeting of the Board.
In July 2015 the Government had announced its intention to pool the assets of Local Government Pension Scheme (LGPS) funds, it had also been suggested that more asset investment should be made in new, UK infrastructure. Guidance on pooling was expected to be issued shortly, however the Local Government Association had asked funds to begin assessing options available to them, the pools of collective investments were expected to be £25-30bln in size. The Wiltshire Pension Fund was in dialogue with other Funds in the South West to explore the potential for a South West Collective Investment Vehicle, this pooling could involve a range of options from a Collective Investment Vehicle (CIV) to a joint committee approach, but strategic asset allocations would remain with each local fund. A South West Collective Investment Vehicle currently would total £20bln.
The Board raised questions as to whether funds could buy out Private Finance Initiative (PFI) contracts, the officer advised that the Government had not yet commented on this but PFIs would be attractive to Funds due to low development risks. It was commented that the Funds in the Collective Investment Vehicle could potentially buy and sell liquidity between them.
An update was also given on the Government consultation on the Public Sector Exit Cap. It was confirmed that the Fund had responded with a number of concerns, namely that pension straining costs were included in the cap and this could adversely impact upon long-serving low earners in the Fund. The Government had responded to feedback but would continue to include straining costs. The changes were anticipated to come into force in April 2016 and would necessitate changes to Local Government Pension Scheme (LGPS) regulations. Following questions from members, it was verified that approximately 10% of those with pension straining costs were expected to be affected; Full Council could exempt the penalties but this would be on a case by case basis and the expectation was that this would be seldom used. It was commented that other funds were not funded and so not susceptible to straining costs. The Board agreed that the effect of the cap on the Fund’s valuation and on employers and members should be reviewed and communicated as soon as possible.
The Board heard that HMRC had launched a consultation on strengthening incentives to save; officers supporting the Fund and advisors from Hymans Robertson were concerned that taxing pension contributions would deter people from contributing. The Board was updated on the Annual Benefit Statement exercise for 2015 which had been the first with the LGPS care scheme in place. It had proved challenging to get details from employers since they now had to provide two figures for year end pay, data from some employers was missing and they had been written to and warned that lateness would need to be reported to the Regulator in future. Due to new statutory requirements, these statements now had to be sent by the end of August instead of November. Although the print extract had been completed prior to the deadline, circulation had been a few days late due to printing problems, however officers did not consider this a material breach, therefore would not report it to the Pensions Regulator (tPR). It was agreed that officers should endeavour to reduce the timescale for sending statements to the printer to mid- August.
Resolved:
To note the updates.
To recommend to the Wiltshire Pension Fund that full consideration is given to the legal duties of the Fund and the administration of assets arising from pooling assets in a Collective Investment Vehicle.
To recommend to the Wiltshire Pension Fund that changes arising from the public sector exit cap be communicated to employers and members and that the impact of changes on the Funds valuation be considered.
To recommend to the Wiltshire Pension Fund that plans are put in place with employers and printers to ensure all Annual Benefit Statements are issued by the 31st August 2016.