Agenda and draft minutes

Pension Committee
Tuesday, 4th June, 2019 7.00 pm, MOVED

Venue: Civic Offices, St Nicholas Way, Sutton SM1 1EA

Contact: Sharon Major, Committee Services Officer  Tel: 020 8770 4990 | Email:  committeeservices@sutton.gov.uk

Note: This meeting was moved from the 3 June 2019. 

Items
No. Item

1.

Welcome and Introductions

Minutes:

The Chair Councillor Jill Whitehead welcomed those present, and in particular extended a warm welcome to the new committee members, Councillor Richard Clifton, Vice Chair, and Councillor Sam Weatherlake, and to all guests

2.

Apologies for Absence

Minutes:

Apologies were received from Councillor Param Nandha.

3.

Declarations of Interest

Minutes:

There were no declarations of interest.

4.

Minutes of the Previous Meeting pdf icon PDF 105 KB

To approve as a correct record the Minutes of the meeting held on 18 March 2019.

Minutes:

RESOLVED: that the minutes of the meeting held on 18 March 2019 be agreed as an accurate record and signed by the Chair.

5.

Presentation by London CIV and update

Minutes:

A presentation was delivered by Mike O'Donnell Chief Executive and Will McBean Relationship Manager from the London CIV.

Members asked the following questions:

  1. The government's aim is to ultimately have all Borough funds invested via the CIV. Do you think the legislators have a clear understanding of how long it will take to accomplish this given the time lines they have set through their recent consultation?

 

In response Mike O'Donnell Chief Executive advised that whilst the consultation talked about 95% of new investments being pooled by 2020 , he was not sure if that target is realistic but believes that Boroughs need to be seen to make good progress. He commented that the CIV need to have all required products available to help make the transition happen.

 

2.            Until recently the CIV was heavily city dominated. How will the CIV consult boroughs going forward to ensure that Boroughs needs are taken on board, and that the local government ethos is promoted and maintained?

 

Mike O'Donnell Chief Executive acknowledged this concern. He advised his new role will help to provide balance within the team due to his Local Government background. He also commented on the strong governance within the CIV and highlighted the representation on the  shareholder board and committee.

 

3.            Bearing in mind that each Borough will have different and varying priorities, how do these square with the CIV's own asset allocation priorities for London as a whole?

 

The Committee were advised that the CIV will not have its own asset allocation strategy.  This would be governed by each borough’s strategy. It was acknowledged that there is a challenge in collating the requirements of all boroughs and being able to meet all individual boroughs requirements.

 

4.            The actuaries are currently carrying out the latest triennial review and this may result in amendments to Sutton asset allocation priorities. How can the level of assets pooled through the CIV be increased?  How confident are you that your investment platform will have products which suit our priorities?

 

The committee were advised of the approach of  the CIV Relationship Managers who undertake regular detailed engagement with all London boroughs to capture requirements regarding strategic asset allocation which will aid this process.

 

5.            Regarding demand for popular new CIV products, would investment providers be able to meet demand or does London have too many boroughs to be manageable?

 

The committee were advised that the CIV Relationship managers are making sure there is capacity for the demand and to make sure funds are fit for purpose and set up in a timely manner.

 

6.            Fund performance is key whether through the pool or not. The Pension Pools were created to save on provider management fees but little thought was given to performance and the transition cost of funds into the CIV . How can you square the saving of expenses with performance?

 

The representatives confirmed that pooling has to deliver individual value and boroughs need to be able to assess performance net of fees

 

7.            How  ...  view the full minutes text for item 5.

6.

Quarterly Investment Performance report pdf icon PDF 370 KB

This report shows the performance of the total Fund and individual fund managers for the quarter ending 31 March 2019, performance in the last twelve months, annualised rolling three year performance against the benchmark and performance since inception.

Additional documents:

Minutes:

 

Lyndsey Gamble, Head of Investment Risk and Commercial Finance, presented the report and updated members on the performance of the total fund and individual fund managers for the quarter ending 31 March 2019.

 

Members asked about volatility in the markets.  David Walker From Hymans Robinson commented that in Q1 equity markets recovered strongly, however, his expectation is that markets will continue to be volatile and that is a reason to diversify asset allocation.

  

RESOLVED: that :

The performance of the total Fund, contribution at the fund manager level and detailed attribution of the results be noted

 

7.

Review of Draft ESG Policy

A verbal  update will be provided to the Committee on the review of the draft ESG policy.

Minutes:

Lyndsey Gamble, Head of Investment Risk and Commercial Finance, and David Walker Hymans Robinson provided a verbal update to Members on the Review of the draft ESG Policy

The committee were advised of the work undertaken on actions from the previous sessions. A further workshop is being planned to identify the Committees current investment beliefs and if any amendments are required. The Head of Investment Risk and Commercial Finance will propose dates to Members so that a date can be finalised during July.  Engagement has taken place with existing fund managers to evaluate the current Investment Manager arrangements to benchmark the extent to which consideration of ESG factors are already embedded in the Funds arrangements,  and how this can be reported to the committee via a performance report.

Truecost has been tasked with providing a report to help the committee to understand the ESG profile of the current investment portfolio.

 

8.

Member Training - Triennial Valuation pdf icon PDF 2 MB

Minutes:

Melanie Durrant, Associate and Actuary, and Julie Baillie, Actuary, from Barnett Waddingham delivered the training presentation to the Pension Committee.

A further update will be provided to the Committee  in September and will look at the whole fund and individual employer funds.

Members queried the impact of the new valuation on contribution rates.  It was confirmed that the contributions to be paid would be proposed by Barnett Waddingham.  New members sought clarity on the role of this committee and if Members were liable if the asset allocation strategy did not deliver the expected returns.  Members were advised their role is to act as Trustees but that they were not personally liable.

Members asked about the impact of austerity and the fact there will be more pensioners and less people earning to cover funds in future . The committee were advised that this is an issue across all funds.

 

9.

Training plan pdf icon PDF 108 KB

This report sets out the background to the training policy and plan that has been developed for both the Pension Board and Pension Committee for 2019/20. The training plan set out at Appendix B is a working draft which will be revised to reflect changes in the pensions landscape and specific committee and board requirements .

Additional documents:

Minutes:

 

Lyndsey Gamble, Head of Investment Risk and Commercial Finance, presented the report on the training policy and plan that had been developed for the Pension Committee for 2019/20.

 

The plan was developed to give the committee a base level of knowledge on pensions, and to build on knowledge being shared at each committee meeting. In particular by looking at further training on ESG, topping this up with the online information via the pensions regulator training toolkit and looking at what other training courses committee members may wish to access.

 

New members asked about the role of the Pension Board.  The Head of Investment Risk and Commercial Finance advised this is a separate body which supports the committee from a governance and administration perspective. It was confirmed that the Board has no decision making powers.

 

RESOLVED: that :

The Pension Fund training policy and plan as set out in Appendix A and B be agreed.

 

10.

Pension Administration Update pdf icon PDF 168 KB

This report provides an update on the main work streams impacting pensions administration for the period of February 2019 to April 2019.

 

Additional documents:

Minutes:

 

David Kellond, Pensions Administration Manager, presented the report and provided an    update on the main work streams impacting pension administration for the period from February 2019 to April 2019.

 

The Committee were advised that the accounting valuation reports have been completed. An error was identified in the application of pension valuations, that has been corrected and overpayments collected. A letter of advice is to be sent to those affected. The average over payment was £2 for the month of April.

 

The Annual returns deadline was 7 May. At that point 95% of returns were received.

 

Regarding outstanding processes, the Administration Manager advised it is a key objective to clear this backlog but an immediate improvement is not likely.

 

The GMP reconciliation closure report was still awaited.  The committee was advised that It is expected by the end of this week. The Administration Manager updated the Committee on the sign up to Pensions Online. The committee were advised that currently 25% of active members and 16% of deferred members have signed up for access to the online information.

 

The committee were advised that the Admin team will increase the online functionality to encourage Members to sign up.

RESOLVED: that :

The report was considered and noted.

 

11.

Review of Work Programme pdf icon PDF 98 KB

The Work Programme set out in this report has been produced to propose agenda items to be presented and discussed at future meetings.

Minutes:

Lyndsey Gamble, Head of Investment Risk and Commercial Finance, presented the report on the work programme.

 

It was confirmed that the provisional results of triennial valuation will be given in the November meeting.There were no further questions.

RESOLVED: that : The proposed Work Programme set out in the report was noted

 

12.

Any Urgent Business

The Chair must approve the reason for urgency.

Minutes:

There was no urgent business.