Agenda and draft minutes

Pension Board
Thursday, 27th June, 2019 10.00 am, 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: Please note this was moved from 26 June to 27 June at the request of the Chair. 

Items
No. Item

1.

Welcome and introductions

Minutes:

The Chair, Mike Ellsmore, welcomed those present.

 

2.

Apologies for absence

Minutes:

Apologies for absence were received from Tracey Burley.  Andrew Theobald and Trevor Harris were also absent.

3.

Declarations of interest

Minutes:

There were no declarations of interest.

4.

Minutes of the previous meeting pdf icon PDF 118 KB

To approve as a correct record the minutes of the meeting held on 3 April 2019.

Minutes:

RESOLVED: that the minutes of the meeting held on 3 April 2019 be agreed as an accurate record and signed by the Chair.

5.

Member Development - training on the actuarial valuation pdf icon PDF 2 MB

Minutes:

Melanie Durrant, Associate and Actuary, from Barnett Waddingham delivered the training presentation to the Pension Board on the process for the actuarial valuation.

 

The board was advised that the review will be completed by the end of March 2020.

 

The Chair asked what the current Sutton funding level is. It was confirmed that there is currently an 80% funding level.  Members asked what method is used to create the discount rate and is this applied to all pension funds and the presenter responded accordingly.  

It was confirmed that a further update on the progress of the valuation will be provided to the Pension Committee in November and to the Pension Board in the December meeting.  At that time the whole fund and individual employer funds will have been reviewed. The Board were advised that any new contribution rates will start from 1 April 2020.  

The Chair asked about the quality of data received from employers. David Kellond the Pension Administration Manager confirmed the data is of a much better quality this year. 

 

At 10.45am the Chair welcomed Councillor Jill Whitehead the Chair of the Pension Committee, who joined the Board meeting as an observer. 

 

6.

Quarterly investment performance report pdf icon PDF 224 KB

The Pension Committee, at its meeting on 4 June, received a report on the investment performance of the Pension Fund managers as at 31 March 2019.

 

This report is being circulated to the Pension Board for information.

 

Minutes:

 

Antony Huggett, Investment, Insurance and Commercial Manager presented the report. He drew the Board's attention to the fall in value of the assets in December 2018 and he confirmed that this had bounced back as at the end of March 2019. He also talked about longer term performance. He confirmed that the fund Managers had not met the required performance targets but that their benchmark targets had been met. 

 

The Board were advised that in respect of asset allocation, following a review last year, there was a recommendation to move from UK equities into private debt.  The Investment, Insurance and Commercial Manager advised the Board that the London CIV private debt fund offering will go to the FCA for approval this week with a view to being open for investment by September 2020.

 

The Chair commented that he was impressed with the long term return of the fund.  He asked if the fund was more defensive in moving to private debt.  The Officer advised that private debt will have less volatility than equities but with a similar return.  

 

Members asked for clarification on the L&G fund movement during the quarter and in particular how much was invested in February 2019.  The officer agreed to investigate this and respond post this meeting.

RESOLVED: That the performance of the Sutton Pension Fund investments be noted.

7.

Pension administration update pdf icon PDF 135 KB

The Pension Committee, at its meeting on 4 June 2019, received a pension administration update report. That report is presented to the Board for noting.

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 Board were advised of the latest position regarding the appointment new pension administration team members. 

In respect of complaints, the Pensions Administration Manager provided an update that the pension ombudsman sought more information regarding the ongoing complaint and following their investigation an award £500 to the individual was recommended. The complaint is now closed and resolved. 

In addition the Board were advised that issues with the national Tell Us Once system had been resolved which will be used to identify deaths and reduce fraud.

In a lengthy debate regarding the volume of outstanding work the Pensions Administration Manager, advised that a system audit had been completed with the software provider to identify how the backlog of work could be reduced.  He also commented that having the additional team members now and soon to be in place will help to reduce the backlog. 

The Board Members requested that in the next report the data should please be amended to show only outstanding work process for London Borough of Sutton rather than combined data for both Sutton and Kingston.  They also asked that the report shows an indication of the type of work which is outstanding, with a month by month break down so that the Board can be satisfied that the level of outstanding items are improving. 

The officer confirmed that the work is broken down by priority and that will be shown going forward in the next report. 

Finally in respect of GMP reconciliation the Board were advised that the closure report is still awaited. This could mean that there could have been over or underpayments to pensioners which will need to be addressed.  


RESOLVED That the Pensions Administration update report be noted.

8.

Update on the annual benefit statement online take up

David Kellond, Pensions Administration Manager, will provide a verbal update to the Board.

Minutes:

David Kellond, Pensions Administration Manager, confirmed that the pension administration  report showed the registration numbers for pensions online.

He highlighted to the Board the actions that could be taken to improve the number of online registrations.  He confirmed that the functionality available for online users could be improved so there are more reasons for Members to register for online information and to give users the ability to model what their pension could look like.

 

The Pension Administration Manager advised that a communication will be sent to all fund employers giving their employer registration numbers and providing them with an email to send to their staff to encourage them to sign up to Pensions online.

A letter is also to be sent to all active members to ask them to register for pensions online and advising them of the benefits of this. 

Members queried if the Administering Authority is meeting the regulatory requirements by only providing the annual statements online rather than on paper

The officer confirmed that the regulations are being met and that at the request of a Member a paper statement could be provided.  


Members sought clarity on the reason for reluctance in sending the information as a paper statement.  The Pensions Administration Manager, advised that the cost of providing a paper statement is significantly higher,  but also that the benefits to Members of being able to use the online functionality would be lost if paper statements only are provided. 

In debate Members could see the additional benefits if more individuals were to be persuaded to register for online access.  It was suggested that if the volume of registration for online access had not improved after the initiatives outlined above had taken place then this would need to be reviewed further.. It was highlighted that currently 78% of active members will not have received an annual statement. 

Members asked for this to continue to be closely monitored. Richard Simpson Strategic Director Resources, confirmed that there is an annual report and an AGM for Members to attend to share information with Members. 

Members asked for confirmation on the timeline for the initiatives outlined above to be completed. The Pensions Administration Manager, confirmed actions will be taken by the end of this summer.  He further suggested that the number of registrations should be reviewed in December to see if the number of online registrations have increased.

The Chair motioned that the Board are supportive of initiatives outlined to increase online registration and that the board would like to revisit this in the December meeting.  This was seconded by Michael Curran and the board moved to vote

RESOLVED: the Board are Supportive of initiatives outlined to increase online registration and that an update regarding online registration should be provided to the Board in the December 2019 meeting.

 

9.

Local Government Pension Scheme (LGPS) Update pdf icon PDF 151 KB

This report provides an update on the current work of the LGPS Scheme Advisory body.

Minutes:

Antony Huggett, Investment, Insurance and Commercial Manager presented the report. 

In debate the Chair highlighted that he is aware that there will shortly be a survey on the effectiveness of Pension Boards. 

RESOLVED: The key developments contained in the report be noted.

10.

Approach to ESG pdf icon PDF 141 KB

The Pension Committee, at its meeting on 4 June, received a verbal update progress on the agreed actions to develop the Fund’s approach to environmental, social and governance (ESG) matters.  The detail of this update is contained within this report.

 

Minutes:

Lyndsey Gamble, Head of Investment Risk and Commercial Finance, provided an update to Members on the Review of the draft ESG Policy. The report sets out the actions being undertaken as part of the review.  The Board were advised that the values and belief session will take place in July.  She highlighted that Officers are gathering information on the level of engagement undertaken by fund managers and how this can be brought into future quarterly reporting. 

Richard Simpson, Strategic Director Resources, advised the Board of the work ongoing in the London CIV to look at a range of funds available to meet the requirements of the Pension Funds of the London Boroughs. 

The Chair, Mike Ellsmore, asked if other employers in the fund are being consulted on their views on ESG. 

The Chair motioned that the Pension Committee be asked at the appropriate time to seek the views of other employers in the fund on ESG.  This was seconded by Michael Curran and the Board moved to vote.

 

RESOLVED: That 

  1. The Pension Committee be asked at the appropriate time to seek the views of other employers in the fund on ESG.
  2. The development of the Fund’s ESG policy be noted.

 

11.

Review of work programme pdf icon PDF 138 KB

This report discusses the proposed work programme for the Board for the 2019/20 financial year.

Minutes:

Lyndsey Gamble, Head of Investment Risk and Commercial Finance, discussed the proposed work programme for the Board for the 2019/20 financial year

The chair asked if cyber security can be considered in respect of Member training.  In addition the Board were encouraged to review the training in the regulator tool kit. 

RESOLVED: The work programme for the Board for the coming year be agreed.

12.

Any urgent business

To consider any items which, in the view of the Chair, should be dealt with as a matter of urgency because of special circumstances (in accordance with S100B(4) of the Local Government Act 1972).

Minutes:

The Chair advised the Board that CIPFA have issued guidance that requires that Pension Board Members are requested to review the annual report and accounts.  As soon as the annual report and accounts are available in the next couple of weeks they will be circulated by Lyndsey Gamble, Head of Investment Risk and Commercial Finance, to the Board for review and comment. 

Members sought clarity on if Trevor Harris the Union Representative is still a Member of the Pension Board.   The Head of Investment Risk and Commercial Finance, advised that she had written to the Union to ask if they wanted to change their representative and is awaiting a response.