Agenda and minutes

Pension Committee
Tuesday, 19th November, 2019 7.00 pm

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

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

Items
No. Item

27.

Welcome and introductions

Minutes:

The Chair, Councillor Jill Whitehead, welcomed those present.

28.

Apologies for absence

Minutes:

There were no apologies for absence. Apologies for lateness  were received from Lyndsey Gamble, Head of Investment, Risk and Commercial Finance.

29.

Declarations of interest

Minutes:

There were no declarations of interest.

30.

Minutes of the previous meeting pdf icon PDF 87 KB

To approve as a correct record the minutes of the meeting held on 17 September 2019.

Minutes:

RESOLVED: that the minutes of the meeting held on 17 September 2019 be agreed as an accurate record and signed by the Chair.

31.

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 August 2019 to October 2019.

Additional documents:

Minutes:

 

 

David Kellond, Pension Administration Manager, presented the report to provide an update on the main work streams impacting pension administration for the period August 2019 - October 2019.

The key points highlighted were; that the pension administration software had been audited and a number of actions undertaken to better use the system to help improve the key performance statistics. The committee were advised that the Pension Key performance statistic YTD for P1 tasks is stated within the report as 75% but this should read 67%.

From the next Pensions Administration Report to the Committee the report will show outstanding work at a date in time. The report will then refer to this as a backlog that can be tracked over time and also a report separately on the ongoing work thereafter.

The Pension Administration Manager, further advised that a new team Member had been appointed who will start in the team on 9 December which should also help reduce the backlog.

Members asked if pensions online is available to pensioner members and it was confirmed that pensions online is currently only available for active and deferred members.

RESOLVED: To note the report.

32.

Quarterly investment performance report to September 2019 pdf icon PDF 124 KB

Appendix A shows the performance of the total Fund and individual fund managers and exempt Appendix B has manager ratings by Hymans Robertson and manager fees.

 

Note - the appendices are included as colour / exempt supplements.

Additional documents:

Minutes:

David Walker from Hymans Robertson presented the report showing performance of the total fund and individual fund Managers for the quarter ending 30 September 2019.

The committee were updated that in respect of private debt investments, the  London CIV provider Ares, has withdrawn from the London CIV arrangement.  He pointed out that this means that as the Committee decided at the last meeting to make an investment with Ares that other options may need to be considered and to investigate if the CIV is planning on delivering an alternative solution.

David Walker from Hymans Robertson then highlighted key areas of the performance report. He commented that despite greater uncertainty due to US and China trade tensions and a shift in interest rate policy in the US,whilst the outlook is weaker positive results have been seen. 

It was also highlighted that sterling has weakened and this should be taken into consideration in the next strategy review. In summary over the last quarter the fund produced 2.8%, which was marginally behind target but a positive return over that period. 

Members sought clarification on some of the London CIV investments that do not appear to be performing as well as other Managers.  David Walker reminded the committee that some existing products were lifted and shifted over to the CIV from existing products, but consideration is needed to look at other new product offers on the CIV platform to see if a more attractive option is available in due course. 

RESOLVED: The performance of the total Fund and the performance of individual fund managers against their benchmarks and targets be noted

33.

Member Training - Feedback from the Values and Beliefs session pdf icon PDF 120 KB

The report outlines the feedback and outputs from a recent Pension Committee workshop to review the current values and beliefs statements from the Pension Committee.

 

Note the Appendix is included as a colour supplement.

Additional documents:

Minutes:

The report was presented by David Walker from Hymans Robertson,  to outline the outputs from a recent Pension Committee workshop to review the current values and beliefs statements for Sutton Pension Committee. 

At the engagement session, Members looked at previous committee investment beliefs and ran through a series of questions to understand current committee views and if there were any changes to be incorporated. 

In debate Members suggested that the committee should develop a proper policy paper on ESG, in line with the London CIV and other London Boroughs. Members also suggested looking at the ESG policy of the Church of England, as at  present Sutton only had an ESG statement, and thinking was that due to likely legislative changes from government in 2020 going forward there would be a requirement for a full ESG policy, rather than a statement. The Members indicated their agreement with the suggested changes to Values and beliefs and to build the revised  beliefs into the strategy review process. 

RESOLVED: The suggested changes to the values and beliefs statements as set out in Appendix A. be reviewed and agreed

34.

Presentation by the London Collective Investment Vehicle and update

This presentation is exempt on the basis of Paragraph 3, Schedule

12A of the Local Government Act 1972, and is included within the exempt agenda pack.

Minutes:

The presentation was delivered by Robert Hall, Head of Equities and Silvia Knott Martin, Client Relations Manager from the London CIV

They gave a brief update on staffing changes at the London CIV and also their own background and experience. The presenters reported to the committee that a CIV Infrastructure Fund had been successfully launched on 31 October 2019 and there will be a specific CIV Renewable Investments fund available in December 2019, and details will be provided for consideration in due course. They also advised that the Global Equity Core E Fund had been terminated due to lack of interest from the Boroughs..

 

35.

Actuarial Valuation of the Pension Fund as at 31 March 2019 pdf icon PDF 121 KB

The Fund’s actuary, Barnett Waddingham, has prepared the initial results and proposed assumptions for the 2019 actuarial valuation detailed in their report at Appendix A.

Note the appendix is included in the colour supplement.

Additional documents:

Minutes:

 

The report was presented by Melanie Durrant, Principal, Barnett Waddingham. She advised the committee that the assumptions were split into financial and demographic factors, and talked through the key assumptions accordingly. 

It was pointed out that currently there is uncertainty about the McCloud judgement, and another factor brought to the committee’s attention was that the life expectancy rate in these assumptions had been reduced. 

There is now a £71M deficit and a funding level of 90% which is a considerably improved position from the previous valuation but still not quite fully funded. 

A meeting has been arranged on 4 December where results will be communicated to individual employers. 

Members commented that bearing in mind the increase in the value of assets, the fund is still not quite fully funded despite performance being above expectations. Melanie Durrant responded that the expectation was that Sutton would reach a fully funded position over a 20 year period, and that the funding level is currently ahead of expectations and we were working towards being fully funded by 2035. 

RESOLVED: The assumptions detailed in the attached report as the basis for preparing the 2019 actuarial valuation be agreed.

 

36.

Draft Funding Strategy Statement pdf icon PDF 147 KB

The Fund’s actuary, Barnet Waddingham, has prepared a draft Funding Strategy Statement which underpins the preparation of the 2019 actuarial valuation. 

Additional documents:

Minutes:

Lyndsey Gamble, Head of Investment, Risk and Commercial Finance spoke through the report. The Fund’s actuary Barnett Waddingham had prepared a draft funding strategy statement, which underpinned the preparation of the 2019 actuarial valuation. 

A key point raised was that currently Self Insurance for all employers is not currently included and it was proposed that going forward this would be included.

Councillor Whitehead asked if the proposed change in time frames from 3 to 4 year valuations was actual or just proposed. It was confirmed that  the local valuations are currently still  on a 3 year cycle and the next valuation will be due  in 2022.

RESOLVED: 

1.    The draft Funding Strategy Statement (FSS) be approved and be circulated to employers for consultation.

2.    It be agreed to delegate authority to the Strategic Director Resources in consultation with the Chair of the Pension Committee to make final amendments to the draft Funding Strategy Statement following responses to the consultation.

 

37.

Investment Advisor Objectives pdf icon PDF 129 KB

The Competition and Markets Authority requires the Pension Committee to set objectives for their investment consultant by 10 December 2019. The proposed objectives for Hymans Robertson, the pension fund’s investment advisers, are set out in this report.

Minutes:

 

Lyndsey Gamble, Head of Investment, Risk and Commercial Finance presented the report on the proposed objectives for Hymans Robertson, who are the Pension Fund’s investment advisers. She advised the committee that the Competition and Markets Authority (CMA) require the Pension Committee to set objectives for their investment consultant by 10 December 2019. 

RESOLVED: The draft objectives for the Pension Fund’s investment advisers Hymans Robertson as set out in the table in paragraph 4.1. be agreed.

38.

Review of work programme pdf icon PDF 99 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:

The report was presented by Lyndsey Gamble, Head of Investment, Risk and Commercial Finance to proposed agenda items for discussion at future meetings. 

RESOLVED: To note the proposed work programme set out in the report

39.

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:

There was no urgent business.