Agenda and draft minutes

Pension Board
Thursday, 12th December, 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 11 December to 12 December at the request of the Chair. 

Items
No. Item

27.

Welcome and introductions

Minutes:

The Chair, Michael Ellsmore, welcomed those present.

 

28.

Apologies for absence

Minutes:

There were no apologies received.

29.

Declarations of interest

Minutes:

There were no declarations of interest.

30.

Order of items

Minutes:

The Chair announced that Item 5 would be taken before Item 4.

31.

Member Development - Investment Strategy Review,

The Member Development session will be presented by David Walker, Hymans Robertson .

Minutes:

The Member Development session was presented by David Walker from Hymans Robertson.

Members discussed the active manager role in responsible investment. The officer advised that there was a range of available Index Funds which have a pro rata share, weighted towards management’s need. Hymans Robertson will be looking into responsible investment next year.

 

In response to questions, the advisor clarified that passive funds are provided by managers outside of the London CIV but are effectively treated as “pooled”.  The Council is restricted in investments in any companies it has control over as defined in the Local Government and Public Involvement in Health Act. This includes housing development which is an alternative investment to diversify from growth assets into other assets like infrastructure.

Members asked the advisor about the Council’s voting rights through a pool, particularly, when choosing funds connected to the environment. The advisor stated that there was a common voting policy, whereby direct decisions are made for each fund with regard to their own voting guidelines. The Chair advised that the Board’s responsibility is to scrutinise the administering authority, and would wish to see consultation with the wider stakeholder base. The Chair mentioned that he was concerned by the lack of employee and employer representatives on the committee.

The Board would urge that the committee should consult as widely as possible with the all stakeholders in the pension fund.

32.

Minutes of the previous meeting pdf icon PDF 96 KB

To approve as a correct record the minutes of the meeting held on, 27 June 2019 and 10 October 2019.

Additional documents:

Minutes:

RESOLVED: that the minutes of the meeting held on 27 June 2019 and 10 October 2019 be deferred to the next meeting.

33.

Quarterly investment performance report - to September 2019 pdf icon PDF 133 KB

The Pension Committee, at its meeting on 19 November, received a report on the investment performance of the Pension Fund managers as at 30 September 2019.

 

Minutes:

The Pension committee at its meeting on 19 November received a report on the investment performance of the Pension Fund managers as at 30 September 2019. Anthony Huggett, Investments, Commercial and Risk Manager, presented the report.

Members discussed the percentage allocations to each asset class in the existing strategy, against the current practice. Whilst they recognised that deviating from the strategy by investing more in global equity had been beneficial, members also argued that it poses a greater risk to investments.

There was agreement that, whilst they were mindful of looking at the level of equites, there was no clear policy on rebalancing allocations. Members discussed the requirement for a new approach to reporting, and commented that there needs to be greater clarity about policy around what action to take when asset allocations are moving away from strategy.

The officer clarified that if an asset allocation is outside of its control range, advice is sought from the Fund’s investment advisor about why this is and possible course of action.

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

34.

Pension Administration Update pdf icon PDF 123 KB

The Pension Committee, at its meeting on 19 November 2019, received a pension administration update report. That report is presented to the Board for noting

Minutes:

The Pension committee at its meeting on 19 November received a pension administration update report,  That report is presented to the board for noting.

David Kellond, Pensions Administration Manager, presented the report. The Pensions Administration Manager highlighted that there were no new cases over the recorded period. The team had been improving the system, alongside Civica, to save manual labour and there was discussion of partnering with another Civica user, who benefit from a bigger systems team.

He highlighted that the KPI stats were high, due to the added tasks being included, but the number of open processes had fallen, which will be reflected in the next report. He confirmed with members that the team aim to crystallise the backlog, and analysis from ongoing work will be from 2 sets of data; the existing backlog and new tasks.

The officer confirmed that a new team member had now been recruited.

 

RESOLVED: The Pensions Administration Update report be noted

35.

Update on the annual benefit statement online take up- December 2019 update pdf icon PDF 137 KB

At its meeting on 27 June 2019, the Board requested an update for its December 2019 meeting on the registration numbers of the Pensions Online service.

Minutes:

 

At its meeting on 27 June 2019, the Board requested an update for its December 2019 meeting on the registration numbers of the pensions online service. 

David Kellond, Pensions Administration Manager, presented the report. He highlighted that the rate of online take-up was low, however there was improvement overall, between June to November 2019 with 1 in 3 members now registered online. 

To date, there were 533 deferred members which have lost contact with the provider. The Pensions Administration Manager is liaising with a third party to provide an address tracing service. The proposal would include an automated trace to all lost members and a manual trace for all lost members over the age of 55. 

In discussion, members urged more promotion to be done to raise awareness of the online service and ideas included using the contractor’s mortality screening service, adding information into a staff joiners pack and including it in manager’s core brief. 

Members welcomed the suggestion to include an update in the admin report.  

RESOLVED: The update on the annual benefits statement take up online report be noted.

36.

Pension Regulator's LGPS Cohort Report pdf icon PDF 119 KB

The Pension Regulator commissioned a report in October 2018 to review the administration of 10 LGPS funds to understand scheme managers’ approaches to a number of key risks. This followed on from the annual survey of public sector schemes.

Minutes:

The Pension Regulator commissioned a report in October 2018 to review the administration of 10 LGPS funds to understand scheme Managers approaches to a number of key risks.

This followed on from the annual survey of public sector schemes.  The report was presented by Anthony Huggett, Interim Investments, Commercial and Risk Manager, and he highlighted that the Pension Regulator  was concerned about slowdown in improvements by LGPS funds against the code of practice 14 established by the Regulator. The Investment, Commercial and Risk Manager informed the Board that the full report, including the recommendations, was available on the Pension Regulator website.

The Chair asked the officers about the use of independent security testing to combat the growing risk of cyber security. The officer responded that the system was a third party system so the provider would be responsible for ensuring the safety of the system.

RESOLVED: The Pension Regulator LGPS Cohort report be noted.

37.

Triennial Valuation update pdf icon PDF 124 KB

The Pension Committee, at its meeting on 19 November 2019, received a report by the Fund’s actuary, Barnett Waddingham on the initial results of the 2019 actuarial valuation. The Committee agreed to the recommendation to approve the assumptions to be used in the 2019 valuation as detailed in the report.

Additional documents:

Minutes:

The Pension committee at its meeting on 19 November 2019, received a report by the Funds actuary Barnett Waddingham, on the initial results of the 2019 actuarial valuation.

 

This report was presented by Melanie Durrant from Barnett Waddingham LLP. She highlighted that the outcome of the Mcloud case would not be decided until 2020, which had created uncertainty around the benefits which are being valued. In addition, Barnett Waddingham will be sending out the results of valuation today and all employers are in a stable position. The next stage of the update would be to consult employers before sign-off and publication in 2020 whereby contributions would start to be made. 

 

RESOLVED: The Actuarial Valuation of the Pension Fund report.be noted.

 

Andrew Theobald left the meeting at 12:00

38.

Draft Funding Strategy Review pdf icon PDF 124 KB

The Pension Committee, at its meeting on 19 November 2019, received a report by the Fund’s actuary, Barnett Waddingham, on the draft Funding Strategy Statement. The Committee agreed to the recommendations to approve the document for consultation with fund employers and to delegate authority to the Chair of the Pension Committee and the Strategic Director, Resources to make any necessary amendments.

Minutes:

The Pension Committee, at its meeting on 19 November 2019, received a report by the Fund’s actuary Barnett Waddingham, on the draft funding Strategy Statement. The report to the Board was presented by Melanie Durrant from Barnett Waddingham LLP.

 

Members discussed ill-health retirement and raised issues around the lack of disincentives to people authorising ill-health retirement. In addition, the actuary confirmed that any liabilities relating to an orphan pension fund would be distributed to all employers, and the Council would take direct responsibility for contractor’s pensions.

 

RESOLVED: The Draft Funding Strategy Statement report be noted.

39.

Investment Advisor Objectives pdf icon PDF 123 KB

The Pension Committee, at its meeting on 19 November 2019, received a report on the objectives of the investment advisor. The Committee agreed to the recommendation to approve the objectives stated in the report.

Minutes:

The Pension committee at its meeting on 19 November 2019 received a report on the objectives of the investment advisor. The committee agreed to the recommendation to approve the objectives stated in the report.

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

 

RESOLVED: The Investment Advisor Objectives report be noted.

40.

Review of Risk Register Report pdf icon PDF 127 KB

This report provides the current version of the Risk Register.

Additional documents:

Minutes:

 

The report of the current version of the Risk Register was provided to the Board for information by Lyndsey Gamble, Head of Investment, Risk and Commercial Finance.

 

Members requested that the item be a standing item on the agenda.

 

RESOLVED: The Risk Register was commented upon and noted.

41.

Review of work programme pdf icon PDF 121 KB

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

Minutes:

The report to the Board was presented by Lyndsey Gamble, Head of Investment, Risk and Commercial Finance to discuss the proposed work programme for the Board for the 2019/20 financial year.

 

Members were informed that the date of the July meeting will be set at Full Council in May 2020, and that training needs will be discussed at this meeting to inform the training plan.

 

RESOLVED: The work programme for the Board for the remainder of the financial year be agreed.

42.

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.