Agenda and minutes

To note any changes to the Membership.

1.1       There were no changes to the Membership.

To receive declarations by Members and Officers of the existence and nature of any personal or prejudicial interests in matters on this agenda.

2.1      Clarification was sought as to whether there was any conflict of interest arising from Councillor Adnan Mohammed’s position as the Deputy Cabinet Member for Finance and Corporate Services. Carolyn Beech (Director of Human Resources) advised that a conflict of interest would only likely arise if Councillor Mohammed had any involvement in the Pension Scheme itself, however this would be unlikely for the position that he held. Carolyn Beech agreed to provide final clarity on this matter and report back to the Board.

2.2      Councillor Peter Cuthbertson, in noting that some investments in the Pension Scheme involved tobacco companies, declared that he works for an organisation involved with nicotine vaping products, which some smokers use move to away from tobacco products. However, he did not regard this as a prejudicial interest and remained present to Chair the meeting and consider all items on the agenda.

To approve the minutes of the meeting held on 27 July 2015.

3.1       RESOLVED:

            That the Minutes of the meeting held on 27 July 2015 be signed by the Chairman as a correct record of proceedings.

3.2       It was agreed that in future, the Minutes of the Pension Board meetings would be circulated to Members once they had been approved by the Chairman.

The Pension Fund Committee agenda including reports from the last meeting that took place on 8 September 2015 are attached.

4.1      The Board had before them papers of the last Pension Fund Committee meeting that took place on 8 September. In respect of the item on the Admission Agreement for Sanctuary Housing, the importance of researching materials in the report prior to the meeting was emphasised in order to prevent unnecessary discussion at the meeting. A member commented that he was satisfied with the Committee’s challenging of the material that had been presented to them and of the Fund’s performance.  Another Member queried whether the Committee received sufficient information for the admitted bodies reports. A Member stated that synergy between the Committee and the Pension Board could be strengthened if Board Members attended the same workshops as Committee Members. Members concurred that attending Pension Fund Committee meetings and workshops did add value for Board Members.

4.2      Carolyn Beech emphasised that the Pension Fund Committee took its responsibilities very seriously. In respect of admitted bodies, the Fund had incurred costs three years previously when an admitted body went out of business and so the Committee wanted to receive assurance on such matters. It was noted that authority to admit bodies to the Pension Scheme was now delegated to the City Treasurer.

4.3      Members agreed to Neil Sellstrom’s (Tri-Borough Pensions Team) suggestion that future Board agendas include the list of agenda items only and the approved minutes of the previous Pension Fund Committee meeting, as the Board already received the full set of Pension Fund Committee papers upon date of publication.

The report from the City Treasurer is attached.

5.1       The Board received the report and noted the confirmation that Board          Members were covered by the Council’s Indemnity Insurance Scheme.

The report from the City Treasurer and appendices are attached.

6.1      The Board had before them a report and appendices, including the detailed Risk Register Scoring Matrix. It was noted that this item was a standing item on the Pension Fund Committee agenda. The Board enquired how often did the Risk Register change. In reply, Neil Sellstrom advised that changes were regular and that a future report could include a covering report highlighting where these changes were. The Board agreed that it continue to receive reports on the Risk Register Scoring Matrix, including highlighting any changes. Members also agreed to the suggestion from Nikki Parsons (Pension Fund Officer) that focus be given to a different section of the Matrix at each meeting.

6.2      Members sought further information with regard to a risk 18 identified in the report concerning an operational administration issue relating to failure of financial system. In reply, Nikki Parsons advised that the matter was being looked at on a tri-borough basis and had meant that some scheme members had not received payments in time. However, the risk’s impact had only been rated as three because of the relatively small amount of money involved. Neil Sellstrom added that the issue had arisen because of changes to financial systems and that it should be resolved once all systems were working correctly. Carolyn Beech advised that a lack of a suitable interface between Agresso and Surrey County Council’s financial systems had been a contributing factor to the issue arising, however the risk would be much lower when the system was fully embedded and the need for faster payments would be overcome.  She also advised the Board that a meeting was due to take place with BT on 21 October to discuss payment issues, including pension scheme payments.

6.3      The Board acknowledged that most risks were either classified as low or medium but beyond the Council’s control, however risk 18 was something it could address. Members enquired how the risk rating would be reflected if for example a scheme member had not been paid for two months. Members also felt that there should be a set time frame in place in which to resolve payment issues.  In reply, Nikki Parsons advised that manual payments could be raised where the usual payment process had failed to pay scheme members.

6.4      The Board requested an update on the Risk Register Scoring Matrix at the next meeting, highlighting major changes and focusing on a particular section of the matrix.

Report to follow.

7.1      Members received a confidential report on Pension Administration Costs and discussed how further savings could be made.

Report to follow.

8.1       The Board expressed its satisfaction in the Pension Board Communications Update report and the Human Resources pensions engagement strategy.

8.2       RESOLVED:

            That the Human Resources pensions engagement strategy for the period 1October 2015 to 31 March 2017 be noted.

Report to follow.

9.1       The Board had before them an update on data sharing.

9.2       RESOLVED:

1.    That the performance standards as detailed in the Section 101 Agreement be noted.

2.    That the need for further work to be carried out to prioritise the monitoring of the standards from the list and to control costs that must be agreed in collaboration with the Bi-Borough Councils (who were on-boarded into a similar agreement with Surrey County Council on 1 September 2015) be recognised.

Report to follow.

10.1    Members had before them an update on the Pension Board Training Strategy. Members emphasised the need for the training to ensure that the Board could take a proactive role and to plug any knowledge gaps for Members. Topics such as benchmarking, public service governance and administration were particularly useful for the Board and it was suggested that these be included for the training in January 2016. In respect of the knowledge and skills assessment, a Member stated that she needed more information in respect of the contract with Surrey County Council in administering the Pension Scheme and she enquired whether Members should be identifying other areas where they felt they needed more knowledge. Another Member felt he needed more information on pension law. It was commented that some local authorities’ Pension Boards would receive up to six weeks training and it was suggested that a list of training topics be drawn up and shown to the Board and also the Pension Fund Committee. Other areas that Members suggested they needed training in included pensions accounts, auditing, standards and actuaries and training through e-learning.

10.2    In reply to the issues raised, Trevor Webster (Senior HR Manager) advised Members to identify their training needs at this stage. A training plan would then be drawn up and further training would commence from January 2016, including subject specific training such as regulatory changes, triennial valuations and annual refresher training. He stated that a number of different ways of delivering the training could be explored to ensure that it was undertaken in the most appropriate way, such as training in small groups, day and evening sessions, e-learning, bite size sessions, conference calls and informal sessions. Trevor Webster advised that Members would also receive a link to the learning management system so that they could record the training they had undertaken. He added that training slides could also be made available online.

10.3    Neil Sellstrom added that Surrey County Council appointed lawyers to ensure the Pension Scheme met legal requirements and that the Pension Board regulators had an online training toolkit. He advised that the creation of Pension Boards had only been agreed in 2014 and so local authorities were in the process of collating their training needs for Board members.

10.4    The Board welcomed the ability to record training undertaken through the learning management system as a way of demonstrating that Members were complying with their knowledge and skills requirements. Members acknowledged the need to complete their knowledge and skills self-assessment forms and requested that training slides be made available online. Christopher Smith (Scheme Member Representative on the Pension Board) also agreed to provide information of the training provided to those Pension Boards that were to receive six weeks of training.

10.5    RESOLVED:

                   1.    That the contents of the paper be noted.

            2.    That the catch up training for those missing the original training be noted, and;

                   3.    That the methodology, requirement and timeframe for the recording     of training completed be noted.

The report and appendices from the City Treasurer are attached.

11.1    The Board had before them a report on Pension Fund Benchmarking. The Chairman advised that the Council’s response to the Local Government Pension Scheme (LGPS) Scheme Advisory Board’s benchmarking exercise and comparisons with other local authorities would be discussed at the next Board meeting. A Member commented that the State Street Global Services UK Local Authority Annual Review for 2013/2014 had indicated that Fund performances had not been particularly strong. He expressed an interest in having more information on the Council’s Investment Strategy and how it compared with other local authorities. Another Member enquired what steps could be taken in terms of benchmarking costs for fund managers and how could the real costs be identified. He also suggested that a comparison with those local authorities who internally appointed fund managers could be undertaken, as some such authorities were performing better than those who appointed externally.

11.2    In reply to the issues raised, Neil Sellstrom advised that the Council’s Fund was not in the LGPS universe when the Local Authority 2013/2014 review had been undertaken, however he advised that since joining the universe, more specific data was being received. He informed Members that the Pension Fund Committee received quarterly updates produced by Deloitte on the Fund’s performance. The Board heard that the London Collection Investment Vehicle produced a summary of the Investment Strategy. Neil Sellstrom advised that transactional costs, including fund manager costs, were identified in reports, fund managers pay was performance related and they received more if they exceeded targets. He stated that some very large authorities, such as Greater Manchester, had appointed internal fund managers and because of their size, it was difficult to make direct comparisons with the performance of other local authorities. In addition, the appointment of some internal managers was based on historical arrangements. Neil Sellstrom advised that the cost of administering the Pension Scheme was around £7 million. The Board noted that the Council would be passing its comments to the Scheme Advisory Board with regard to the proposed Key Performance Indicators.

11.3    Nikki Parsons advised that Deloitte took fund managers fees into account in their reports and that league tables of performance for local authorities were also produced on a quarterly basis, although there was often a time lag with the data available, so the results were not necessarily up to date.

Report to follow.

12.1    The Board sought confirmation that the Council’s response to the survey would be available for consideration at the next meeting. Trevor Webster confirmed that the Council’s response would have been made by then and the Board agreed that this item be considered at the next meeting.

The Board is invited to consider future items for the Work Plan. It is suggested that these include Manager Selection, Fund Performance and Benchmarking Fees.

13.1    The Board noted that benchmarking was taking place in a number of areas. A Member requested whether a milestone progress chart of the Fund could be provided. It was suggested that the role of the external auditor could be added to the Work Plan.

13.2    In reply, Neil Sellstrom advised that the triennial evaluation looked at the progress of the Fund every three years, with the last one taking place in 2013 and the next one due in 2016. The triennial evaluation was undertaken by Barnett Waddingham, the Fund’s actuary. Neil Sellstrom added that actuary training for Members would be taking place in the first quarter of the 2016/2017 municipal year. He agreed that adding the role of the external auditor to the Work Plan would be useful, as well as that of the internal auditors.

13.3    Nikki Parsons added that the auditors also helped provide assurance. She advised that the Funding Strategy Statement was based on the outcome of the triennial evaluation.

13.4    The Board agreed that the 2013 triennial evaluation, including an explanation of the figures stated in it, be provided at the next meeting in order to inform Members of the wider picture.

To consider the date of the next Pension Board meeting.

14.1    The Board agreed that the next meeting take place on Monday, 18 January 2016.

15.1    There was no additional business for the Board to consider.