Agenda and minutes

Pension Committee
Friday 7 September 2018 10.45 am

Venue: Meeting Room 1&2 - Shire Hall, Gloucester. View directions

Items
No. Item

1.

Declarations of Interest -

Members of the Committee are invited to declare any financial or pecuniary interest related to specific matters on the agenda.

 

Please see note (a) at the end of the agenda.

Minutes:

Councillor Theodoulou & Parsons declared they were members of Cotswold District Council. 

 

Councillor Theodoulou also declared that his wife was a Governor at Farmor’s School. 

2.

Public Questions -

To answer any written questions about matters that are within the powers and duties of the Committee. The closing date/time for the receipt of questions is 10.00am on 30th August 2018.

 

To answer any oral question(s) put by members of the public.

 

Depending on the nature of the oral questions asked it may not be possible to provide a comprehensive answer at the meeting, in which case a written answer will be supplied as soon as reasonably possible after the meeting.

Minutes:

No public questions were received.

3.

Members' Questions -

To answer any written members’ questions. The closing date/time for the receipt of questions is 10.00am on 30th August 2018.

Minutes:

No Members’ questions were received. 

4.

Minutes - pdf icon PDF 129 KB

To approve as a correct record the Minutes of the meeting held on 11th May 2018.

Additional documents:

Minutes:

The public minutes of the meeting held on the 11th May 2018 were approved as a correct record and signed by the Chairman. 

 

Resolved

 

That the public minutes of the meeting held on the 11th May 2018 be approved as a correct record. 

5.

Risk Register pdf icon PDF 59 KB

The Committee is asked to note the report.

Additional documents:

Minutes:

Mark Spilsbury, Head of Pensions introduced the risk register explaining that it had been reviewed in May 2018.  Following feedback from the pension board the pension committee had agreed that in future a report on the risk register would be considered at each of their regular quarterly meetings. 

 

It was noted that the risk register was a live document and therefore it was important for it to reflect the discussion carried out by the committee.

 

Members were informed that since the risk register was last considered by the Committee in May 2018 a number of changes have been made:

 

-           F3:  Fall in return on Government Bonds leading to rise in value placed on liabilities.  The residual risk increased from low to medium to reflect the impact on the funds service liabilities as a result of bond yields and hence the discount rate falling.

 

-           Previously F9: MIFID classification was retail rather than professional client.  This risk had now been deleted because all of the Fund Managers used by the Gloucestershire Fund had agreed to upgrade the fund to professional client status.

 

-           A/R1: Significant additional costs resulting from changes to national pension requirements and/or HMRC rules e.g. changes arising from public sector pension’s reform, and/or more complex regulations requiring increased administration resources.  Period comments changed to reflect the recruitment of four further Pension Officers in 2018 to take the Pensions Administration Team up to the full establishment funded by the current agreed budget.

 

-           A/R5:  New risk regarding Guaranteed Minimum Pension reconciliation.  New risk regarding Guaranteed Minimum Pension reconciliation. 

 

Members requested to know how many pensioners the fund did not have a valid address for.  Officers agreed to provide a response via email in due course. 

 

During the discussion, it was noted that mortality had improved, as smoking had declined, obesity, etc and it was anticipated that the figure would plateau.  Members’ questioned F/D4 in relation to early retirement grounds, officers were requested to provide further detailed information.  (Action: JW)

One member questioned if ill health affected the employer and not the fund.   Officers explained that the additional costs of ill health retirement were met by employers although they could insure against it via a policy offered through Hyman Robertson.

 

The Director of Strategic Finance agreed that risk F1 would continue to be reassessed and reviewed accordingly. 

 

The Head of the Pension Fund informed the committee that the Pensions administration team staffing had now been increased to cope with demand. 

 

Officers were requested to check that the Pension Board actions in relation to the Risk Register had been included.  (Action – MS)

 

Resolved

 

That the committee noted the Risk Register, subject to the inclusion of the Pension Board amendments.   

6.

Pension Fund Annual Report pdf icon PDF 157 KB

Additional documents:

Minutes:

 Alex Bull, Finance Manager for Pensions & Investments presented the report.  The draft Pension Fund Annual Report for 2017/18 was prepared in accordance with the Local Government Pension Scheme Regulations, which set out what should be included with Annual Reports.

 

The regulations governing the content of the Annual Report required it to be published on or before 1st December following the year end, and subject to any changes requested by the Committee, it was intended that the final Annual Report would be submitted to full Council at its December meeting.

 

It was noted officers had adapted the introduction section of the Annual Report, to include a more graphical presentation of the key information contained within the full report.  Members noted that it was a very long report, however there was limited flexibility regarding the content.  Officer’s explained the intention was that the adapted introduction section could be read as a standalone summary of the Annual Report. 

 

During the discussion, members raised questions relating to ethical policies in terms of investment.  The Chair explained that the Pension Committee would have to decide in which investment mandates they wished to invest in and would instruct Brunel accordingly.  However, in the future Brunel would appoint the Fund Managers, who would select the specific investments in accordance with the specifications of the investment mandates.  Officers informed the Committee that overall Brunel Policies were ethical and sustainable.  It was agreed that officers would construct appropriate wording for inclusion in the Annual Report, this would then be circulated to members via email for their approval. 

 

The committee were advised that voting were being discussed with Brunel and that more detailed would be provided by Brunel in due course. 

 

Members’ were advised that the External Auditors report and opinion on the Pension Fund Account was included on pages 53 and 54 of the report.

 

After some discussion, the committee noted the Pension Fund Annual Accounts and Annual Report.  Members were requested to send any suggested amendments or comments relating to the Annual Report to Officers by 21st September 2018. 

 

Resolved

 

That the report be noted. 

 

That any comments or amendments be submitted by members of the committee by the 21st September 2018. 

7.

Pension Board Annual Report pdf icon PDF 96 KB

The Committee is asked to note the report.

Minutes:

Councillor Moor presented the report.  He informed the Committee that the Board had two meetings relating to the 2017/18 financial year and that the meetings were attended by all board members.   The Committee noted that Sean Collins (Head of Pensions for Oxfordshire) was the Chairman of the Gloucestershire Pension Board, as he had good experience and knowledge of the LGPS, which was invaluable.  

 

Resolved

 

That the report be noted.   

8.

Actuarial Contract pdf icon PDF 73 KB

The Committee is asked to consider the report recommendations. 

Minutes:

Mark Spilsbury, Head of the Pension Fund explained the purpose of the report was to seek the agreement of the Pension Committee to submit a report to the October Cabinet meeting, seeking approval to utilise the National Local Government Pension Scheme (LGPS) Framework for the provision of Actuarial Services for the Gloucestershire Pension Fund.

 

Members were advised that the current contract with Hymans Robertson LLP to provide these and related services runs until 31 March 2019, at which point there was a requirement to put in place a new contract for Actuarial Services.

 

The benefit of using the National LGPS Framework for this exercise was that it saves time and money in comparison with the standard OJEU procurement process, without compromising the quality of the eventual appointment. There were four nationally recognised suppliers of actuarial services used by LGPS Funds in England, Scotland and Wales, and each of them is represented on this framework.

 

There was a one off fee for using the framework of £5,000 for the period up to September 2020. The intention was to award this contract for a period of 4 years from 1 April 2019, with an option to extend the contract for a further 3 years.   These contract periods were designed to ensure that the end date on future contracts do not fall on the date of a triennial valuation.

 

It was intended that the Head of Pension Fund, supported by his team and colleagues from the Commercial Services Team would run a mini competition exercise between the four suppliers on the National LGPS Framework. The mini competition would be based on Gloucestershire Pension Fund’s specific requirements, addressing both quality and cost.

 

The detailed tender submissions would then be scored by officers and, if required, as part of the evaluation process, some or all of the potential suppliers would be invited to give a presentation to officers, which would also be scored.

 

The mini competition tender submissions will be assessed against three criteria, as set out in the framework agreement: Quality, Service and Price. The framework gave a range of percentages which could be assigned to each criterion, as follows:

 

-           Criteria           Percentage range allowed

-           Quality           20% to 40%

-           Service Fit     20% to 40%

-           Price               20% to 40%

 

The total of the there percentage weightings must total 100%. The proposed weightings to be used in the tender evaluation are Quality 40%, Service Fit 40%, and Price 20%. The maximum price would be capped based on rate cards submitted by each of the four providers on the framework.  Members’ felt the weightings were correct but questioned whether or not assumptions should be considered.  Officers explained that assumptions were included under the quality criteria   The Committee were advised that the Independent Advisor or another specialist from his company would also be involved in an overview role.  The Director of Strategic Finance agreed that an informal session would be held for Committee members, in order to further develop their understanding of the process  ...  view the full minutes text for item 8.

9.

Market Valuations and Quarterly Performance Review of the Pension Fund : Quarter 2 2018 pdf icon PDF 456 KB

The Committee is asked to note the report.

Additional documents:

Minutes:

 

 

 

Mark Spilsbury, Head of the Pension Fund, presented an overview of market valuations and an update on the performance of the Gloucestershire Local Government Pension Scheme, (LGPS), as at 30 June 2018.

 

The report was sub-divided into four areas, detailing information on i) Manager Performance; ii) Asset Allocation; iii) Market Values, and iv) Cash Position. The Committee discussed the report in detail. 

 

The Committee discussed in detail the difference between performance target and the benchmark. The head of the Pension Fund in advised the Committee that GCC LGPS should move to the same methodology as other LGPS, in terms of monitoring performance.  It was noted that in terms of benchmark performance WAMCO continued to perform well over a 10 year period.  Some members felt the previous reporting summary of performance was more user friendly, and requested that a similar summary be returned to the report.  (Action – MS)

 

The Head of Pension Fund informed members that the fund had under performed against its target in Quarter 2.  The level of performance was disappointing but within risk tolerances.  .  Officers explained that GCC Pension Fund performance over the quarter was below the benchmark but ahead of its benchmark over longer time periods. 

 

It was noted that a summary report, including the benchmark and performance target and the Brunel performance report would be presented at the next committee meeting.  It was agreed that a one page supporting paper on performance net of fees would also be presented at Committee. 

 

Resolved

 

That the performance report was noted. 

10.

Exclusion of the press and public

 

That in accordance with Section 100 A (4) of the Local Government Act 1972 the public be excluded from the meeting for the following agenda items, because it is likely that if members of the public were present there would be disclosure to them of exempt information as defined in paragraph 3 of Part 1 of Schedule 12 A to the Act and the public interest in withholding the information outweighs the public interest in disclosing the information to the public.

Minutes:

It was resolved

 

That in accordance with Section 100 A (4) of the Local Government Act 1972 the public be excluded from the meeting for the following agenda items, because it is likely that if members of the public were present there would be disclosure to them of exempt information as defined in paragraph 3 & 5 of Part 1 of Schedule 12 A to the Act and the public interest in withholding the information outweighs the public interest in disclosing the information to the public.

11.

Exempt Minutes

To approve as a correct record the exempt minutes of the meetings held on 11th May 2018.

Minutes:

The exempt minutes of the meeting held on the 11th May 2018 were approved as a correct record and signed by the Chairman. 

 

Resolved

 

That the exempt minutes of the meeting held on the 11th May 2018 be approved as a correct record.

 

12.

Independent Advisor's Quarterly Review

The Committee is asked to note the report. 

Minutes:

Independent Advisor, John Arthur, provided members with an update on current investments.  It was reported that the Pension Fund underperformed against its performance target in Q2 2018.  The level of underperformance was within risk tolerances, it was reported that the fund was close to achieving its performance target over the medium and longer term.  The Committee were referred to the detailed Performance and Executive Summaries contained within the report.   

 

Resolved

 

That the report be noted. 

 

 

 

13.

Admission Body/Employers Update Report

The Committee is asked to note the report. 

Minutes:

The committee received a report from the Director of Strategic Finance.

 

Resolved

 

That the Committee approved the Officer’s recommendation. 

 

 

 

14.

Equity Protection

The Committee is asked to consider the recommendation. 

Minutes:

The Head of the Pension Fund, Mark Spilsbury presented the report in detail. Members were advised of the current position. 

 

Resolved

 

That the Committee noted the report and approved the Officer recommendation. 

 

15.

PIRC Annual Fund Review

The Committee is asked to note the report. 

Minutes:

Unfortunately Karen Trumble was unable to attend the meeting. 

 

David Cullinan, PIRC gave a detailed presentation relating to the Annual Fund Review via a phone link. 

 

Resolved

 

That the report be noted.   

16.

Brunel Pension Partnership Update

The Committee will receive a verbal update.

Minutes:

Mark Spilsbury, Head of the Pension Fund gave a verbal update to the committee. 

 

He confirmed that, in accordance with the agreed Strategic Asset allocation around 25% of the funds assets had now been transitioned into the passive equity mandates available within the Brunel Pension Partnership,  and that the cost of transitioning was significantly lower than forecasted.  The Committee welcomed this news. 

 

The Committee was advised that a detailed transition report would be presented at the next committee meeting. 

 

Resolved

 

That the verbal update be received. 

17.

Investment Presentation

To receive a presentation from Western Asset

Minutes:

Marian George and Annabelle from the Western Asset Investment Company gave a detailed presentation on the Investment Company’s portfolio.

 

Resolved

 

That the Committee received the report.