Agenda, decisions and minutes

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

No declarations of interest were made. 

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 15th September 2023..

The following supplementary questions were asked:

Question 1 - Penny Kent asked why is Gloucestershire Pension Committee in a Council which declared a climate emergency years ago, so lacking in initiative on climate action compared to other counties around the south west?

The Chair referred to the published response already provided for question 4.  He explained that many of the funds within Brunel travelled at a different pace but overall he thought GCC was in a good place.    As Brunel was a leader regarding responsible investment and that Gloucestershire was part of that pack the Chair disagreed with the claim that the fund was lagging at the extent suggested.

Question 2 - Penny Kent asked would Gloucestershire Pension Committee now also take its ethical and moral responsibility seriously?

The Chair replied the Committee did take it's ethical and moral responsibility seriously but it also had to balance that with its fiduciary responsibilities.  He explained it was necessary to recognise the pension fund was funded by employer contributors, members of the scheme but also as a backstop by the taxpayer. Those parties involved all had input into this, but part of that process was very much striking that balance between what would be referred to as responsible investment, while ensuring that the fund delivered the correct returns needed, in order to pay scheme members their pensions when they become due, or continue to be paid.

The Chair recognised that in any range of investment, people will hold different views but he was content that the fund was on the right trajectory for investments in relation to fossil fuels. It was explained that some of those fossil fuel companies were leading in Renewable Energy and it was essential to be engaged with those companies in order to influence those decisions, with our partners in Brunel.  It was explained that other countries, who wouldn't be such a positive influence would be keen to take up those investments if the fund withdrew from its investment.  The Chairman felt it was a question of being better off being at the table, being invested and having influence to drive their policies going forward, as the Pension Committee policies were very much aligned to those of responsible investment.

Questions 3 - Penny Kent asked you say you acknowledge that you may need to take an action and have reserved the right to influence specific exclusions if appropriate, the planet is burning and were heading for a climate cliff edge, if not now, when?

The Chairman felt this was a very similar question to the previous question.  He reflected the fact that Brunel throughout it's the various meetings had shown commitment to responsible investment.  The Chair believed Brunel were one of the leading managers in this country with regards to looking at investments, as they dug very deep, talked and engaged with those companies.  It was explained that profits ended up as reinvestments or as dividends which funded the pension fund.  The Chair recognised there was a circle  ...  view the full minutes text for item 33.

To answer any written members’ questions. The closing date/time for the receipt of questions is 10.00am on 15th September 2023

No member questions were received. 

To approve as a correct record the Minutes of the meeting held on 15th June 2023

At this point the meeting was briefly adjourned and reconvened shortly after. 

Members were advised that a responsible investment training session was in the process of being arranged and the details would be circulated in due course. 

Resolved

That the minutes of the meeting held on the 15th June 2023 were approved as a correct record. 

The Committee is asked to note the draft Pension Board minutes of the meeting held on the 20th July 2023.

Resolved

That the Committee noted the draft Pension Board minutes of the meeting held on the 20th July 2023. 

The Committee is asked to note the report.

The Head of Pensions presented the report which detailed the Fund’s funding position, market value, asset allocation, investment performance for the quarter ending 30 June 2023.

Members noted that by the end of the quarter to 30 June 2023, the Fund’s total market value had increased by £61.3m to £3,112.7m and over the quarter, total Fund assets produced a positive return of 1.5%, which was equal to the strategic benchmark. It was reported that performance over the 3 years to 30 June 2023 was 6.0% annualised which is 0.1% ahead of benchmark. The fund was still regarded to be in a healthy position.

The Independent Adviser (IA) gave a detailed presentation of his report He recognised there were a number of long term issues such as demographics had changed and there was a strong desire for decarbonisation. Inflation remained an issue for the economy. 

He informed the committee that there was potentially some value in short term lending, as that area was beginning to look quite attractive, based on the actuarial required rate of return.  The IA felt that interest rates were near their peak and a locked in rate for seven years was an attractive investment if you could find a suitable investment fund to invest through. The Committee noted that the high alpha global fund had performed very well and was ahead of its benchmark since inception. 

Members welcomed the report and questioned the use of Artificial Intelligence (AI) and green technology.  The committee discussed the impact in terms of productivity gains, as some members felt that AI ongoing technological advancements would strive to remove barriers.  The IA explained that long term investment in education was the key, as the UK had performed poorly in that area 

Julie Masci, Grant Thornton (GT) presented the Pension Fund Audit Findings report and advised the committee GT would be issuing an unqualified opinion on the financial statement, and overall she felt it was a positive picture.   It was explained that the audit was progressing well.  Members were advised that the newly appointed external auditors were also actively engaged with GCC. 

During the discussion, the Chair requested that in the future the Audit Findings report be a separate item on the agenda. 

The Committee agreed that the GT Audit Findings report should be commended to the Audit & Governance Committee for its approval. 

Resolved

That the Committee noted in accordance with the regulations, the Fund’s position and governance activities as at the 30 June 2023.   

That the Committee noted the performance of the investments as detailed in report and associated appendices.

That the Committee acknowledged the Audit Findings Report provided by Grant Thornton for year to 31 March 2023 and requested it be commended to the Audit & Governance Committee. 

The Committee is asked to note the Risk Register and the current elevated risks.

              The Head of Pensions explained that in accordance with the Risk Management policy, progress and activity in managing risks will continue to be monitored and recorded on a risk register and key information will be provided on a quarterly basis to the Pension Committee and the Pension Board as part of the regular update reports on governance, investments and funding, and administration and communications. The Committee were advised that there were no major changes since the previous review and a number of risks remained elevated at this time. 

              Resolved

              That the Committee noted the risk register and the current elevated risks and the new risks as outlined in the report. 

The Committee is asked to note the report. 

The Head of Pensions presented the report and explained that the Fund participated in the LGPS Investment Performance benchmark undertaken by PIRC.

Resolved

That the Committee noted the LGPS Performance Benchmarking Report as at 31 March 2023.

The Committee is asked to note the report.

The Committee received the Pension Board Annual Report. 

Resolved

The Committee noted the Pension Board Annual Report for 2022-23

The Committee is asked to note the report. 

The Local Government Pension Scheme Regulations 2013 requires administering authorities to prepare a Pension Fund Annual Report.  The regulations also required the Annual Report to be published on or before 1st December following the year end.

Members were advised that the Funds Annual Report could only be published once the Council’s Statement of Accounts has been approved. If the Statement of Accounts had not been approved by 1 December, the annual report would be published with a draft Statement of Accounts and will be republished once the Statement of Accounts had been approved.

During the discussion, members suggested that the photographs needed to amended to be more representative of Gloucestershire and perhaps include green technology pictures.  Members also requested more clarity in terms of the benefits to members on page 18 of the report, as a wider understanding was required.  The Head of Pensions accepted the points raised and agreed to amend the report and would recirculate a copy for the committee's approval. 

In response to a question relating to the increase in transition costs, it was explained that those costs were due to the transition to Brunel and there was more transparency through CTI and the detailed reporting was becoming more granular. Members were advised that details of management fees, CTI could be circulated via email if they wished and it was noted there would be a benchmark so the committee could monitor and challenge.   The Chair requested more narrative detail be circulated to the committee for information. 

Members referred to the diagram on page 168 and requested that the colours be amended if possible. 

The Committee were requested to email any further suggestions/amendments to the Head of Pensions.  The Committee agreed subject to the amendments to delegate final approval to the Chair. 

Resolved

That the Committee noted the current draft of the Annual Report 2022-23 and subject to any feedback received or agreed amendments, delegated final approval of the Annual Report to the Chair of the Pensions Committee, thereby enabling publication of the Annual Report in accordance with the regulatory requirements.

The Committee is asked to approve the response to the consultation.

The Head of Pensions explained that a consultation on the future of investment pooling in the LGPS has been expected for some time  and the Committee were asked to approve the proposed response to the consultation.

Resolved

That the Committee approved the response to the consultation on next steps on investments as attached at Appendix 2 to the report.

The Committee is asked to consider the report recommendation. 

The Head of Pensions sought approval to conduct a Procurement exercise for a 10 year contract (initial 7 year term, with a 3 year extension option) using the National LGPS Framework for Pensions Administration Software in relation to the Fund’s Pension Administration System requirements.

In response to a question, it was noted that an outside company would be used to assess the social value process.  During the discussion, a member asked if the dashboard could be used to ask questions of member and if the the annual report could be distributed to members of the scheme via the dashboard.  The Head of Pensions explained that the member self service function would exist but he would need to check the requirements in terms of GDPR, if information was being sent out to members. 

Resolved

That Pension Committee delegated authority to the Head of Pensions in consultation with the s151 Officer and the Chair of Pensions Committee to:

1. Conduct a mini-competition process under the National LGPS Framework for Pensions Administration Software in respect of a call-off contract for the supply of a pension administration system. The proposed call-off contract shall continue for an initial period of seven years and include an option to extend its term for a further period of not more than 3 years;

2. Award such call-off contract to the preferred tenderer and

3. Determine whether to exercise the option to extend such contract for a further period of not more than three years on the expiry of the initial seven year term.

The Head of Pensions sought approval to conduct a Procurement exercise for a 10-year contract (initial 7-year term, with a 3-year extension option) using the National LGPS Framework for Pensions Administration Software in relation to the Fund’s Pension Administration System requirements.

In response to a question, it was noted that an outside company would be used to assess the social value process.  During the discussion, a member asked if the dashboard could be used to ask questions of member and if the annual report could be distributed to members of the scheme via the dashboard.  The Head of Pensions explained that the member self-service function would exist but he would need to check the requirements in terms of GDPR, if information was being sent out to members. 

Resolved

That Pension Committee delegated authority to the Head of Pensions in consultation with the s151 Officer and the Chair of Pensions Committee to:

1. Conduct a mini-competition process under the National LGPS Framework for Pensions Administration Software in respect of a call-off contract for the supply of a pension administration system. The proposed call-off contract shall continue for an initial period of seven years and include an option to extend its term for a further period of not more than 3 years;

2. Award such call-off contract to the preferred tenderer and

3. Determine whether to exercise the option to extend such contract for a further period of not more than three years on the expiry of the initial seven-year term.

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 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.

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 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.

To approve as a correct record the exempt minutes of the meetings held on the 15th June 2023.

Resolved

The exempt minutes of the meeting held on the 15th June 2023 were agreed as a correct record.

The Committee is asked to note the report. 

The IA presented the report which was designed to be read in conjunction with the Part 1 report, as it provided more detailed analysis and commentary on the Fund’s future activities, participating employer activities and a summary of the operational aspects of the Brunel Pension Partnership, for the quarter ending 30 June 2023.

Resolved

That the Committee noted the employer activities and Brunel update as at 30 June 2023.

That the Committee noted the progress of the Social and Affordable Housing portfolio delivery.

That the Committee received a presentation from Schroders-greencoat.