Agenda and minutes

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.

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 27th November 2020.

No public questions were received. 

To answer any written members’ questions. The closing date/time for the receipt of questions is 10.00am on 27^th November 2020.

No Members’ questions were received. 

The Chairman welcomed Matthew Trebilcock, as the newly appointed Head of Pensions to the meeting.  In addition, the Chairman wished to thank Paul Blacker, Director of Finance for covering the service area and supporting the Committee in the interim period. 

To approve as a correct record the Minutes of the meeting held on 25^th September 2020.

The minutes of the meeting held on the 25^th September 2020 were approved as a correct record and signed by the Chairperson. 

Resolved

That the public minutes of the meeting held on the 25^th September 2020 be approved as a correct record. 

The Committee are asked to note the Pension Fund financial statements and the 2019/20 Annual Report.

The Annual Report for 2019/20 was prepared in accordance with the Local Government Pension Scheme (LGPS) regulations and included all of the Fund’s strategy and policy documents, as well as the Fund’s audited accounts and performance details.

The annual report contained a summary section on pages 22 to 25 of the report pack, which provided a short graphical summary of the Fund, which could be read as a standalone summary. 

The External Auditors report on the statement of accounts considered by the Audit & Governance Committee on 30 October 2020 stated that the accounts gave a true and fair view of the financial transactions of the Pension Fund.

There was a single amendment made to the annual report issued as part of the reporting pack. On page 97 the table label ‘Creditors’ has been replaced with ‘Payments in Advance’ for consistency purposes. The annual report should also receive an external auditor’s opinion on the pension fund’s statement of accounts, which is a ‘consistent with’ opinion referring to that given on the administering authority’s statement of accounts.

The Local Government Pension Scheme Regulations 2013 require an administering authority to publish a pension fund annual report on or before 1st December together with the consistency statement from the auditor, it was confirmed that these documents were published on the 1 December 2020, thereby meeting the regulations.

It was noted that the Authority would not be producing a printed copy  of the annual report this year, but would rely on the electronic version only. 

The Head of the Pension Fund wished to thank the pensions accounting team led by Maria Saunders, in delivering the Annual Report within the regulation timelines. 

In response to a question, the Independent Advisor confirmed that he was content with the Annual Report. 

During the discussion, it was confirmed that the Funds current responsible investment approach was now included within the report.  The Head of Pensions explained that the regulations would  evolve especially in relation to climate related financial disclosures.  

The Head of Pensions explained he intended to work closely with Brunel and all fellow partner Funds within the pool, in a collaborative approach to ensure continued compliance with regulations as they moved forward. 

The Committee questioned the actuarial fees on page 39 of the report, the Director of Finance confirmed the figures were in line with the expectation. 

In response to a question relating to investment management expenses, it was noted that there was a large fluctuation between the 2018/19 and 2019/20 costs. The Head of Pensions drew the Committees attention to the accompanying note which provided an explanation for the increase, such as a move from passive to active management, however a more detailed cost analysis would be undertaken and  this information would be circulated via email to members of the Committee.

Members wished to know if there were any best practice examples other authorities used in their Annual Report that Gloucestershire could adopt. It was explained that due to regulations and guidance annual reports were inherently  ...  view the full minutes text for item 35.

The Committee is asked to note the report.

The Head of Pensions introduced the risk register explaining 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 Pension Committee in September 2020, a number of changes had been made, these were highlighted in yellow and the new narrative was shown in bold red, in the risk register.

It was reiterated that in September the residual risk ratings for risks F1, F2 and F4 relating to the Pension Fund investment strategy and deficit position, were increased due to the impact of COVID- 19. Members noted these risks remained at the increased level.

The Head of Pensions was pleased to report that the G5 Risk had been reduced as a result of his appointment.   However, this remained a medium risk due to remaining vacancies in the accounting and investment team.

Members were advised that Risks A/R 1.1 & 1.2 had also been increased from a low to a medium risk.  It was noted that the Pensions Committee had previously agreed an increase in resource for the Pensions Administration Team in response to the introduction of the 2014 CARE scheme. However, since the launch of the 2014 CARE scheme, the administration team now faced dealing with McCloud ruling, the 95k cap, as well as an increased number of employers in the Fund. It was explained that Government were launching a pension’s dashboard initiative, which would also result in additional workload for the team.

The Committee were reminded that Hymans outlined the potential impact of these issues on the administration function in September 2020.  At that meeting, it was also requested that a review of resourcing requirements should be undertaken by the Head of Pensions. It was noted these risks had been increased until this review had been undertaken.  It was proposed that this review would be to brought back to Committee in January 2021, the Committee welcomed this approach. 

A member raised the issue of life expectancy and whether employers would try and promote a late retirement culture, given that life expectancy was decreasing.  Members also wondered if there was any idea nationally about the impacts of  Covid long term, given the number of people who could potential contract the virus before the vaccine is widely available.   

The Head of Pensions explained that Club Vita would be undertaking an analysis in terms of life expectancy.  He expected that would be reflected in the assumptions that contribute to the next valuation in 2022.  It was suggested that some good analysis could be provided that was bespoke to the members of the Gloucestershire Pension Fund.  The Head of Pensions agreed to take this point away and review the data available and an update would be provided at a future meeting or via a briefing note. 

In response to a question, it was noted that the Fund had previously purchased Fund level ill-health insurance, so in cases of  ...  view the full minutes text for item 36.

The Committee is asked to note the report.

The Head of Pensions presented an overview of market valuations and an update on the performance of the Fund , as at 30 September 2020.

Members noted that by the end of Quarter 3 the market value of the fund grown by £271m in the quarter, to £2.649bn. It was reported that performance for the fund for the quarter was 2.6%, and the benchmark was 1.5%, therefore the fund had outperformed the benchmark.  It was reported in terms of the 3 yearly annualised returns, the fund was 0.2% behind benchmark at 5%. 

During the discussion, it was noted that during the period to 30 September, the transition to the Brunel Diversifying Returns Fund (DRF) and Sustainable Equity portfolios had commenced.

Members were advised there had been a strong performance from the Global High Alpha portfolio at 19.2% since its inception in November 2019, 13.2% ahead of the benchmark. In response to a question, it was noted that the key driver of this performance was one of the underlying fund managers holding a highly concentrated portfolio.

The Committee were informed that the Fund was holding a higher level of cash than usual, this was due to the fact that some employers had paid their secondary rate contributions in April 2020 in advance.

The Committee felt the Brunel quarterly performance report could be simplified to a two-page summary, which focused on most the salient points.  The Head of Pensions explained he would be working with Brunel to improve the performance report.

It was noted that the Independent Advisor would look at the performance in more detail during his report

Resolved

That the Committee noted the market value and quarterly performance of the Gloucestershire Pension Fund as at 30^th September 2020

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 25th September 2020.

The exempt minutes of the meeting held on the 25^TH September 2020 were approved as a correct record and signed by the Chairman. 

Resolved

That the exempt minutes of the meeting held on the 25^th September 2020 be approved as a correct record.

The Head of the Pensions Fund presented the report in detail. 

Resolved

That the Committee approved the Officer’s recommendation. 

The Committee is asked to note the report.

Independent Advisor, John Arthur, provided members with an update on current investments.   The Committee were referred to the detailed Performance and Executive Summaries contained within the report.  

Resolved

That the report be noted and that Committee approved the Officer’s recommendations