For debate and decision. To consider the recommendation from the Pension Committee to be held on 2 December 2016.
Exclusion of the press and the public
Please note that if any exempt matters are raised during the debate (for example relating to the detailed business case and risk register), the following motion to exclude the press and public will need to be moved and seconded:
In accordance with Section 100A(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 paragraphs 3 and 5 of Part 1 of Schedule 12A to the Act and the public interest in withholding the information outweighs the public interest in disclosing the information to the public.
Cllr Ray Theodoulou, Chairman of the Pensions Committee, presented the report and the recommendations from the meeting of the committee held on 2 December 2016. He explained that the Government believed that investment costs could be reduced by bringing local government pension funds together. The Pensions Committee had approved the business case for pooling funds and it was intended that the Brunel Pension Partnership would become operational in March 2018. The partnership would bring 10 pension funds together but each local authority would still have responsibility for the strategic allocation of funding.
It was noted that the whole process was under Government guidance and if the Council did not join the Brunel Pension Partnership, the Government would direct the Council towards joining another pool. The advantage of joining the Brunel Pension Partnership was that the Council was able to influence how it was set up and managed.
Answering questions, Cllr Theodoulou explained that the Brunel Pension Partnership was expected to have 22 individual investment funds. There would be opportunities to invest in ethical funds if the Pensions Committee believed that to be the right approach. He said that he did not expect to see an increase in investment charges as a result of pooling and early indications were that firms would be reducing their fees.
Cllr Nigel Moor, a member of the Pensions Board, thanked Cllr Theodoulou and the officers who had been closely involved in the process. He said that he was confident that Gloucestershire was in a good position to influence how the Brunel Pension Partnership was set up.
Members of the Pensions Committee thanked officers for all the work they had undertaken over recent months. They noted that the Gloucestershire Pension Fund was well managed and paid significantly less in fees compared to other local authority pension funds. The Gloucestershire fund, however, had to join a pool along with other pension funds. They believed that joining the Brunel Pension Partnership was the best option on the table as the Council had an early opportunity to influence how it was managed. They noted that pensions’ administration would continue to be run from Shire Hall. Allocation of funds remained of critical importance with just a 1% difference in performance each year equivalent to £20 million.
Some members were concerned that the reduction in the number of funds might result in a lack of competition and higher costs in future.
Five members abstained from the vote.
a) The Brunel Pension Partnership investment pool be developed, funded and implemented substantially in accordance with the terms and provisions described in the said business case, and more particularly that:
o An FCA regulated company to be named Brunel Pension Partnership Limited be established and operated with all necessary and appropriate arrangements as to its ownership, structure, governance and services capability.
o A new supervisory body comprising representatives of the Council and all other participants in the Brunel Pension Partnership be established to ensure oversight of the Council’s investment and participation in the Brunel Pension Partnership.
b) The Pensions Committee be authorised and granted delegated powers to undertake such tasks as it thinks appropriate to progress implementation of investment pooling, and to take such decisions and do all other things deemed necessary in order to promote the interests of the Council with respect to pooling, which without limitation shall include agreeing and authorising any documentation, contracts, terms of reference, financial expenditure or investment that may be required consequential upon the Council's participation in the Brunel Pension Partnership.
c) The Director of Strategic Finance and the Head of Legal Services be similarly authorised and granted delegated powers to undertake such tasks to progress implementation of investment pooling, and to take such decisions and do all things deemed necessary in order to support the Pensions Committee and to promote the interests of the Council with respect to pooling.
d) Subject to the above, all such matters be carried out with the aim of achieving a target date for investment pooling of 1 April 2018, and otherwise subject to such intermediate steps and timescales as may be considered appropriate and necessary by the Pensions Committee.