The Board is asked to note the report.
The Head of Pensions explained the report summarised the Fund’s financial position and operational activities for the quarter ending 30 September 2021. The Board were advised that the report was in effect a review of the outcomes of the previous quarter and beyond. It was noted that the report had been presented to the Pension Committee.
The report also contained information on relevant recommendations which were tabled and agreed by Committee at its December meeting.
It was reported that overall the Fund remained in a healthy position, and that the assets outweighed the liabilities and the Fund was still valued in excess of £3bn. In terms of the next valuation cycle, it was noted that the actuary expected that the return on assets to be slightly reduced going forward to 4.1%.
Members were advised that final transition of the Funds fixed interest allocations to Sterling Corporate Bonds and Multi-Asset Credit had completed to the Brunel Portfolios during the quarter.
The Board were advised of the review of low carbon passive and smart beta allocations, as requested by the Pension Committee. The reviews were requested in response to the launch of the Paris Aligned Benchmark, in addition a report was provided to the Committee from the Independent Advisor and a presentation from David Vickers (CIO), Brunel Pension Partnership.
It was noted that the Committee had agreed an allocation to the Paris Aligned Benchmark, as well as increases to the strategic allocations to Global High Alpha and Sustainable Equities portfolios which encapsulated all of the current exposures to the low carbon and the smart beta portfolios. As a result the Committee updated and approved its new Investment strategy statement, which was provided to the Board as part of the agenda pack.
In terms of engagement statistics the committee received reports detailing the activity that was being undertaken on their behalf by Hermes EOS. It was noted that an annual report of our stewardship outcomes that Brunel provided would be presented to the March Pension Committee and would also be presented to the next Pension Board meeting in April 2022.
In terms of fund administration it was explained that the service was maintaining the current working practices, however it was recognised that these may change subject to Government advice. Members were advised that staff were still working in an enforced Covid environment. The Head of Pensions informed Members there was an increased level of activities especially in the area of retirements and that the Fund would potentially see the highest volume of retirements in any given year.
The Head of Pensions anticipated that performance indicators would improve as the figures were reported on a calendar year cumulative basis, he expected to see an improvement as during the course of the year staff had been redeployed in the first two quarters, to assist in the production of the benefit statements and processing the year end returns.
It was noted that in terms of the McCloud ruling and the 95K Cap funds, officers were awaiting further guidance in light of the consultation process, so the risk had remained at amber at this stage.
The Board were advised that in terms of the Governance Review, a work plan had been devised and many of the statutory policies had been reviewed to ensure compliance.
In response to a question relating to the SLA’s for the administration and internal targets, a member wished to know if there were any published SLA external targets. The Head of Pensions explained that there weren’t any external targets, only statutory targets in terms of compliance. It was noted that the Committee and the Board viewed performance against the same internal targets. It was recognised there were statutory requirements and if not achieved these would have to be reported as breaches and non compliance in terms of activity.
Members wished to know if there was any reason why the statutory targets aren't included on the same reports. The Head of Pensions explained it was purely historical and there was no particular reason why it hadn’t been included. The Board felt as their role was to ensure the committee were meeting their statutory responsibilities and felt this should be reviewed.
The Head of Pensions agreed that where the statutory requirement existed, it could be included within the report. Members welcomed this approach, as it added a degree of comfort and the fact there are no breaches were being reported consolidated the point.
That Board noted the report and agreed that the statutory requirement be included where appropriate.