Agenda item

The Committee is asked to note the funding, investment position and governance activities.

The Head of Pensions presented the report which summarised the Fund’s funding position, market value, asset allocation, investment performance for the quarter ending 30 June 2022.

Members noted that by the end of the quarter to 30 June 2022, the Fund’s total market value had decreased by £181.909m, to £2,924.184m and over the quarter, total Fund assets produced a negative return of -5.9%, compared to a target of -5.4%, underperforming the strategic benchmark by 0.5%. It was reported that performance over the 3 years to 30 June 2022 was 4.7% annualised slightly behind the benchmark by 0.6%.  Despite the decrease the fund was still regarded to be in a healthy position. 

The Committee noted that the Government had launched their consultation on Governance and Reporting of climate risks, which followed the Taskforce for Climate-related Financial Disclosures (TCFD) framework, which would require administering authorities to consider and report against the four key areas of governance, strategy, risk management and targets.  Members were advised that a training day would be held at the before the consultation deadline to allow the fund to respond. 

The Head of Pensions informed Committee that the Administration Key Performance Indicator's (KPI's) were not where he wanted them to be.  The KPIs had been impacted by the triennial valuation which had taken up considerable time and resources.  However, as the triennial valuation was a critical part of governance process and given the efforts of the team, they were ahead of the timetable and were working with all employers of the fund.  He reiterated there were currently no breaches of the statutory requirements.   

The Head of Pensions explained that two new Pensions Officers had been appointed and would be in post in the near future. There were another 4 Pension Officer posts to be recruited to.  In addition, the recruitment process for a new Pension Administration Manager was underway, which would build more resilience into the team as a whole.  The Committee were informed that recruiting across the entire LGPS sector remained a challenge as the volume of membership increased as did the complexities of peoples circumstances.  The Head of Pension would continue to undertake a review of the processes, with the new Pension Administration Manager, when appointed, to see how things could be improved through efficiencies or through the use of IT systems. 

Member were advised that the LGPS National Knowledge assessment would be sent to them via email for completion and they were urged to complete the assessment as soon as possible. 

Members raised concerns regarding the Pension Fund Administration performance figure of 90%, they felt this figure was unrealistic as it hadn’t been achieved for a considerable time.  The Committee requested a strategic action plan in order to clearly understand the issues affecting the KPI's. 

The Head of Pensions reiterated the KPI's weren't where he personally wanted them to be either but many of the issues were systemic as the team had been under resourced for a long period of time and had not kept pace with service change.  Although he appreciated the need to understand the reasons.  He acknowledged the complexity of the fund and the increased requests, which had been hampered by IT resources.  

The Head of Pensions reiterated that the service had been under resourced for a considerable amount of time and it would undoubtedly take time to bring in staffing resources as individual’s knowledge needed to be built upon as it was a complex area of work.  He advised the committee that the issues could not be immediately resolved just by appointing new staff as it would take 6 to 12 months for these additional resources being in a position to aide improvement due to the training and upskilling required.  He has already commissioned Hymans to assist in the training plan for new recruits as well as support staff, in order to repair the long term issues. 

Some members felt the targets were meaningless and should be realistic in terms of what could be achieved, in order to hold those responsible to account. 

In response to a question, members were informed that the team morale was good as the team could see additional resources were finally being put in place to support them and that they are continuing to receive the support of Committee. Many dedicated staff had been working overtime to provide continuity of service in these challenging times.  

The Committee were disappointed with the poor investment performance of the fund and referred to page 27 of the report.  The Independent Advisor (IA) explained that the main issue of underperformance of the majority of managers was due to the unusual market situation and the impact of the Responsible Investment ethos of the partnership.  He recognised the invasion of Ukraine had affected the quarterly performance figures and all commodities across the board.  Overall the IA felt Brunel's approach remains appropriate in the current climate.   

Resolved

That the Committee noted the funding and investment position and governance activities as at 30 June 2022.