Agenda and minutes

Cumbria Pensions Committee - Thursday, 7th March, 2019 9.30 am

Venue: Cumbria House, Carlisle

Contact: Nicola Harrison  Email: nicola.harrison@cumbria.gov.uk

Items
No. Item

131.

APOLOGIES FOR ABSENCE

To receive any apologies for absence.

Minutes:

Mr Worth, Chair of the Committee handed over Chairmanship of the Committee to the Vice Chair, Mr N Marriner.

 

Mr Marriner in the Chair.

 

Apologies for absence were received from Mr J Airey.

132.

terms of Reference and Membership

To note the Terms of Reference and membership of the Committee

Minutes:

Mrs Carrick replaced Mr Airey as a member of the Committee for this meeting only.

 

The Terms of Reference of the Committee was noted.

133.

DISCLOSURES OF INTEREST

Members are invited to disclose any disclosable pecuniary interest they have in any item on the agenda which comprises

 

1          Details of any employment, office, trade, profession or vocation carried on for            profit or gain.

 

2          Details of any payment or provision of any other financial benefit (other than from the authority) made or provided within the relevant period in respect of any expenses incurred by you in carrying out duties as a member, or towards your election expenses.  (This includes any payment or financial benefit from a trade union within the meaning of the Trade Union and Labour Relations (Consolidation) Act 1992.

 

3          Details of any contract which is made between you (or a body in which you have a beneficial interest) and the authority

 

(a)       Under which goods or services are to be provided or works are to be executed; and

 

            (b)       Which has not been fully discharged.

 

4          Details of any beneficial interest in land which is within the area of the authority. 

 

5          Details of any licence (alone or jointly with others) to occupy land in the area of the authority for a month or longer. 

 

6          Details of any tenancy where (to your knowledge)

 

            (a)       The landlord is the authority; and

 

            (b)       The tenant is a body in which you have a beneficial                                                         interest.

 

7          Details of any beneficial interest in securities of a body where

 

(a)       That body (to your knowledge) has a place of business or land in the    area of the authority; and

 

 

(b)       Either –

 

(i)      The total nominal value of the securities exceeds £25,000 or one            hundredth of the total issued share capital of that body; or

 

(ii)     If that share capital of that body is of more than one class, the total nominal value of the shares of any one class in which the relevant person has a beneficial interest exceeds one hundredth of the total issued share capital of that class.

In addition, you must also disclose other non-pecuniary interests set out in the Code of Conduct where these have not already been registered.

 

Note

 

A “disclosable pecuniary interest” is an interest of a councillor or their partner (which means spouse or civil partner, a person with whom they are living as husband or wife, or a person with whom they are living as if they are civil partners).

Minutes:

Mr K McDonald disclosed that members of his family are members of the Local Government Pension Scheme.

 

Ms G Troughton disclosed that she is a deferred member of the Local Government Pension Scheme.

 

134.

EXCLUSION OF PRESS AND PUBLIC

To consider whether there are any items on the agenda for which the press and public should be excluded.

Minutes:

RESOLVED that, the press and public be excluded from the meeting during consideration of the following reports as they contain exempt information relating the financial or business affairs of any particular person (including the authority holding that information) by virtue of Paragraph 3 of Part 1 of Schedule 12A of the Local Government Act 1972:

 

Agenda item 16. Consultation on Draft Statutory Guidance on LGPS asset Pooling

 

Agenda item 17. Presentation – Border to Coast Update

 

Agenda item 18. Update on Developments with Border to Coast - Part 2

 

Agenda item 19. Draft Pensions Budget 2019/20 (Part 2)

 

Agenda item 20. Monitoring Report for the Quarter Ended 31 December 2018 (Part 2)

 

Agenda item 21. Verbal Update: Emerging Issues

 

Agenda item 22. Cumbria LGPS Investment Sub Group Activity Report to February 2019

 

Agenda item 23. Closing Comments

135.

MINUTES pdf icon PDF 307 KB

To confirm as a correct record the minutes of the Cumbria Pensions Committee held on 10 December 2018

Minutes:

Mrs Wall to be added to the list of Apologies.

 

RESOLVED that, subject to the addition above, the Minutes of the meeting held on 10 December 2018 be approved as a correct record.

136.

REPRESENTATION FROM NON COUNTY COUNCIL EMPLOYERS AND DISTRICT COUNCILS

This is a standing item.  To receive concerns, queries and comments from the Cumbria Pensions Board, scheme employees, including the public.

Minutes:

There were no representations made to this meeting of the Cumbria Pensions Committee.

137.

SCHEDULE OF FUTURE MEETINGS pdf icon PDF 137 KB

To receive for information a schedule of future meetings of the Cumbria Pensions Committee

Minutes:

Members noted a change of date to the Cumbria LGPS Investment Sub Group from 23 May to 21 May 2019.

 

The Schedule of Future meetings that had been published with the Agenda was noted.

138.

Minutes of Cumbria LGPS Local Pension Board meeting held on 31 January 2019 pdf icon PDF 253 KB

To note the minutes of the Cumbria LGPS Board meeting held on 31 January 2019

Minutes:

The Committee received the Minutes of the Cumbria LGPS Local Pension Board meeting held on Thursday 31 January 2019 which outlined the business conducted at the meeting.

 

The Board was advised on its revised Terms of Reference relating to Substitute members and were provided with a review of the decisions made by the Cumbria Pensions Committee at its meeting on 10 December 2018. Board members had also received a report from the Director of Finance regarding the Cumbria Pension Fund Risk Register. This advised of the refresh to the Register following consideration by the Board on the risks most critical to the Fund. New risks were reported.

 

Compliance with the Pension Regulator’s Code of Practice No 14 was considered, with Board members welcoming that officers were identifying and dealing with any issues raised.

 

The Data Review and Data Improvement Plan was considered. The Board was informed of the Fund’s commitment to improving pending leaver information and learned that the Fund would be employing a data tracing agency to verify correct addresses of all deferred members. Regular updates to members would be provided by officers.

 

An update was provided on a number of Pension Administration matters including the service provided and monitoring of YPS, employer issues and the measures taken to mitigate them.

 

Members were advised of the Consultation on Draft Statutory Guidance on Asset Pooling. The potential impact of the statutory guidance was reported along with the draft comments to be included in the response to the consultation.

 

A verbal report was received from the Chair of the Board on her visit in December 2018 to a Northumberland Local Pension Board meeting. Learning gained at the meeting may be applied to the Cumbria Board to enhance the operation of the Cumbria Board at future meetings.

 

RESOLVED that the Minutes of the Cumbria LGPS Local Pensions Board meeting held on 31 January 2019 be received

139.

minutes of the BCPP Joint Committee meeting held on 21 November 2018 pdf icon PDF 136 KB

To note the minutes of the BCPP Joint Committee meeting held on 21 November 2018

Minutes:

The Minutes of the BCPP Joint Committee meeting held on 21 November 2018 were presented by the Chair of the Cumbria Pensions Committee.

 

The business conducted at the meeting included Scheme Member representation, the Joint Committee Budget, a review of the Committee’s Terms of Reference, the Responsible Investment Policies Review, Feedback on National Working Groups, the Border to Coast CEO project update, the launch of the ACS Global Equity Alpha Fund and the Border to Coast Budget and Business Plan.

 

The Chair reminded members of the discussion at the previous Pensions Committee meeting regarding the co-option of a non-voting Member of the Joint Committee. He advised that one Scheme member representative had been co-opted as an observer of the Joint Committee.

 

Since the Minutes of the BCPP Joint Committee had been circulated, one of the two Non-Executive shareholder directors had resigned. It was noted that concerns relating to conflicts of interest had been raised and that Partner Funds would take legal advice on the matter. This may have implications for the position of Non-Executive Directors. Members would await the outcome of legal advice with interest.

 

A member reported on his attendance at a Pensions conference where he had had a discussion about the BCPP proposed Responsible Investment Policy which had been discussed at the previous Pensions Committee meeting. He  still had concerns about some aspects of the responsible investment policy as outlined at the previous meeting.

 

RESOLVED that the minutes of the BCPP Joint Committee meeting held on 21 November 2018 be received

140.

Update on Developments with Border to Coast (Part 1 Items) pdf icon PDF 218 KB

To consider a report from the Director of Finance (Section 151 Officer).

 

Minutes:

A report was considered from the Director of Finance (s151 Officer) which gave an update on the Developments with Border to Coast Pensions Partnership Ltd (Border to Coast). This included governance matters, the development of investments sub funds by Border to Coast and the due diligence work undertaken by Officers and the Independent Advisers on those sub funds. Key developments were also reported.

 

The Senior Manager - Pensions and Financial Services reported on staffing changes at Border to Coast. She expressed disappointment that one of the two Client Relationship Managers (CRMs) had resigned, however, the Chief Executive of the company had confirmed that alternative arrangements had been put in place. The remaining CRM would work with all twelve Partner Funds and graduates would be recruited into the company to support the CRM in this role.

 

It was noted that the former Teeside Head of Pensions, Paul Campbell had now joined the company as Property Portfolio Manager and was working with Partner Funds on developing the pool’s approach to property. The Investment Advisor expressed concern about commencing work in this area at this time given the volume of activity currently underway and the impact this additional work may have on the Cumbria LGPS Fund. The Senior Manager - Pensions and Financial Services had contacted Border to Coast on this matter to note that Cumbria and two other Partner Funds already had similar approaches to direct property and that it may be beneficial to initially focus on work with the other nine Partner Funds to ascertain their requirements.

 

The Senior Manager - Pensions and Financial Services explained the Border to Coast UK Stewardship Code Compliance Statement and highlighted this was now published on the Border to Coast website and was consistent with County Council policies. A member expressed her concern that the Compliance Statement had not been considered by the Committee and that it should have had sight of it before it was made public. The Senior Manager - Pensions and Financial Services stated that this would be brought to the attention of Border to Coast.

 

Members of the Committee congratulated the Chair of the Cumbria LGPS Pension Board, Deirdre Burnet on her appointment as a scheme member representative substitute member on the Joint Committee.

 

RESOLVED that progress on the development of Border to Coast be noted

141.

MONITORING REPORT FOR THE QUARTER ENDED 31ST DECEMBER 2018 - PART 1 pdf icon PDF 384 KB

To consider a report from the Director of Finance (Section 151 Officer).

 

Additional documents:

Minutes:

A report was considered from the Director of Finance (s151 Officer) which was a monitoring report for the quarter ended 31 December 2018. This advised on material risk, investment performance, governance and policy issues of the Fund for the quarter ending 31 December 2018. It also identified any governance issues or national regulatory changes and outlined the performance of the whole portfolio and movement on liabilities over the same period.

 

The Group Finance Manager - Pensions Investments and Insurance reported that there had been no update to the scores within the Risk Register but the narrative had been updated. He was pleased to report that the performance of Your Pensions Service (YPS) had improved and was now back to that before its restructure however, due to concerns of its quality of work, the risk had not been de-escalated. There had been a reduction in the number of complaints received. Planning for all outcomes was taking place relating to preparation for the UK leaving the EU, with YPS stating the same service would be delivered whatever the outcome.

 

It was noted that the fall in the Fund’s asset value had reduced over the past quarter, however long term performance remained above the benchmark. The quarterly review of governance by the Pensions Committee which included class actions, shareholder voting and Global Tax Recovery was noted.

 

The Group Finance Manager – Pensions, Investments and Insurance advised on the Pensions Regulator Cohort Review. Five meetings had been held from which feedback was being received and an Action Plan was being drafted. There would be a report to Committee on this matter at a future meeting.

 

A member queried YPS’s performance reporting. The length of time people were waiting for payment was questioned and whether a small number of people were waiting a long time for payment. The 10 day response time to correspondence was also queried; did this mean resolution of the query or was it a thank you letter and the query was dealt with later. In sharing the member’s concerns of the increase in payment time, the Group Finance Manager - Pensions Investments and Insurance reassured the Committee that there was a quarterly report on those cases not paid after 100 days and the reasons why but that the 10 day response time would be confirmed with YPS. He advised that some people had waited a significant period of time or payment but that there were cogent reasons for this. The GMB representative explained he had experience of both scheme members and employers waiting a long time. The Chair queried whether late payment was due to scheme members or employers.

 

Another member asked whether there was a difference in performance figures between deferred and active members receiving their pension and if there was a difference in performance figures between County Council employees and those employed by other employers. A member  asked if there was a difference in performance between putting deferred members and active members into pension. The Group Finance Manager –  ...  view the full minutes text for item 141.

142.

DRAFT PENSIONS BUSINESS PLAN AND ADMINISTRATION BUDGET 2019/20 pdf icon PDF 462 KB

To consider a report from the Director of Finance (Section 151 Officer).

 

Minutes:

A report was considered from the Director of Finance (s151 Officer) regarding the Draft Pensions Business Plan and Administration Budget 2019/20. The report set out the Draft Business Plan for 2019/20 setting out the Pension Fund’s proposed work plan for the year and the Draft Budget 2019/20 required to deliver the proposed Business Plan for the Cumbria Local Government Pension Scheme (the Fund).

 

The Senior Manager - Pensions and Financial Services advised that the Fund expected to face a series of external pressures and on-going challenges in 2019/20. The Business Plan was assisting with identifying those pressures. Members’ attention was drawn to the key objectives of the Draft Business Plan 2019/20. Also highlighted was the reduction in the total proposed cost of administering the Fund, there were no proposed amendments to the staffing structure, membership within the scheme had increased, Actuarial fees had increased and Shareholder voting costs had reduced.

 

In considering the proposed Business Plan for 2019/20, a member asked when the proposed work in relation to the negative cash flow of the Fund would be undertaken. The Senior Manager – Pensions and Financial Services confirmed that this work would form part of the Investment Strategy Review which would commence shortly and be completed following the 2019 valuation.

 

The Director of Finance summarised the costs of the Fund and its performance and noted the the benefits of having both the Cabinet Member and Shadow Portfolio Holder for Finance on the Pensions Committee. She commented on the work of the Pensions Team on significant contracts and the transparency and accountability of this work. She welcomed the improving dialogue with YPS in order for the Committee to have an overview of its work.

 

It was queried whether the Fund management fees had reduced due to the work on Border to Coast and if they would continually reduce. The Senior Manager - Pensions and Financial Services advised that this was not the case as there would always be some level of cost to managing investments. She confirmed however, that pooling should help minimise costs where possible but the key focus should be on net of costs performance rather than the costs alone.

 

RESOLVED that

 

1             The Draft Business Plan for 2019/20 be approved

2             The draft budget required to administer the Cumbria LGPS of £6.451m for 2019/20 (which has been constructed in support of the activities outlined in the Draft Business Plan) be approved

143.

PREPARATIONS FOR 2019 TRIENNIAL VALUATION pdf icon PDF 205 KB

To consider a report from the Director of Finance (Section 151 Officer).

 

Minutes:

A report was considered from the Director of Finance (s151 Officer) regarding the preparations for the 2019 Triennial Valuation. The report advised that as the Administering Authority for the Cumbria Local Government Pension Scheme, Cumbria County Council is responsible for the administration of the Cumbria Fund on behalf of 127 scheduled and admitted bodies. Responsibility included the requirement to obtain an actuarial valuation of assets and liabilities of the Fund on a triennial basis by a recognised qualified professional.

 

The Group Finance Manager - Pensions Investments and Insurance advised that the next valuation would be on 31 March 2019. The timeframe of activities in preparation for and completion of the triennial valuation was reported.

 

The Senior Manager - Pensions and Financial Services talked about the work undertaken to date by Mercer Ltd as the Fund’s Actuary and on the importance of data quality work. An Investment Advisor indicated that there was a link between the valuation and the Investment Strategy and requested that the Advisors be included in discussions.

 

RESOLVED that progress made in preparing the Fund for the 2019 Triennial Valuation be noted

144.

CUMBRIA LGPS DATA QUALITY REVIEW pdf icon PDF 374 KB

To consider a report from the Director of Finance (Section 151 Officer).

 

Minutes:

A report was considered from the Director of Finance (s151 Officer) regarding the Cumbria LGPS Data Quality Review. The report advised that Your Pension Service carried out a review in October 2018 to specifically look at items that the Pension Regulator referred to as ‘common and specific data’ and the assessment indicated over 99% was present and accurate. The report provided an update on the actions being undertaken to further improve the quality of data across the Fund.

 

The Group Finance Manager – Pensions, Investments and Insurance guided members through the report highlighting that the Fund was of a good standard but officers strived for excellence. The term ‘Pending Leavers’ was explained and the work undertaken in this area was reported. Similar work by employers was recognised, as was the work undertaken with the National Fraud Initiative to ensure that the correct payments were made to estates or nominated individuals. 25 cases of pension overpayment had been identified and all cases had been resolved within 6 months.

 

Since the report was published, a contract had been signed with a company who would trace the whole deferred member cohort’s addresses.

 

Officers had undertaken a review of the most common pensions letters with Dr Haraldsen of the Cumbria Pensions Committee and Mrs Burnet of the Cumbria LGPS Pension Board and feedback would be provided to YPS in due course. A review of other pensions letters would take place with the same members providing a critical eye on their content.

 

RESOLVED that progress towards further improving the quality of data held by the Fund be noted

145.

CUMBRIA LOCAL GOVERNMENT PENSION SCHEME FUND POLICY DOCUMENT ANNUAL REVIEW pdf icon PDF 228 KB

To consider a report from the Director of Finance (Section 151 Officer).

 

Additional documents:

Minutes:

A report was considered from the Director of Finance (s151 Officer) regarding the Cumbria LGPS Fund policy document annual review. Members were advised that the report incorporated all changes to existing policies to reflect current circumstances and regulation changes in 2018/19. During the year, two substantive changes had been made to the policies in the Fund Policy document.

 

The Finance Manager - Pensions, Investment and Governance reported on the substantive amendments made to the Fund’s Policy document during the year and details of the proposed changes for this annual review. Minor amendments to the Investment Strategy Statement to reflect updated information were reported. As discussed earlier in the meeting, a change to lower the limit to £500 on submissions to the Death Grant Panel was also reported.

 

Additions to the Training Policy and Plan following completion of the current year’s training needs assessment were outlined. Members’ attention was drawn to the new Internal Control and Risk Management Policy which had been introduced to document the structure of internal controls and risk management that already exists within the Fund.

 

 

RESOLVED that

 

1             Minor amendments made throughout the Fund Policy Document be noted and approved

2             The updated Training Policy and 2019/20 Training Plan be approved

3             The Fund’s new policy on Internal controls and Risk Management be approved

 

The meeting adjourned at 11.00am and reconvened at 11.10am

146.

CONSULTATION ON DRAFT STATUTORY GUIDANCE ON LGPS ASSET POOLING

To consider a report from the Director of Finance (Section 151 Officer).

 

Minutes:

A report was considered from the Director of Finance (s151 Officer) regarding the consultation on the Draft Statutory Guidance on LGPS Asset Pooling.

 

Members considered the proposed response in detail, carefully considering the options available to the Committee. They were informed about the timescales for response. Detailed member discussion took place on funded schemes, the distance between administering authorities and pension funds, good governance, the responsibility and principles of the Pension Fund and on Fund strategies.

 

RESOLVED that the proposed draft response be agreed

147.

Presentation: Border to Coast Update

To receive an update presentation on Border to Coast from the Chief Investment Officer

Minutes:

A presentation was received from Border to Coast Pensions Partnership Ltd on the Cumbria Pension Fund.

 

The presentation covered the following:

·         Funds launched to date

·         Future Fund launches

·         UK Listed Equity Fund update

·         UK Listed Equity Alpha Transition

·         Global Equity Alpha Fund: Indicative Fund Structure

·         Investment Grade credit

·         Multi Asset credit

·         Inflation linked bonds

·         Current allocation to alternatives

·         Alternative business case: cost savings and investment breadth

·         Private equity

·         Infrastructure

·         Infrastructure sector: risk/return spectrum

·         Objectives and timelines of alternatives structure

 

Members asked a number of detailed questions of Border to Coast and upon conclusion of the presentation, the Chair asked that the message be relayed back that Cumbria wanted to work in a timely manner with Border to Coast.

 

RESOLVED that the position be noted

148.

UPDATE ON DEVELOPMENTS WITH BORDER TO COAST - PART 2

To consider a report from the Director of Finance (Section 151 Officer).

 

Minutes:

A report was considered from the Director of Finance (s151 Officer) which gave an update on developments with Border to Coast – Part 2.

 

Following careful consideration of the report and taking into account the information presented by the Senior Manager - Pensions and Financial Services, it was

 

RESOLVED that the report be noted

149.

DRAFT PENSIONS BUDGET 2019/20 (PART 2)

To consider a report from the Director of Finance (Section 151 Officer).

 

Minutes:

A report was considered from the Director of Finance (s151 Officer) regarding the Draft Pensions Budget 2019/20 (Part 2). The report provided details of the Fund’s investment management fees budget for 2019/20 and the operational budget for Boarder to Coast Pensions Partnership Ltd for 2019/20.

 

During discussion, members raised a number of issues relating to the strategic development of the Plan and asked that this be fed back to Border to Coast. Following careful consideration of the report and taking into account the information presented by the Senior Manager - Pensions and Financial Services, it was

 

RESOLVED that

 

1             the detailed 2019/20 budget for investment management fees as summarise in the 2019/20 Draft Business Plan and Administrations Budget report presented in the Part 1 section of the meeting be noted

2             the proposed Border to Coast budget for 2019/20 be noted

3             Subject to the concerns expressed on Strategic Development of the Plan, the Chair of the Cumbria Pension Committee be supported in his capacity as the Council’s shareholder representative for the company to vote to approve the Border to Coast Strategic Business Plan for 2019/22 and the operating and project implementation budget for 2019/20

150.

Monitoring report for the quarter ended 31 December 2018 (part 2)

To consider a report from the Director of Finance (Section 151 Officer).

 

Minutes:

A report was considered from the Director of Finance (s151 Officer) regarding the Part 2 monitoring report for the quarter ended 31 December 2018. The report advised on matters considered to be exempt and related to governance or employer issues.

 

Following careful consideration of the report and taking into account the information presented by the Senior Manager - Pensions and Financial Services, it was

 

RESOLVED that the quarterly monitoring report Part 2 items of the Fund for the period to 31 December 2018 be noted

151.

Verbal Update: Emerging Issues

To receive a verbal update on emerging issues

Minutes:

The Committee received a verbal update from the Senior Manager – Pensions and Financial Services on a number of emerging issues pertinent to the work of the Committee which included the good governance survey, the cost management process and the Annual Report.

 

RESOLVED that the position be noted.

152.

CUMBRIA LGPS INVESTMENT SUB GROUP ACTIVITY REPORT TO FEBRUARY 2019

To consider a report from the Director of Finance (Section 151 Officer).

 

Minutes:

A report was considered from the Director of Finance (s151 Officer) regarding the Cumbria LGPS Investment Sub Group Activity Report to February 2019. The report outlined activities since the meeting of the Investment Sub Group held on 20 November 2018, on any decisions made by the Section 151 Officer and the proposed future work schedule in respect of the Investment Sub Group.

 

Following careful consideration of the report and taking into account the information presented by the Senior Manager - Pensions and Financial Services, it was

 

RESOLVED that

 

1             The progress of the Investment Sub Group from November 2018 to February 2019, including the Group’s support for the proposed new investment commitment and the agreement of the Section 151 Officer, under her delegated powers, that the investment decision be enacted be noted

2             The final outcomes of the interim investment strategy ‘sense check’ be noted

3             The performance of the Fund over the quarter, and notes that the corporate bonds portfolio manager will remain ‘on watch’ be noted;

4             The proposed work programme of the Investment Sub Group for the next reporting period, including the short-listing of further investment opportunities be agreed.

 

 

153.

closing comments

To receive closing comments from the Chair

 

Minutes:

The Chair thanked Councillor Gillian Troughton for her long service and her contribution to the Committee, as she would not be standing in the forthcoming Borough Council elections and therefore would be standing down from the Cumbria Pensions Committee.