Agenda and draft minutes

Cumbria Pensions Committee
Friday, 13th March, 2020 9.30 am

Venue: Conference Room A and B, Cumbria House, Carlisle

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

Items
No. Item

69.

APOLOGIES FOR ABSENCE

To receive any apologies for absence.

Minutes:

Apologies for absence were received from Mr J Airey, Mr J Keith and Mr J Mallinson

70.

Terms of Reference and Membership

To note the Terms of Reference of the Committee and any changes to membership.

Minutes:

The Terms of Reference of the Committee were noted.

 

The Chairman advised that Mr M Wilson had replaced Mrs H Wall after she had resigned from the Committee.

71.

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:

There were no disclosures of interest made at the meeting

72.

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 to 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;

 

14.    Draft Pensions Administration Business Plan and Budget 2020/21 (Part 2)

 

15.    Border to Coast Business Plan 2020/22, Budget 2020/21, Capital Requirement and Related Shareholder Resolutions

 

16.    Monitoring Report for the Quarter ended 31 December 2019 - Part 2

 

17.    Multi Asset Credit

 

18.    Presentation – Multi Asset Credit

 

19.    Verbal Update – Emerging Issues

 

20.    Cumbria LGPS Investment Sub Group Activity Report to February 2020

 

21.    Closing Comments

73.

MINUTES pdf icon PDF 104 KB

To confirm as a correct record the minutes of the Cumbria Pensions Committee held on 13 December 2019.

 

Minutes:

RESOLVED that, the minutes of the meeting held on 13 December 2019 be approved and signed as a correct record.

74.

REPRESENTATION FROM NON COUNTY COUNCIL EMPLOYERS AND DISTRICT COUNCILS

This is a standing item.  To receive concerns, queries and comments from non-County Council employers and individual members of the Cumbria Local Government Pension Scheme

Minutes:

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

75.

SCHEDULE OF FUTURE MEETINGS pdf icon PDF 191 KB

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

Minutes:

The schedule of future meetings that had been published with the Agenda was noted.

76.

Minutes of the BCPP Joint Committee pdf icon PDF 185 KB

To note the minutes of the BCPP Joint Committee meeting held on 20 November 2019.

 

Minutes:

The Minutes of the Border to Coast Joint Committee meeting held on 20 November 2019 were received.

 

The Chairman of the Committee reported on the Joint Committee’s budget and the agreement that a consultant may be appointed on an ad hoc basis, if there was a specific collective issue that fell within the remit of the Joint Committee. He advised that there would be a number of workshops on the Responsible Investment Policies including tobacco and reported that a number of Pensions Committees were being lobbied by climate change protest groups.  He noted that engagement remained the pool’s agreed approach to influencing companies, with decisions about when to invest (or not) being taken by their investment managers in accordance with the pool’s policies.

 

A Member questioned the practice of investing in tobacco and the longer term risk / return prospects of those assets. The Chair referred to the slight underperformance of the UK Listed Equity Fund and the reason for this.

 

RESOLVED that, the minutes of the Border to Coast Joint Committee meeting held on 20 November 2019 be received.

77.

Update from Cumbria LGPS Local Pension Board pdf icon PDF 118 KB

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

 

Additional documents:

Minutes:

A report was considered from the Director of Finance (Section 151 Officer) regarding an update from the Cumbria LGPS Local Pension Board (CLPB). The report summarised matters discussed by, issues arising from and any recommendations made by the CLPB at its recent quarterly meeting held on 17 January 2020.

The Vice-Chair of the CLPB highlighted the positive work of the CLPB which included the Cumbria LGPS data review and data improvement and the review of the Action Plan resulting from the Pensions Regulator’s Cohort Review of the LGPS. The Vice-Chair of the CLPB reported that all members of the Board had received cyber security training from Cumbria County Council officers and had undertaken to complete the County Council’s online cyber security training.

RESOLVED that, the update from the Cumbria Local Pension Board be noted.

78.

CUMBRIA LOCAL GOVERNMENT PENSION SCHEME - FUND POLICY DOCUMENT ANNUAL REVIEW pdf icon PDF 122 KB

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

 

Additional documents:

Minutes:

A report was considered from the Director of Finance (Section 151 Officer) regarding the Cumbria Local Government Pension Scheme – Fund Policy Document Annual Review. The report incorporated all changes to existing policies (last published in September 2019) to reflect current circumstances and regulation changes in 2019-20.

TheFinance Manager - Pensions Investments and Governance advised that substantial policy changes had been made to the Investment Strategy Statement and the Training Policy and 2020/21 Training Plan which meant those policies had been shown without highlighting to allow for a full review. In addition, an updated Appendix A4 Investment Strategy Statement was tabled at the meeting highlighting a small number of minor changes which had been made to the document since it had been published with the Agenda. It was noted that policies could be subject to change throughout the year.

Following a member query about the transfer of a new body into the Fund, the Finance Manager – Pensions confirmed that if Fund members transferred to a contractor they could remain in the Fund but the contractor was obliged to sign an Admissions Agreement.

RESOLVED that, the Committee

1             Approves the changes to the Fund’s Investment Strategy Statement;

2             Approves the updated Training Policy and 2020/21 Training Plan; and

3             Notes and approves the other minor amendments made throughout the Fund Policy Document.

79.

MONITORING REPORT FOR THE QUARTER ENDED 31 DECEMBER 2019 - PART 1 pdf icon PDF 182 KB

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

 

Additional documents:

Minutes:

A monitoring report was considered from the Director of Finance (Section 151 Officer) for the quarter ended 31 December 2019 – Part 1. The report advised Members of any material risk, administration, investment performance, governance, and policy issues of the Fund for the quarter ending 31 December 2019. The report also identified any governance issues or national regulatory changes and outlined the performance of the whole portfolio and movement on liabilities over that period.

The Finance Manager - Pensions Investments and Governance highlighted changes to the Risk Register; 2 new risks added (Scam Detection and Prevention and Availability of Investment Opportunities), 2 removed (Cash Flow of the Fund and Flexibility of Investments) and 1 score had changed (Pensions Administration Processes). Explanations for the changes were reported to the Committee.

Members were informed that YPS’s performance level had improved, and for five successive quarters to date had been at or above the target performance levels, but remained under review. It was reported that the number of days to enter into pension had increased however; this may be to do with complex cases rather than YPS’ performance. Members were advised that there had been two new applications for admission into the Fund in the quarter with members being recommended to approve these.

An explanation was provided for the fall in Fund value of £48m and a summary was given of the performance against the Fund’s benchmark for 1, 3, 5 and 10 years. It was reported that the Fund would be working with the Actuary to develop its exit credit policy which would then be consulted upon and reported to the June 2020 committee meeting.

A member welcomed that scam detection and prevention had been included in the Risk Register and asked if the Fund or the member bore the cost of the scam and if there had been a scamming incident. The Finance Manager – Pensions advised that the Fund had not been involved in a scamming incident.

A member raised whether, in relation to risk 3.2 ‘Availability of Investment opportunities’, it should be reflected in the Risk Register that there was an option to not pool assets should Border to Coast not offer suitable sub funds to enable the Investment Strategy to be implemented in a timely manner. The Senior Manager - Pensions and Financial Services advised that officers would review this as an addition to the Risk Register.

A short discussion took place on whether scams were reported nationally. It was noted that this was reported at Pensions Officers’ groups and escalated if necessary. It was highlighted that a central register of scammers would be useful. The Senior Manager - Pensions and Financial Services explained that this was already in place.

Discussion took place on YPS performance target for members receiving a response in 10 days, in writing. This was considered to be an acknowledgement rather than a resolution and the wording should be changed. The Senior Manager - Pensions and Financial Services agreed with this and stated that  ...  view the full minutes text for item 79.

80.

PROGRESS OF TRIENNIAL ACTUARIAL VALUATION 2019 pdf icon PDF 133 KB

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

 

Minutes:

A report was considered from the Director of Finance (Section 151 Officer) regarding the progress of the Triennial Actuarial Valuation 2019. The report provided Members with an update to the progress on the 2019 Triennial Actuarial Valuation of the Cumbria LGPS.

The Senior Manager - Pensions and Financial Services reported that work was being completed in line with the Actuarial Valuation timetable and explained that as agreed, no explicit allowance had been made in the Actuarial Valuation for the potential additional liabilities arising from the rectification of the McCloud case.

A member highlighted that the Actuarial Valuation involved a lot of assumptions and asked if there were officers who could ascertain if the assumptions were correct. The Senior Manager - Pensions and Financial Services explained about assumptions and how figures were based on data and were not expected to be absolutely correct, rather it was a judgement and the valuation provided an indication of expectations.

RESOLVED that, the Committee notes that the 2019 actuarial valuation is progressing in accordance with the timetable required to complete the valuation process within the regulatory requirements

81.

DRAFT PENSIONS ADMINISTRATION BUSINESS PLAN AND BUDGET 2020/21 pdf icon PDF 214 KB

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

 

Minutes:

A report was considered from the Director of Finance (Section 151 Officer) regarding the Draft Pensions Administration Business Plan and Budget 2020/21. The report advised Members of the Draft Business Plan for 2020/21 setting out the Pension Fund’s proposed work plan for the year and the Draft Budget 2020/21 required to deliver the proposed Business Plan for the Cumbria Local Government Pension Scheme (the Fund).

The Senior Manager - Pensions and Financial Services reported on the key objectives in the Business Plan for 2020/21 highlighting that as yet, it was unknown what the remedy would be for the McCloud case, but acknowledged that it would generate a significant increase in workload. She reported on the work of the team and the work of the LGPS Pension Board with employers on data quality. Work on investment management and the Investment Strategy was highlighted.

Members were informed of the work on oversight and governance led by the Finance Manager - Pensions Investments and Governance and of the Draft Budget for 2020/21. Reasons for the decrease of the proposed cost of administering the Fund were outlined.

RESOLVED that, the Committee approves:

 

1             The draft Business Plan for 2020/21.

2             The draft budget required to administer the Cumbria LGPS of £6.037m for 2020/21 (which has been constructed in support of the activities outlined in the Draft Business Plan).

82.

DRAFT PENSIONS ADMINISTRATION BUSINESS PLAN AND BUDGET 2020/21 (PART 2)

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

 

Minutes:

A report was considered from the Director of Finance (Section 151 Officer) regarding the Draft Pensions Administration Business Plan and Budget 2020/21 (Part 2). The report provided details of the Fund’s investment management fees budget for 2020/21, which, due to their confidential nature, were not reported publically.

 

The Senior Manager - Pensions and Financial Services reported on investment management costs, the YPS budget 2020/21 and planned service improvements.

 

Members asked questions on administration of the Fund, fees per Fund members, delivering greater economies of scale and the importance of ensuring that a potential change project is appropriately managed if it goes ahead. It was agreed that the last matter would be referred to the LGPS Pension Board to provide oversight.

 

Following careful consideration of the report and the detail provided by the Senior Manager – Pensions and Financial Services, it was

 

RESOLVED that the Committee

 

1     Notes the detailed 2020/21 budget for investment management fees as summarised in the 2020/21 Draft Business Plan and Administration Budget report presented in Part 1 of the meeting.

2     Notes the proposed Pensions Administration (YPS) budget 2020/21 as summarised in the 2020/21 Draft Business Plan and Administration Budget report presented in Part 1 of the meeting.

3     LGPS Pension Board to provide oversight in relation to a potential change project, should it be progressed.

83.

BORDER TO COAST BUSINESS PLAN 2020-22, BUDGET 2020/21, CAPITAL REQUIREMENT AND RELATED SHAREHOLDER RESOLUTIONS

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

 

Minutes:

A report was considered from the Director of Finance (Section 151 Officer) regarding the Border to Coast Business Plan 2020-22, Budget 2020-21, Capital Requirement and related Shareholder Resolutions. The report set out the 2020/21 Operating and Project Implementation budgets for Border to Coast Pensions Partnership Ltd (“Border to Coast”) and the Border to Coast Strategic Business Plan 2020-22 (which covered the financial years 2020/21 to 2022/23).

 

The Senior Manager - Pensions and Financial Services reported on the BCPP Strategic Business Plan 2020-22. A member asked a question about staffing numbers.

Following careful consideration of the report and the detail provided by the Senior Manager – Pensions and Financial Services, it was

 

RESOLVED that, the Committee

 

1          Notes the detailed 2020/21 budget for investment management fees as summarised in the 2020/21 Draft Business Plan and Administration Budget report presented in Part 1;

2          Notes the proposed Border to Coast Operating and Project Implementation budgets for 2020/21 and Business Plan 2020-22;

3          Supports the Chair of the Pension Committee, in his capacity as the Council’s  Shareholder representative for the company, to vote to approve the Border to Coast Strategic Business Plan for 2020-22 and the Operating and Project Implementation budgets for 2020/21;

4          Supports the Chair of the Pension Committee, in his capacity as the Council’s  Shareholder representative for the company, to vote give Border to Coast the authority to allot up to £3 million “B” shares in the Company up to an aggregate nominal amount of £13 million, noting that circa £10 million “B” shares have already been allotted.

84.

MONITORING REPORT FOR THE QUARTER ENDED 31ST DECEMBER 2019 - PART 2

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

 

Minutes:

A monitoring report was considered from the Director of Finance (Section 151 Officer) for the quarter ended 31 December 2019 – Part 2. The report advised Members of any matters that were considered to be Part 2 (due to the inclusion of exempt information relating to commercially sensitive matters of third parties including employers in the Fund, tax recovery cases, class actions and fraud cases) that had arisen during the quarter ending 31 December 2019. The matters were generally in regards to either governance or employer issues.

 

The Finance Manager – Pensions reported on employer issues and employer data provision. A question was asked on the responsibility of employers for providing data. A short briefing was provided on oversight and governance.

 

Following careful consideration of the report and the detail provided by the Finance Manager - Pensions, it was

 

RESOLVED that, the Committee notes the quarterly monitoring Part 2 items of the Fund for the period to 31st December 2019.

85.

Multi Asset Credit

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

 

Minutes:

A report was considered from the Director of Finance (Section 151 Officer) regarding Multi Asset Credit. The report sought Members’ approval in principle that the Fund invests its 5% strategic allocation to Multi-Asset Credit (also known as Diversified Credit) in the Border to Coast Multi-Asset Credit Fund (the MAC fund).

 

The Chair advised that the decision before members would be in principle.

 

Following careful consideration of the report and the detail provided by the Senior Manager – Pensions and Financial Services, it was

 

RESOLVED that, the Committee

 

1          Approves in principle, subject to satisfactory completion of due diligence work, the transfer of the Fund’s 5% allocation to Multi-Asset Credit (or Diversified Credit as it is also known) into the Border to Coast Multi-Asset Credit Fund

2          Notes that, following the expected further development of the Border to Coast Multi-Asset Credit Fund, it is anticipated that a further update and recommendations on this matter will be presented to the June 2020 meeting of the Committee

86.

Presentation on Multi Asset Credit

To receive a presentation from Mr A Stone, Border to Coast Pensions Partnership.

 

Minutes:

Members received a presentation from Andrew Stone from Border to Coast Pensions Partnership Ltd on Multi Asset Credit (MAC). This detailed presentation gave a summary of MAC, and included the roles and responsibilities of MAC Managers.

 

Members asked questions about practices since the 2007 Black Monday crash, visibility of underlying loans to the managers, triggers on funds, expected default rates in a crisis such as the Coronavirus pandemic, high yield bonds and discussed the definition of a successful manager.

 

RESOLVED that the position be noted.

87.

Verbal Update - Emerging Issues

To receive a verbal update on emerging issues

Minutes:

The Chairman wished the Finance Manager – Pensions Administration a long and happy retirement and thanked her for her work in the Pensions Team and in supporting the Committee.

 

A short update was provided on the McCloud case.

 

RESOLVED that, the position be noted.

88.

CUMBRIA LGPS INVESTMENT SUB GROUP ACTIVITY REPORT TO FEBRUARY 2020

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

 

Minutes:

A report was considered from the Director of Finance (Section 151 Officer) regarding the Cumbria LGPS Investment Sub Group’s activity report to February 2020. The report outlined activities since the previous Investment Sub Group (ISG), any decisions made by the Section 151 Officer and the proposed future work schedule in respect of the Investment Sub Group.

 

The Finance Manager – Pensions and Treasury reported on the business considered at the Cumbria LGPS Investment Sub Group meetings, outlined a review of new products, reported on progress with the Border to Coast Sub-Funds and performance monitoring and gave an update on the Group’s work programme.

 

Following careful consideration of the report and the detail provided by the Finance Manager - Pensions and Treasury, it was

 

RESOLVED that, the Committee

 

1          Notes the progress of the Investment Sub Group from November 2019 to February 2020, including progress made in the planning and implementation of the agreed changes to the Investment Strategy (i.e. strategic asset allocation);

2          Notes the performance of the Fund over the quarter; and

3          Agrees the proposed work programme of the Investment Sub Group for the next reporting period.

89.

Closing Comments

To receive closing comments from the Chair

Minutes:

The Chairman thanked members for attending the meeting.