Minutes:
Members were provided with an initial training session which addressed the following areas:-
Legal Framework
Benefits and Administration
Investments
Legal Framework
Bryan Smith provided background to the Pension Fund Committee and its role in maintaining the Pension Fund in terms of its governance, and for prudent and effective stewardship. The Officer took Members through the Terms of Reference of the Committee which included the review of key Policy Documents such as the Funding Strategy Statement (FSS) and Statement of Investment Principles (SIP). The Committee also had responsibility for the review of Pension Fund Management arrangements with advice from their professional advisers and assistance from the relevant Council Officers to decide how the Fund’s assets should be invested.
Bryan Smith went on to provide background to the events which led to the requirement to establish a Local Pension Board, and its role. The Pensions Regulator provided an e-learning programme for Board members to complete and the link would be circulated to members. Neville Hancock understood that there was an expectation that all Board Members had to complete the full programme.
Benefits and Administration
Nick Orton – Team Leader Operations and Data/Pensions gave a brief overview of the LGPS, Pension Fund membership and benefits and contributions.
He explained that there were over 110 employers in the Fund and in response to a question from Ian Densham about contribution rates, advised that these differed depending upon each employer’s own liabilities. As at the last actuarial valuation non-active liabilities (pensioners) were greater than active liabilities and the average employer contribution rate was 21%.
The Officer then outlined changes to the LGPS Benefit Structure, and following a question from Councillor Tinsley advised that pension benefits payable were now based on a career average and were no longer linked to final pay. He explained to members how Career Average Revalued Earnings were calculated.
The Board was also informed of the differing types of retirement, employee contributions and how much employers paid. He concluded by explaining the choices that scheme members, the administering authority and employers had available to them since the changes to the LGPS.
Investments
Hilary Appleton – Strategic Finance Manager – Corporate Finance provided the Board with an overview of the Pension Fund Investments and circulated key Policy documents, the FSS and SIP.
The Officer explained that the Pension Fund’s Assets were currently managed by 7 managers and outlined the allocation process to each of the Asset Classes; namely Global Equities, Conventional Bonds, Broad Bonds, Property and Dynamic Asset Allocation.
The aim was to achieve returns on investments to pay the liabilities in the Fund and the performance of the managers was assessed taking advice from 2 independent investment advisers.
Ian Densham asked if consideration had been given to investing in local infrastructure and was informed that whilst this was possible any investment had to be in the best interest of the Fund and with the aim of securing the best possible return on its investments.
Geoff Sykes noted the discretion given to Investment Managers to invest. Hilary Appleton advised that the SIP set out a framework within which the Investment Managers had to operate and any Manager wishing to invest beyond these parameters had to do so by formal request for assessment by the Advisers.
Following a further comment from the member, the Board was advised that the Council had adopted an Ethical Statement but that some Managers invested in pooled funds and it was therefore difficult to pinpoint specific products. However, it should be noted that generally unethical products produced lower rates of return making investment by Managers less likely.
Pension Fund management arrangements were reviewed every 3 years and 3 new Managers had recently been appointed as a result of the last review. Future procurements for the Actuary, Independent Advisers, Global Custodian and Transition Manager would be reported to the Committee during 2015 and 2016.
Future Training Needs
Members discussed future training requirements and it was suggested that a session on the LGPS regulations would be useful. Other training needs would be identified as the Board developed its role.
AGREED that the information be noted.