Agenda item

Observations from Pension Fund Committee held on 12 September 2019

Minutes:

Neville Hancock was in attendance at the Committee, and as he was not present at the Board meeting, Officers highlighted the following key points:

 

McCloud Judgement

Paul Cooper advised that a verbal update was provided for Pension Fund Committee Members on the McCloud Judgement. The judgement ruled that changes made by the Government to public sector pension schemes were unlawful on the grounds of age discrimination. Members were informed that there was a national expectation that employer contributions would increase by up to 0.9% as a result of the judgement and would affect all public sector schemes. The impact on pension fund liabilities would be addressed as part of the triennial valuation and the Actuary would be present at the Pension Fund Annual meeting on 14 November 2019 to discuss.

 

Following questions from Councillor Tinsley the Board was informed that a potential increase in employer contributions had been included in the Medium Term Financial Plan (MTFP) but any impact as a result of the McCloud judgement on the MTFP would be addressed following the Actuary’s update which was expected mid-October. 

 

Private Credit

 

Beverley White informed Board Members that the Committee had agreed in principle in March 2019 to invest in private credit with BCPP, but at that time there were no specific details about the product.

 

Pension Fund Committee Members discussed the proposals and felt that they did not have the knowledge base to make a decision and requested training in the asset class. The deadline for an investment decision was 4 October 2019 and BCPP had been asked for an extension to this date, however this was too difficult to achieve. If a decision was not made by the deadline it would be a further 18 months before Durham was able to invest in the asset class. To meet the timescales training had been arranged for 30 September 2019, and this would be followed by a Special meeting of the Pension Fund Committee on 4 October 2019 to make a formal decision.

 

Ian Densham was pleased to note that the Committee had been cautious and had felt that they needed a greater understanding of private credit before making a decision.

 

Board members noted that the principle of investment had been agreed earlier in the year and queried the tight timescales required of the Committee to make a decision. Councillor Hopgood suggested that it would be useful for a Sub-Committee of the Pension Fund Committee to be established which could consider matters requiring decisions between the cycle of Committee meetings.  Members were informed that BCPP was aware of the meetings cycle and in March 2019 was informed that Durham was a potential investor. The private credit product had been designed on that basis.  The product was new and more complex than other investment products such as the Global Equity Fund, and Members had felt that they needed more information before reaching a decision. This was not expected to be an issue in future, and key investment decisions should fall in line with the meetings cycle.

 

AGREED that the information given be noted.