Agenda and minutes

To receive apologies for absence.

Apologies were received from County Councillor T Van-Rees.

To receive any declarations of interest from Members relating to items to be considered on the Agenda.

Members of the Committee declared interests as members of the Local Government Pensions Scheme.  These are personal interests, not prejudicial interests in accordance with Paragraph 12(b) (iv) of the Members Code of Conduct 2016.

To authorise the Chair to sign the minutes of the last meeting held on 22 November, 2019 as a correct record.

The Chair was authorised to sign the minutes of the Pensions and Investment Committee meeting held on 22 November, 2019 as a correct record.

To consider the report.

The Committee received the report from the Head of Finance.

To consider the report.

The Committee received the report from the Head of Finance.

The Committee noted the Scheme Advisory Board [SAB] Good Governance Project and that it is proposed that Administering Authorities must undergo a biennial independent governance review and produce an action plan to address any issues identified.  In response to questions the Pension Fund Manager advised that he would circulate the Training Needs Analysis [TNA] survey again, for the Committee to complete.  The TNA would identify any training gaps, for individual Committee members or the Committee as a whole. 

The Pension Fund Manager highlighted to the Committee that the SAB was recommending that Administering Authorities should “give proper consideration to pay and recruitment policies in order to meet the needs of the pension fund; not simply applying general council staffing policies such as recruitment freezes.”  The Head of Finance assured the Committee that although a review of Financial Services was currently underway, a percentage cut to the Pension Administration Section budget was not being applied.   The review was however, considering the administrative processes to ensure that there is resilience in the Team. 

The Committee noted that the SAB and The Pension Regulator [TPR] were promoting good Governance as an issue for Committees to consider.  The TPR had reviewed Governance and administration risks in 10 Local Government Schemes [LGPS].  Good practice was evidenced but key areas for improvement were highlighted and the Pension Fund Manager advised that these would be reviewed in the Powys Pension Fund.

To consider the report.

The Committee received the report from the Head of Finance and noted that the Powys Pension Board had reviewed the Risk Register and also recommended that a potential risk in respect of the ongoing compliance with MIFID II be added.  He advised that if the Committee was content with the inclusion of this potential risk, the wording should refer to the Fund being an institutional investor rather than a retail investor, as stated in the report.  The Committee noted that the Risk Register formed part of the Council’s Corporate Risk Register which was also monitored by the Audit Committee.

Actuarial Valuation as at 31 March 2019.

Becky Durran and Sam Ogborne, Aon presented the Actuarial Valuation as at 31 March, 2019.  The Committee noted that the valuation was a snapshot of the Fund undertaken every three years and considered its assets and liabilities, making assumptions about the future.  Each employer would receive its own valuation based on its membership and the valuation set the employers contributions for the next three years. 

The valuation had shown that the probability of funding success had increased from 73% in 2016 to 77% in 2019.  The Committee noted the McCloud/Sargeant judgement and that Funds should consider their approach to the uncertainty relating to this when setting the employers contributions from 2020.  The Actuaries recommended that the prudent approach was that most employers’ contributions should also increase by 1.1% to reflect this uncertainty.

The Committee noted that assets and liabilities had increased, but due to the performance of the fund the deficit had decreased.  In addition the funding ratio had improved from 80% in 2016 to 93% in 2019 and the time period in which the Fund would be fully funded had decreased from 22 to 16 years.   

To receive a report regarding the WPP.

The Committee received the report from the Head of Finance.  The Pension Fund Manager advised that BlackRock had been appointed as the transition advisor and manger to transfer the fixed income mandates into the WPP.  The Committee noted that interviews had taken place for an oversight advisor for the on-going monitoring and further development of the WPP and the Committee would be advised of the appointment in due course.

To consider the report.

The Committee received the Responsible Investment Policy which had been considered at the previous meeting.  The Pension Fund Manager advised that the document had been amended as a result of discussions at the last meeting.  The Pension Fund Manager proposed that the Policy be approved and published with an amended version including some revised wording being subject to approval by the Chair and Vice Chair to following review by the Monitoring Officer.

To consider the report.

The Committee noted the Forward Looking Business Plan. 

Aon advised that there was a need to replace Stone Milliner Discretionary Macro Fund due to the Fund being closed.  It was noted that Graham Capital Management had been selected as a like for like replacement.  In response to questions regarding due diligence, Aon advised that Graham Capital Management had passed all due diligence tests, it had a long track record and was buy-rated.  The Committee noted that £12m would be transferred into cash and some of this fund could be transferred into the WPP fixed income mandates, rather than keeping all in cash, prior to the approval of the investment in the Graham Capital Management Fund. 

The Pension Fund Manager recommended that the Committee:

      i.        notes Aon’s recommendation regarding the investment in the Graham Capital Management Fund and

    ii.        Aon’s report regarding Graham Capital Management Fund be circulated to the Committee for consideration and comments be forwarded to the Pension Fund Manager within three days of the email and if no objections

   iii.        it be delegated to the Chair and Vice Chair to agree to transferring the investment to Graham Capital Management Fund.

The Monitoring Officer has determined that category 3 of the Access to Information Procedure Rules applies to the following items. His view on the public interest test (having taken account of the provisions of Rule 14.8 of the Council's Access to Information Rules) was that to make this information public would disclose information relating to the financial or business affairs of any particular person (including the authority holding that information).  These factors in his view outweigh the public interest in disclosing this information.

Members are asked to consider these factors when determining the public interest test, which they must decide when considering excluding the public from this part of the meeting.

RESOLVED to exclude the public for the following items of business on the grounds that there would be disclosure to them of exempt information under category 3 of The Local Authorities (Access to Information) (Variation) (Wales) Order 2007).

To consider the report.

The Committee received the report regarding the Equity Protection, which confirmed the decision taken at the last meeting.  In response to questions Aon advised that when considering the protection due to expire in March 2020, the Australian markets would be considered at this time.

To consider the report.

The Committee received the Investment Strategy Review.  The Committee noted that the asset allocations had changed and noted the revised proposed allocation to the WPP Fixed Income sub-funds. 

To consider the report from Aon.

The Committee received the Quarter 3 monitoring report to 30 September, 2019.  The Committee noted that the total asset value had increased by £15m over the period and that the Performance details would be circulated to the Committee.  Aon advised that the Fund would consider the investment in Global property if the WPP did so. 

The Pension Fund Manager advised that as agreed at the previous meeting objectives for the Fund’s Investment Consultant had been developed in conjunction with the Pension Board Chair.  Aon had confirmed that the proposed objectives were acceptable.  The Pension Fund Manager indicated that after each Committee meeting he would select the relevant questions relating to the issues on agenda and then email these to the Committee asking the members to consider and score Aon on these.  The Members scores would then be collated and the results discussed with Aon.