Agenda and minutes
PDF 387 KBVenue: Woodhatch, 11 Cockshot Hill, Reigate
Contact: Angela Guest Email: angela.guest@surreycc.gov.uk
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APOLOGIES FOR ABSENCE AND SUBSTITUTIONS
To receive any apologies for absence and substitutions. Additional documents: Minutes: An apology for absence was received from Richard Tear.
An apology for lateness was received from Steve Williams who arrived at 2:14pm during public questions item.
George Potter attended remotely.
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MINUTES OF THE PREVIOUS MEETING: 10 SEPTEMBER 2021
To agree the minutes as a true record of the meeting. Additional documents: Minutes: The Minutes were approved as an accurate record of the previous meeting. |
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DECLARATIONS OF INTEREST
All Members present are required to declare, at this point in the meeting or as soon as possible thereafter (i) Any disclosable pecuniary interests and / or (ii) Other interests arising under the Code of Conduct in respect of any item(s) of business being considered at this meeting NOTES: · Members are reminded that they must not participate in any item where they have a disclosable pecuniary interest · As well as an interest of the Member, this includes any interest, of which the Member is aware, that relates to the Member’s spouse or civil partner (or any person with whom the Member is living as a spouse or civil partner) · Members with a significant personal interest may participate in the discussion and vote on that matter unless that interest could be reasonably regarded as prejudicial. Additional documents: Minutes: There were none. |
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QUESTIONS AND PETITIONS
There were four public questions submitted. These and the responses are attached. Additional documents: Minutes: There were questions from members of the public. These and the responses were published as a supplement to the agenda. Supplementary questions and responses were: -
Some of BCPP’s peers (including Brunel, and Nest) are in fact putting Barclays’ financing of these particularly dirty fossil fuel businesses under the microscope, asking for an elimination of such exposures by end-2023. I’ll be happy to send on an article discussing this from the journal, Pension Age from earlier this year. Will the Pension Fund urge Border to Coast to support this initiative in its engagement activities in 2022? The Chairman confirmed that this was a good point and discussions would be had with Border to Coast on the issues raised as well as the LAPFF.
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PENSION FUND COMMITTEE- FORWARD PLAN
The Committee is asked to review its Forward Plan. Additional documents: Minutes: Speakers: Chairman
Key points raised during the discussion:
1. The Chairman referred to the LGPS update that had been sent to Members outside of this meeting and welcomed comments/questions on it.
Resolved:
That the Forward Plan be noted.
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RESPONSIBLE INVESTMENT POLICY
This paper provides details of the progress made in developing the Surrey Pension Fund’s (the Fund’s) standalone Responsible Investment Policy, consistent with the actions agreed in the Pension Fund Committee meeting of 10 September 2020 and a sub-Committee meeting of 19 November 2021.
Additional documents: Minutes: Speakers: Neil Mason, Assistant Director - LGPS Senior Officer Sam Wreford, Mercer
Key points raised during the discussion:
Actions/ further information to be provided: None.
Resolved: 3. Approved that officers work with the sub-committee, the independent investment advisor, investment consultant and Border to Coast to model a low carbon transition plan, applying scenario analysis using the agreed TCFD metrics based on dates of 2030, 2040 and 2050. 4. That the revised Border to Coast Responsible Investment (RI) Policy 2022 and Corporate Governance & Voting Guidelines 2022 was supported, subject to the continuing work between the Fund and Border to Coast to align approaches consistent with the Fund’s standalone Responsible Investment Policy currently in design stage.
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INVESTMENT STRATEGY REVIEW
The Pension Fund reviews its Investment Strategy, in accordance with the 2022 valuation, taking it to account its investment core beliefs and in line with Border to Coast’s asset offerings. This paper provides the high-level project plan for this review. Additional documents: Minutes: Speakers: Neil Mason, Assistant Director for Pensions Steve Turner, Mercer
Key points raised during the discussion:
Actions/ further information to be provided: None
Resolved:
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COMPETITION AND MARKETS AUTHORITY (CMA): INVESTMENT CONSULTANT STRATEGIC OBJECTIVES
Local Government Pension Schemes (LGPS) are required to set strategic objectives for their Investment Consultant (IC) Provider and monitor their performance against these objectives at least every three years.
Additional documents: Minutes: Speakers: Neil Mason, Assistant Director - LGPS Senior Officer
Key points raised during the discussion:
1. The Asst Director - LGPS Senior Officer explained that Local Government Pension Schemes (LGPS) were required to set strategic objectives for their Investment Consultant (IC) Provider and monitor their performance against these objectives at least every three years. 2. The Chairman agreed that it would be good practice to look at this annually and that further work was to take place in this area.
Actions/ further information to be provided: None.
Resolved:
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Local Pension Board Update
This report provides a summary of administration and governance issues reviewed, or approved, by the Local Pension Board at its last meeting that require noting or action by the Pension Fund Committee.
Additional documents: Minutes: Speakers: Tim Evans, Independent Chairman of the Local Pension Board Collette Hollands, Head of Service Delivery
Key points raised during the discussion:
Actions/ further information to be provided: The Chairman requested that a note be added to Risk A12 in that GMP liabilities also included equalisation.
Resolved:
i- Risk A2 Lack of process ownership leads to ineffective processes and errors, ii- A3 Failure to follow up on outstanding issues results in inefficiency and damaged reputation. iii- A4 Lack of capability of the admin system leads to inefficiency and disruption, iv- A7 Unstructured training leads to underdeveloped workforce resulting in inefficiency, v- A10 Gaps in skills and knowledge due to key person/single point of failure and different skill requirements leads to inefficiency and poor performance, vi- A11 Failure to get on top of the backlog leads to resource issues and management distractions, vii- A12 Failure to identify GMP liability leads to ongoing costs for the pension fund, viii- A14 Lack of productivity leads to impaired performance, ix- A19 The Pensions Payroll process had migrated onto the Altair system from SAP in Nov 17. The risk of errors in the current processes are increased by the core Altair payroll system not being integrated with the BACS generator application meaning items have to be recorded twice. x- A20 Head of Pension Administration leaving the Council may dilute the organisation's collective knowledge and impact on decision making, xi- A23 Management control of backlog leads to inaccurate Key Performance Indicators (KPI’s) leading ... view the full minutes text for item 64/21 |
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COMPANY ENGAGEMENT & VOTING
This report is a summary of various Environmental Social & Governance (ESG) issues that the Surrey Pension Fund, Local Authority Pension Fund Forum (LAPFF), Robeco, and Border to Coast Pensions Partnership (BCPP) have been involved in, for the attention of the Pension Fund Committee.
NB – there is a Part 2 annex at item 13 Additional documents: Minutes: Speakers: Ayaz Malik, Senior Pensions Finance Specialist Neil Mason. Asst Director - LGPS Senior Officer Anthony Fletcher, Independent Advisor
Key points raised during the discussion:
1. The Committee considered a report that summarised various Environmental Social & Governance (ESG) issues that the Surrey Pension Fund, Local Authority Pension Fund Forum (LAPFF), Robeco, and Border to Coast Pensions Partnership (BCPP) had been involved in. The Fund was a member of LAPFF so enhanced its own influence in company engagement by collaborating with other Pension Fund investors through the Forum. Robeco had been appointed to provide BCPP’s voting and engagement services so acted in accordance with BCPP’s Responsible Investment Policy, which was reviewed and approved every year by all 11 partner funds within the Pool. 2. The Chairman stated that perhaps a conversation was needed with the LAPFF regarding Barclays in relation to the public question heard earlier in the meeting. Another Member also suggested communicating with them about other clearing banks and understanding rationale for including HSBC in this quarter report. 3. The Asst Director - LGPS Senior Officer reminded the Committee that the LAPFF had presented in November’s AGM and he was happy to invite representatives to a future meeting. He stated that the LAPFF had said they would be happy for further engagement with Surrey and that he would sound out Members of the Board and Committee for possible membership of the LAPFF. 4. The Committee asked for further information around the voting with regards to the options being voted on, what was successful and the individual voting. The Asst Director - LGPS Senior Officer stated that this information was in the public domain and that he would direct Members to it outside of the meeting. One Member requested that the information be contained with reports to meeting regardless of extra papers that would involve as the reports received were just reports of activity but not achievements.
Actions/ further information to be provided: The Asst Director - LGPS Senior Officer to liaise with Members on what further information should be contained within reports and that could be directed outside of the meeting.
Resolved: a) Continuing to enhance its own Responsible Investment approach, its Company Engagement policy, and Sustainable Development Goals (SDGs) alignment. b) Acknowledging the outcomes achieved for quarter ending 30 September 2021 by Robeco in their Active Ownership approach and the LAPFF in its Engagement with multinational companies as at 30 September 2021.
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INVESTMENT MANAGER ISSUES AND PERFORMANCE AND ASSET/LIABILITIES UPDATE
This report is a summary of all manager issues that need to be brought to the attention of the Pension Fund Committee, as well as an update on investment performance and the values of assets and liabilities.
NB – there is a Part 2 annex at item 14
Additional documents: Minutes: Speakers: Ayaz Malik, Senior Pensions Finance Specialist Neil Mason. Asst Director - LGPS Senior Officer
Key points raised during the discussion:
· The transfer out of diversified growth funds · Freedom of information requests numbers which differed month to month and tended to be about private equity · Long term Performance which seemed satisfactory, and · Stock fund lending
Actions/ further information to be provided: That a briefing note be provided to the Committee on stock funding, namely how it works and the benefits and risks of doing so.
Resolved: 1. That the main findings of the report in relation to the Fund’s valuation and funding level, performance returns, asset allocation and performance fees be noted.
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EXCLUSION OF THE PUBLIC
Recommendation: That under Section 100(A) of the Local Government Act 1972, the public be excluded from the meeting for the following items of business on the grounds that they involve the likely disclosure of exempt information under the relevant paragraphs of Part 1 of Schedule 12A of the Act. Additional documents: Minutes: Resolved: That under Section 100(A) of the Local Government Act 1972, the public be excluded from the meeting for the following items of business on the grounds that they involve the likely disclosure of exempt information under the relevant paragraphs of Part 1 of Schedule 12A of the Act.
PART TWO – IN PRIVATE |
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COMPANY ENGAGEMENT & VOTING
Minutes: Speakers: Ayaz Malik, Senior Pensions Finance Specialist
Key points raised during the discussion:
Further to Minute 65/21 the Committee considered a Part 2 annex to the submitted report.
Actions/ further information to be provided: None.
Resolved: See Minute 65/21
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INVESTMENT MANAGER ISSUES AND PERFORMANCE AND ASSET/LIABILITIES UPDATE
Minutes: Speakers: Anthony Fletcher, Independent Advisor
Key points raised during the discussion:
Further to Minute 66/21 the Committee considered two Part 2 annexes to the submitted report.
Actions/ further information to be provided: The Chairman requested that a summary report of investments be submitted to the Committee when this was next on the agenda.
Resolved: See Minute 66/21
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Border to Coast Update
Minutes: Speakers: Neil Mason, Assistant Director - LGPS Senior Officer Andrew Stone, Border to Coast Anthony Fletcher, Independent Advisor
Key points raised during the discussion:
The Committee considered a Part 2 update report which explained that Border to Coast Pension Partnership was now an established fully regulated asset management company. The Surrey Pension Fund started transitioning assets in quarter four of 2018 and would continue this through 2021. This update paper provided an investment and governance update.
Actions/ further information to be provided: None.
Resolved: 1. That the background and progress of Border to Coast activity, including details of the following be noted: a) Meetings since the last Pension Fund Committee meeting of 10 September. b) Border to Coast Joint Committee (JC) meeting of 23 November 2021. a) Details of the Border to Coast Asset Transfer Planning 2022-2025 b) Details of changes to key personnel at Border to Coast. c) Update on the multi-asset credit transition. d) Update on the UK Equity Alpha Fund. e) Update on the Alternatives Series 2 launch, including climate opportunities.
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DATE OF NEXT MEETING
The next meeting of the Surrey Pension Fund Committee will be on 10 March 2022. Additional documents: Minutes: The date of the meeting was NOTED. |