Agenda and minutes
PDF 173 KBVenue: Members Conference Room
Contact: Angela Guest email: angela.guest@surreycc.gov.uk
| No. | Item |
|---|---|
|
APOLOGIES FOR ABSENCE AND SUBSTITUTIONS
Minutes: Apologies for absence were received from Alan Young, Philip Walker and Ian Perkin.
The Chairman informed the Committee that she had regrettably received a letter of resignation from Ian Perkin. The Committee thanked Mr Perkin for his invaluable contribution over the years. |
|
|
MINUTES OF THE PREVIOUS MEETING [11 JULY 2016]
To agree the minutes as a true record of the meeting. Minutes: The Minutes of the meeting held on 11 July 2016 were approved as a correct record. |
|
|
DECLARATIONS OF INTEREST
To receive any declarations of disclosable pecuniary interests from Members in respect of any item to be considered at the meeting.
Notes: 1. In line with the Relevant Authorities (Disclosable Pecuniary Interests) Regulations 2012, declarations may relate to the interest of the member, or the member’s spouse or civil partner, or a person with whom the member is living as husband or wife, or a person with whom the member is living as if they were civil partners and the member is aware they have the interest. 2. Members need only disclose interests not currently listed on the Register of Disclosable Pecuniary Interests. 3. Members must notify the Monitoring Officer of any interests disclosed at the meeting so they may be added to the Register. 4. Members are reminded that they must not participate in any item where they have a disclosable pecuniary interest.
Minutes: Councillor Bill Barker declared that he was in receipt of a pension from British Petroleum.
Councillor Tim Evans declared that he was in receipt of a small pension from the Surrey Pension Fund.
John Harrison declared that he was in receipt of a pension from UBS. |
|
|
QUESTIONS AND PETITIONS
Member Questions Four questions have been received from Mr Jonathan Essex.
Notes: 1. The deadline for Member’s questions is 12.00pm four working days before the meeting (19 September 2016). 2. The deadline for public questions is seven days before the meeting (16 September 2016). 3. The deadline for petitions was 14 days before the meeting, and no petitions have been received.
Additional documents: Minutes: Four questions had been received from Councillor Jonathan Essex and responses to these can be found at Appendix 1.
Mr Essex had a supplementary question in relation to his first question asking whether the Committee would consider bringing in experts to better inform the Surrey Pension Fund to provide advice on the carbon tracker report. The Chairman replied that she was entirely satisfied and that this was already done through the LAPFF.
Mr Essex asked a further supplementary in relation to his third question regarding whether the Committee would consider not investing in fossil fuels. The Chairman stated that future investments would be considered by the Committee and a debate held before a decision was made and she could not give that assurance.
Mr Essex asked a final supplementary question in relation to his fourth question and asked whether the Committee would consider complimenting different investments to which the Chairman replied that this would not happen at the moment. |
|
|
ACTION TRACKING AND FORWARD PLAN
An action tracker is attached, detailing actions from previous meetings. The Board is asked to review progress on the item listed.
The Forward Plan for the Pension Fund Committee is also attached for information. Additional documents: Minutes: Key points raised during debate:
1. The Committee reviewed the Action Tracker and the Strategic Finance Manager informed the Committee that the submission had been sent on time and that a further meeting would be taking place in due course to move the project forward. 2. The Forward Plan was reviewed and it was agreed that an item on valuation would be added to the November meeting. It was also requested that the AGM meeting is added to the Forward Plan.
RESOLVED:
That an item on valuation be added to the 11 November 2016 Committee meeting and that the Annual General Meeting be added to the Forward Plan.
|
|
|
Manager Issues and Investment Performance
This report is a summary of all manager issues that need to be brought to the attention of the Surrey Pension Fund Committee, as well as manager investment performance. Additional documents: Minutes: Key points raised during debate:
1. The Strategic Finance Manager (Pension Fund and Treasury) introduced the report and informed Members that it was a summary of all manager issues that need to be brought to the attention of the Pension Fund Committee, as well as manager investment performance. 2. The Committee were informed that the funding level was 86.3% and that improvement resulted from changes in the assumptions around future salary growth, CPI future pension growth and the discount rate. 3. One member queried whether the salary growth took the latest pay and reward position into account and the Committee were informed that this was based on the position as at 31 March 2016. 4. Members considered the fund performance and were updated on the outcomes of interviews with fund managers. It was agreed that an interview should be held with Franklin Templeton as a matter of urgency. 5. A discussion was held around the impact of Brexit and the upcoming US elections it was agreed that an additional meeting would take place to consider the impact of these issues further. 6. The Committee reviewed the asset allocation in light of Marathon’s allocation having a variance of 3.5% and agreed to rebalance the portfolio to ensure that they remained in line with the fund’s policy control limits. 7. A discussion was held around the performance of the individual fund managers and the Committee were informed that there were some concerns around Ballie Gifford. It was agreed that an update be provided on this at the next meeting of the Committee.
RESOLVED:
That the Pension Fund Committee:
1. Noted the submitted report. 2. Agreed to rebalance the asset allocation as follows: · Marathon (Global) -2.7% · Legal and General (UK) +1.7% · Majedie (UK) +1%
Recommendation 3 was considered after the debate on item 10 – Private Equity Investment Performance Review.
RESOLVED:
3. Approved a $50m USD commitment to Goldman Sachs Vintage VII.
Reasons for decisions:
In order to achieve best possible performance alongside operational risk.
[The Committee adjourned for a comfort break at 11.00am] |
|
|
Key Performance Indicators and Administration Update
In line with best practice, Surrey Pension Fund Committee members will be supplied with Pension Fund key performance indicators (KPIs) on a quarterly basis, covering investment and administration practices. This paper also includes an update on administration issues. Additional documents: Minutes: [The Committee reconvened at 11.12am]
Key points raised during debate:
1. The Senior Advisor (Pension Fund) introduced the Pension Fund Committee members to the Pension Fund key performance indicators (KPIs) report and reminded them that these were reviewed on a quarterly basis, covering investment and administration outcomes. 2. He informed Members that the Orbis Pension Service Team had put in a bid to join the Norfolk LGPS Framework and that any future opportunities would be communicated to this committee. Members stressed that it was important to ensure that the administration team were adequately prepared and that the effect on the Surrey Fund was considered before any future partnerships were contemplated.
RESOLVED:
That the Pension Fund Committee noted the submitted report and the KPI statement shown in Annex 1.
Reason for decision:
To comply with best practice.
|
|
|
Pension Fund Risk Register
The Pension Fund Committee to assess the revised Risk Register in Annex 1, making any suggestions for amendment/additions as necessary. Additional documents: Minutes: Key points raised during debate:
1. The Strategic Finance Manager (Pension Fund and Treasury) introduced the report and informed Members of the Committee that there had been one new risk added (no.19) concerning breaches to regulatory obligations. The Committee were informed that the breach policy would be brought to the next meeting of the Committee for review and approval. 2. One Member of the Committee queried what was happening with the phasing out of paper files (no.20) and the Strategic Finance Manager (Pension Fund and Treasury) agreed to look into this and report back.
RESOLVED:
That the Committee assessed and approved the revised Risk Register as attached at Annex 1 of the submitted report.
Reason for decision:
A solid framework of risk management is required in order to manage the considerable risk environment surrounding the governance and investment of the pension fund. |
|
This report provides a summary of the Fund’s share voting process in Q1 of 2016/17 (1 April 2016 to 30 June 2016). Additional documents: Minutes: Key points raised during debate:
1. The Strategic Finance Manager (Pension Fund and Treasury) informed the Committee that this report provided a summary of the Fund’s share voting process in Q1 of 2016/17 (1 April 2016 to 30 June 2016).
RESOLVED:
That the Pension Fund Committee noted the submitted report.
Reason for decision:
The Pension Fund Committee must be aware of the voting actions pertaining to the segregated portfolios of shares held within the pension fund.
|
|
|
Private Equity Investment Performance Review
The Surrey Pension Fund Committee reviews the private equity strategy. This report is a review of the investment performance of the private equity portfolio and a comparison of the cost effectiveness of investing in a Fund of Funds with investment in other private equity opportunities. Additional documents: Minutes: Key points raised during debate:
1. The Strategic Finance Manager introduced the report and informed Members that this was an annual review of the Surrey Pension Fund’s commitment to invest 5% of the fund in private equity. He highlighted that the data was to 31 Marc h 2016 and the report looked at the performance of the individual opportunities invested. Members were informed that the public market equivalent (PME) return was an annualised 11.7% in comparison to the MSCI 7.1% and this resulted in a healthy outperformance of 4.7%. 2. Members were referred to the Goldman Sachs Vintage VI which had an IRR of 15.7% over three years and was widely judge as doing well. 3. The Committee were informed by the Independent Advisor that making a commitment each year was an essential part of private equity and that it was important to be opportunistic and commit funds to managers in this area as the results would not be known for five years and it was not possible to draw conclusions now.
[The Chairman moved back to item 6 on the agenda and asked Members to consider the recommendation to approve an investment of $50m USD to Goldman Sachs Vintage VII].
RESOLVED:
1. That the Committee noted the current position on the Fund’s Private Equity investment performance. 2. That the Fund continued to commit to draw downs of the existing private equity schemes and to consider new opportunities to the Pension Fund Committee for approval as and when they arise.
Reasons for decisions:
A solid framework of review is required in order to benefit from this long term asset category.
|
|
|
Pension Fund Accounts 2015/16
This report presents the audited financial statements of the Pension Fund for the year ended 31 March 2016, with respect of the County Council’s obligations as the administering authority under the Local Government Pension Scheme (LGPS) Regulations. Additional documents: Minutes: Key points raised during debate:
1. The Chairman introduced the item and thanked the Senior Accountant for his work on the accounts. Members were informed that this report presented the audited financial statements of the Pension Fund for the year ended 31 March 2016, with respect to the County Council’s obligations as the administering authority under the Local Government Pension Scheme (LGPS) Regulations. 2. The Committee were informed that the accounts had already been reviewed by the Audit and Governance Committee and that the external auditor (Grant Thornton) had issued an unqualified opinion on the accounts. 3. The Senior Accountant drew Members attention to the audit findings within the report and to an issue that had been highlighted regarding the rounding of small balances. The Committee were informed that this had now been corrected.
RESOLVED:
That the Pension Fund Committee:
1. Noted and approved the financial statements set out in Annex 1 of the submitted report. 2. Noted the content of the External Audit Findings for Surrey Pension Fund Report as set out in Annex 2 of the submitted report. 3. Noted the Letter of Representation as set out in Annex 3 of the submitted report.
Reasons for decisions:
The Pension Fund Committee must approve all financial statements produced for the Pension Fund.
|
|
|
REVISED STATEMENT OF INVESTMENT PRINCIPLES
It is part of good governance that the Pension Fund Committee should review and approve its Statement of Investment Principles (SIP) and Core Belief Statement on a regular basis.
Additional documents: Minutes: Key points raised during debate:
1. The Strategic Finance Managers (Pension Fund and Treasury) informed the Committee that there was a single change to the Statement of Investment Principles (SIP) as a result of the private equity opportunity approved at the last meeting of the Committee. 2. Members were informed that the SIP would be phased out from 1 April 2017 and would be superseded by a new investment strategy statement of which work on this had started already. Members queried how different this would be and were informed that it would be a significant re-write and would contain a menu of areas to be included. 3. It was agreed that the SIP needed to be amended to include mention of ‘Surrey Leader’s Group’ rather than Surrey Local Government Association and that the date should read 2016/17.
RESOLVED:
That the Pension Fund Committee:
1. Reviewed and approved the Statement of Investment Principles as shown in Annex 1 of the submitted report subject to the changes above being made. 2. Reviewed and approved the Core Belief Statement shown in Annex 2 of the submitted report.
Reasons for decisions:
The Pension Fund Committee must review and approve all working documents produced for the Pension Fund.
|
|
|
ACTUARIAL ASSUMPTIONS: 2016 VALUATION
The Committee are asked to approve the actuarial assumptions. Minutes: Key points raised during debate:
1. The Strategic Finance Manager (Pension Fund and Treasury) informed Members that the report reviewed the actuarial assumptions to be used in the next actuarial valuation of the Pension Fund as at 31 March 2016. He stated that it included: · A comparison for three years ago · Assumption of salary increases · Assumption on pension increases · Assumption on pensioner longevity · Assumption on the discount rate and asset outperformance. 2. The Committee were informed that the discount rate would be 4.2% and that there would be an opportunity to ask the actuary more about this in November.
RESOLVED:
That the Pension Fund Committee noted the report and approved the actuarial assumptions as set out in the submitted report.
Reason for decision:
To comply with best actuarial valuation practice.
[Bill Barker left the meeting at 12.10pm] |
|
|
STATEMENT OF POLICY FOR ADMINISTERING AUTHORITY PENSION DISCRETIONS
This report provides details of a written policy statement in respect of the discretions that can be exercised by the Administering Authority (AA) in relation to the Local Government Pension Scheme (LGPS) Regulations. Additional documents: Minutes: Key points raised during debate:
1. The Senior Advisor (Pension Fund) introduced the report and informed Members of the Committee that it provided details of a written policy statement in respect of the discretions that can be exercised by the Administering Authority (AA) in relation to the Local Government Pension Scheme (LGPS) Regulations. He explained that it was not asking for approval of changes to discretionary policy but that it was part of good governance to publish the discretions. 2. The Chairman thanked the team for their work and expressed that it was a good piece of work. One member queried discretion 2.11 regarding the death grant and asked for assurance that the individual identified as the delegated decision maker would be protected in the event of a dispute and whether there was provision for these cases to come to the Surrey Pension Fund Committee for decision. It was agreed that this would be discussed further and clarified by officers.
RESOLVED:
That the Pension Fund Committee: 1. Noted the report and approved in principle the draft Administering Authority Discretions Statement of Policy, included as Annex 1 of the submitted report 2. Approved the publication of the Administering Authority Discretions Statement of Policy for consultation with the Fund’s Scheme Employers with a further report to be brought back to the Pension Fund Committee with the results of the consultation, and a final statement of policy (including any amendments arising from the consultation exercise) for approval.
Reasons for decisions:
The Pension Fund Committee must be aware of the discretions that can be exercised by the administering authority under the LGPS Regulations. The publication of an AA Discretions Statement of Policy allows the AA to demonstrate a transparent decision making process and clarity of governance. |
|
This report summarises the proposed changes to the Local Government Pension Scheme (LGPS) Regulations included in the consultation document issued by the Department for Communities and Local Government (DCLG) in May 2016. It also provides details of the response to this consultation by the Director of Finance on behalf of the Council. Additional documents: Minutes: Key points raised during debate:
1. The Committee were informed that this report summarised the proposed changes to the Local Government Pension Scheme (LGPS) Regulations included in the consultation document issued by the Department for Communities and Local Government (DCLG) in May 2016. 2. Members were informed that the response by the Director of Finance to this consultation on behalf of the Council was now with the Department for Communities and Local Government for consideration.
RESOLVED:
That the Pension Fund Committee noted the report.
Reason for decision:
The Pension Fund Committee must be aware of all LGPS Regulations for the administration of the Surrey Pension Fund.
|
|
This report summarises the proposed development of an insolvency regime for the further education sector within a consultation document issued by the Department for Business, Innovation and Skills (DBIS) on 6 July 2016. This report also provides details of the response to this consultation by the Council. Additional documents: Minutes: Key points raised during debate:
1. The Committee were informed that the report summarised the proposed development of an insolvency regime for the further education sector within a consultation document issued by the Department for Business, Innovation and Skills (DBIS) on 6 July 2016 along with the detailed response to this consultation by the Council.
RESOLVED:
That the Pension Fund Committee noted the submitted report.
Reason for decision:
The Pension Fund Committee must be aware of the risks presented to the Fund by the potential insolvencies of the employers within the Surrey Pension Fund. |
|
|
DATE OF NEXT MEETING
The next meeting of the Surrey Pension Fund Board will be on 11 November 2016. Minutes: It was noted that the next meeting would be held on 11 November 2016. |