To agree the minutes as a true record of the
meeting held on 12 February 2016.
Minutes:
The minutes were agreed as a true record of
the meeting, subject to a minor amendment regarding ensuring
consistency when referring to the Surrey Pension Fund Advisor.
21/15
DECLARATIONS OF INTEREST
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To receive any declarations of disclosable pecuniary interests from Members in
respect of any item to be considered at the
meeting.
Notes:
·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.
·Members need only disclose interests not
currently listed on the Register of Disclosable Pecuniary Interests.
·Members must notify the Monitoring
Officer of any interests disclosed at the meeting so they may be
added to the Register.
·Members are reminded that they must not
participate in any item where they have a disclosable pecuniary interest.
Minutes:
There were no declarations of disclosable pecuniary interests.
22/15
QUESTIONS AND PETITIONS
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To receive any questions or
petitions.
Notes:
1. The deadline for Member’s questions is
12.00pm four working days before the meeting (19 February
2016).
2. The deadline for public questions is seven
days before the meeting (18 February 2016).
3. The deadline for petitions was 14 days
before the meeting, and no petitions have been received.
An action tracker is attached, detailing
actions from the previous meetings. The Committee is asked to
review progress on the item listed.
Minutes:
Declarations of
interest:
None
Key points
raised during the discussion:
The Strategic Finance Manager
(Pension Fund and Treasury) confirmed that he had sent a definition
of the term TECKAL company to the
Committee outside of the meeting.
The Strategic Finance Manager
(Pension Fund and Treasury) updated the Committee on an issue that
had been raised at the last meeting regarding governance
arrangements for the proposed Borders to Coast Pensions Partnership
(BCPP). At the last meeting, concerns had been raised regarding the
ability of the proposed Supervisory Entity to sign off decisions
regarding Fund Managers. Three Committee Members (Alan Young, Tim
Evans and Stuart Selleck) had been
tasked with working alongside the Chairman and Strategic Finance
Manager (Pension Fund and Treasury) to raise this issue outside of
the meeting, with a view to amending the governance section in the
proposal. Advice had been sought from the Local Government
Association who had advised that decisions regarding Fund Managers
should be the responsibility of the Executive Body. Therefore, this
element of the proposal was not amended.
The Chairman stated that although
the Supervisory Entity would not appoint Investment Fund Managers,
they would take decisions on the sub-buckets and how the fund is
structured. They would also be responsible for appointing the
Executive Body.
The Vice-Chairman queried whether
the advice from the LGA was available in writing, to which the
Chairman responded that it was and that she would forward it to the
Committee outside of the meeting.
Members agreed that this decision
made the communication between the Surrey Pension Fund Committee
and their representative on the Supervisory Entity very important.
They would also need to be confident that the Executive Body had
the right skills to make decisions about Investment Fund
Managers.
The Director of Finance confirmed
that there was a flowchart which set out the proposed governance
arrangements for the BCPP which Officers would share with the
Committee.
It was confirmed that the detailed
submission would be need to be submitted to Government by the end
of July 2016, with full implementation by July 2018.
Actions/further
information to be provided:
That the Chairman e-mails the advice
from the LGA regarding the role of the Supervisory Committee in
making decisions about Investment Fund Managers to the Surrey
Pension Fund Committee.
That the Strategic Finance Manager
(Pension Fund and Treasury) shares a diagram setting out proposed
governance arrangements for the BCPP with the Surrey Pension Fund
Committee.
Resolved:
That the action tracker was noted and the
committee agreed to remove the completed actions from the
tracker.
Members are required to have
knowledge of the actuarial assumptions to be used in the next
actuarial valuation of the Pension Fund as at 31 March
2016.
Minutes:
Declarations of
interest:
None
Witnesses:
Barry McKay, Hymans Robertson
Key points
raised during the discussion:
The Strategic Finance Manager
(Pension Fund and Treasury) introduced the report, providing an
overview of the actuarial assumptions to be used in the next
actuarial valuation of the Pension Fund. He also introduced three
different models of establishing discount rates (Gilts plus, CPI
plus and the Economic model), and outlined the advantages and
disadvantages of each one.
It was noted that the Economic model
was not used widely amongst Pension Funds as it was considered to
be more generous and less prudent than the other models.
The representative from Hymans
Robertson provided an update to the Committee on the 2016 valuation
process. He stated that Hymans Robertson had reviewed their
valuation method in the previous year and decided, although no
model was perfect, that Gilts plus model was the best
available.
The representative also set out
Hymans Robertson’s two step approach to valuation. Firstly,
they set a funding target using the Gilts plus model and the
assumptions set out in the report. Secondly, they set a
contribution rate by running over 5000 assumptions.
The Chairman queried whether the
contribution rate modelling was based on a Gilts yield or CPI
model. The representative from Hymans Robertson responded that it
was on a Gilts yield curve. A CPI curve was not yet widely
available and would therefore take more time to create. He added
that the curve used did not impact on the discount rate, simply the
way it was presented.
The Committee had a discussion,
querying the benefits of the CPI plus model vs the Gilts plus model. A number of points where
made including:
Whether the Gilts plus model was
proving to be too prudent and therefore not offering the best deal
to employees, and ultimately Council Tax payers.
Whether it was sensible to use a
Gilts Plus Model when so much of the
fund was invested in assets.
That the distorted market tended to
favour the CPI plus model.
The impact of using the Gilt plus
model on public perception, in that the CPI model tends to produce
a smaller number.
Whether the Gilt plus model
represented an accurate view of what is happening with
inflation.
Whether the Gilt plus model was
overestimating the funds liabilities.
A number of Members acknowledged the
fact that stabilisation had been successful in setting a stable
contribution rate – and that this was something that was
important to employers.
The Vice-Chairman stated that any
measure chosen could be subject to future distortions; it just
happened that current distortions could be seen in the Gilt
market.
The Chief Finance Officer stated
that Officers did receive queries from the public when accounts
were published regarding the size of the deficit and liabilities.
Any change to how they were presented would need to be
explained.
The majority of the Committee
Members expressed preference for the CPI model. It was felt that if
the fund liabilities were linked to CPI, valuation should
...
view the full minutes text for item 24/15
25/15
EXCLUSION OF THE PUBLIC
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That under Section 100(A) of the Local
Government Act 1972, the public be excluded from the meeting during
consideration of 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.
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.
This report sets out the
assessment criteria for, and initial results of, the procurement
exercise to appoint a firm of investment consultants for the
Pension Fund.
Minutes:
Declarations of
interest:
None
Key points raised
during the discussion:
The Pension Fund Committee assessed
four different firms of Investment Consultants, as part of the
procurement exercise to agree a supplier.
Resolved:
That the Pension Fund Committee:
Noted the assessment criteria by
which an investment consultant may be appointed.
Agreed the appointment of a supplier
who achieved the highest score on a two year contract with an
option to extend for two further years, with effect from 1 April
2016, in line with the LGPS Frameworks document.
27/15
PUBLICITY FOR PART 2 ITEMS
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To consider whether the item considered under
Part 2 of the agenda should be made available to the press and
public.
Minutes:
It was agreed that non-exempt information may
be made available to the press and public, where appropriate.
28/15
DATE OF NEXT MEETING
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The next meeting of the Surrey Pension Fund
Committee will be on 13 May 2016.
Minutes:
That the date of the next meeting, scheduled
to take place on 13 May 2016, be re-arranged due to a clash with
the Conservative Group Annual General Meeting.
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