To agree the minutes as a true record of the
meeting.
Minutes:
The minutes were agreed as an accurate record
of the meeting.
35/16
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:
Trevor Willington asked that it be noted that
he was no longer a governor at Nescot
College, which is an employer in the
scheme.
David Stewart asked that it be noted that he
was employed by Hammersmith
and Fulham, an authority whose pension
administration is provided by Surrey
County Council as part of the Orbis Partnership
36/16
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 (13 October
2016).
2. The deadline for public questions is seven
days before the meeting (12 October 2016)
3. The deadline for petitions was 14 days
before the meeting, and no petitions have been received.
The Chairman noted
that the Board had agreed to review the use of substitutes. The
consensus was this was not appropriate, given the training and
knowledge requirements and difficulty in identifying appropriate
substitutes (ref: action 4/15). The action would be marked as
complete.
It was confirmed that
there was no update regarding the Scheme Advisory Board Key
Performance Indicators (ref: action 9/16).
The Board was
informed that the regulations and code of practice had seen no
change since the Counsel opinion regarding the status of local
pension boards (ref: action 13/16).
The Board agreed to
remove action 22/16 as this was now a standing process.
It was confirmed that
there was a meeting planned with other local authorities to examine
Additional Voluntary Contributions arrangements, and this would be
updated at a future meeting (ref: action 26/16)
The Board is asked to note its
forward work programme.
Minutes:
Declarations of
interest:
None.
Witnesses:
Neil Mason, Senior Advisor (Pension Fund),
Pensions and Treasury
Alex Moylan, Senior Accountant, Finance,
Pension Fund and Treasury
Phil Triggs,
Strategic Finance Manager
Key points raised
during the discussion:
1.
The Board reviewed its forward work programme. The Board was
informed that the Pension Committee had requested a report on the
impact of the American election and EU referendum on asset
allocation, and that this would be reported on 11 November
2016.
Recommendations:
None.
Actions/further
information to be provided:
The Pension Fund
Committee report on asset allocation in light on events in 2016 to
be circulated to the Board.
39/16
UPDATE OF PENSION FUND COMMITTEE MEETINGS: 11 July 2016 and 23 September 2016
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To provide the Board with a verbal update on
matters discussed at the Surrey Pension Fund Committee.
Minutes:
Declarations of interest:
None.
Witnesses:
Neil Mason, Senior Advisor
(Pension Fund), Finance
Alex Moylan, Senior Accountant,
Finance, Finance
Phil Triggs, Strategic Finance Manager,
Finance
Key
points raised during the discussion:
The Board was
provided with an update on the 23 September 2016 meeting of the
Committee. The Committee had been informed of a change in the
Board’s funding level to 86.3%, as result of changes in the
assumptions around future salary growth, Consumer Price Index (CPI)
future pension growth and the discount rate. Officers highlighted
that this did not take account of the County Council implementing a
new Pay and Reward Strategy in June 2016.
The Board was
informed that the Committee had reviewed asset allocation due to a
manager allocation variance of 3.5%, which was outside the
tolerance threshold set in the asset allocation policy. The
Committee had taken the decision to rebalance the portfolio in
light of this:
Marathon (Global)
-2.7%
Legal and General
(UK) +1.7% (£60 million)
Majedie(UK) +1% (£30
million)
The Board discussed
the performance of fund managers. It was noted that it was
considered good practice to keep within the asset allocation policy
guidelines, rather than pursue short-term high performance.
Officers outline that it had been a good year in terms of
performance for the fund, with it still ahead of the Fund’s
target benchmark.
The Board was
informed that the Committee had agreed an investment of $50 million
in a private equity partnership focusing on secondary markets with
Goldman Sachs. Officers outlined that the Fund had made a previous
investment in 2011 of $40 million in an earlier version of the
package known as Vintage VI. This had been judged to have performed
well. The Board commented that the Fund had previously under
invested in the private equity market, and it was confirmed by
officers that this was addressed moving to 4.7% of the Fund’s
portfolio.
The Board was
informed that the Fund’s 2015/16 accounts had been approved.
Officers highlighted that the Statement of Investment Principles
was being phased out by April 2017 and replaced by an Investment
Strategy Statement. This was be undertaken following the actuarial
valuation, and it was expected to be taken to the Committee for
decision in February 2017. The Chairman raised a question as to
whether the new strategy would cover environmental, social and
governance considerations, it was confirmed that this would be the
case.
The Board discussed
two consultations being undertaken by central government, one
covering insolvency arrangements for Further Education Colleges and
the other making changes to the LGPS scheme in order to embed
“fair deal” regulations. Officers outlined a number of
details regarding the consultation responses from the
Council.
Recommendations:
None.
Actions/further information to be provided:
The
draft minutes of the Committee meeting on 23 September 2016 to be
circulated to the Board.
The
details of the two consultations and the Council’s response
to be circulated to the Board.
The Board is asked to note the content of this report.
Minutes:
Declarations of interest:
None.
Witnesses:
Neil Mason, Senior Advisor
(Pension Fund), Finance
Alex Moylan, Senior Accountant,
Finance
Phil Triggs, Strategic Finance Manager,
Finance
Key
points raised during the discussion:
The Board noted that
the title of the report was incorrect, and should read ‘2016
Actuarial Valuation Assumptions’.
The Board discussed
the change in member longevity, and whether this reflected a
national or Surrey specific trend. Officers commented that any
assumption reflected the profile of Fund members, as longevity was
calculated using individual member postcode data.
The Board questioned
how the separate elements of the valuation assumption had
influenced the improvement in the funding level up from 69.3% to
86.3%. Officers outlined that a reduction in the gilt yield had an
inverse impact on the funding level. It was explained that the
increase was attributable to changes in the following:
A reduction in the
projected salary increases (impact of 2%)
An reduction in the
projected pension increases (impact of 2.5%)
An increase in the
expected return above gilt yield (impact of 6%)
A change in the
methodology for calculating the discount rate (impact of
6.5%)
It was noted that the
current funding level figure was an estimation, and that the
initial results of the valuation would be available on 4 November,
in time for the Committee meeting on 11 November 2016.
The Board queried the
rationale for changing the methodology for calculating the discount
rate. Officers highlighted that the Fund had been the first local
authority client to ask Hymans to adopt this methodology, and it
was anticipated that it would become more common in the future. It
was commented that this was a decision that had been considered at
length by the Committee with a number of reports being produced
over a nine to twelve month period. It was felt that new
methodology would prove more responsive to the changing economy,
and better reflected the driver of fund liabilities.. It was also
noted that the Government Actuarial Department (GAD) also used a
CPI based methodology, and that this had influenced the
Committee’s decision.
The Board is asked to note the
content of this report and make recommendations if any further
action is required.
Minutes:
Declarations of interest:
None.
Witnesses:
Jason Bailey, Pensions Lead
Manager, Shared Services
Neil Mason, Senior Advisor
(Pension Fund), Finance
Alex Moylan, Senior Accountant,
Finance
Phil Triggs, Strategic Finance Manager,
Finance
Key
points raised during the discussion:
This agenda item was
taken out of order as witnesses had arrived for this
item.
The Board was
provided with the context of the report, including the delay in
producing 2014/15 annual benefits statements. It was explained that
the Pensions Regulator had agreed that funds would not be penalised
for this delay, and only a couple of funds had suggested they had
issued their annual benefits statements in time for the August 2015
deadline.
Officers informed the
Board that the 2015/16 statements had not been issued in line with
the August 2016 deadline. Statements had been produced by
mid-September for active members. Officers commented that the cause
of this delay was related to the workload of associating and
validating year-end returns, and the timing of the triennial
valuation of the pension fund. It was noted that this had not been
reported to the regulator as it was not considered a material
breach. This view had been taken as no members had contacted the
Pension Service regarding the statements, and there was considered
to be no material impact as a result of the delay.
4.The Board discussed the breach, and highlighted that
the Pension Regulator had emphasised the need to meet the August
2016 deadline, in view of the widespread failure of local authority
funds to meet the August 2015 deadline. In compliance with the
draft breaches policy, which was due to be discussed in the
meeting, the Board recommended that the breach should be reported
to the regulator, although noted this would not normally be
regarded as material.
The Board discussed
the transition arrangements to an electronic annual benefits
statement for active members in 2017. It was felt that this would
mitigate the logistical challenge of producing the statements in
time. Officers confirmed that all
employers in the Fund had been asked to supply email addresses for
each active member as part of the 2016 year-end returns in
preparation for the launch of member self-service and the issue of
electronic statements.
The Board raised
concerns that the electronic statement would not be appropriate for
all active members, particularly if there were issues with internet
access. It was confirmed that the Pension Service would continue to
provide a paper statement where requested by the employer but that
experience from other areas (e-payslips) suggested most local
government staff now had internet access.
The Board was
informed that deferred members would be notified in 2017 of the
intention to transfer them to electronic annual benefits statements
in future and asked to register for this. Officers highlighted that
non-respondents would continue to receive paper
statements.
Resolved:
The Board noted
the contents of the report.
Recommendations:
That
the delay in providing annual benefits statements be reported to
the regulator in line with the draft Breaches Policy process.
...
view the full minutes text for item 41/16
Jason Bailey, Pensions Lead
Manager, Shared Services
Neil Mason, Senior Advisor
(Pension Fund), Finance
Alex Moylan, Senior Accountant,
Finance, Finance
Phil Triggs, Strategic Finance Manager,
Finance
Key
points raised during the discussion:
This agenda item was
taken out of order as witnesses had arrived for this
item.
Officers introduced
the report by highlighting the more detailed metrics that had been
included following a request from the Board. The Board highlighted
that the information provided still needed to include the
appropriate statutory targets where relevant.
It was noted that the
figures reflected prior concerns reported to the Board about the
initial engagement with retiring members. It was noted that the
quarter two Key Performance Indicators (KPIs) was expected to show
a modest improvement in the areas of concern, and officers
anticipated a more substantial improvement in quarter
three.
The Board was
informed that in some cases the lengthy delays in initiating
contact with scheme members could be because employers had not
notified the Pension Services team in advance of a member retiring,
however there were also cases of genuine delay. It was queried
whether the distribution of different employers in such a scenario
could be presented as part of the KPIs. Officers commented it was
difficult to capture trends of poor performance in employer
notifications in this context, though this was something that would
be included in the forthcoming administration strategy. It was
noted that there were instances where the county council had been
late in notifying the Pension Service of retirement, though the
majority of late notifications were from other employers within the
fund.
The Board was
informed that a dedicated pension fund administration team had been
established for the Surrey LGPS Fund. This was in response to the
Board’s prior concerns about the impact that undertaking
pension administration for other funds could have on
performance.
The Board discussed
actions taken to improve workflow. This included a new dashboard
facility that would improve oversight of workflow. The Chairman
suggested that the Board visit the Pension Service team as part of
a training opportunity.
Resolved:
The Board noted
the contents of the report, including the current performance
issues related to transfers in and retirements.
It further noted that
improvement is anticipated in quarter 2 and quarter 3 of 2016/17
and anticipates evidence of this in future reports.
The Board is asked to note the
content of this report.
Minutes:
Declarations of interest:
None.
Witnesses:
Jason Bailey, Pensions Lead
Manager, Shared Services
Neil Mason, Senior Advisor
(Pension Fund), Finance
Alex Moylan, Senior Accountant,
Finance
Phil Triggs, Strategic Finance Manager,
Finance
Key
points raised during the discussion:
This agenda
item was taken out of order as witnesses had arrived for this
item.
The Board
was informed that the new internal customer service monitoring
process had commenced from 1 July 2016. It was expected that the
number of interactions recorded would increase as the process
became more embedded. Officers commented that it could be difficult
to distinguish a complaint from dissatisfaction with the provisions
of the LGPS, and highlighted that the pension administration team
would be looking to categorise comments and complaints as the
process developed.
The Board
raised a query as to the number of complaints investigated within
the target response time. It was noted that the team had been
unclear on the process, and that the Pensions Lead Manager would
expect to see an improvement in future reports. It was the case
that the policy set out that a response would be given within five
working days, with full resolution in ten working days.
Jason Bailey, Pensions Lead
Manager, Shared Services
Neil Mason, Senior Advisor
(Pension Fund), Finance
Alex Moylan, Senior Accountant,
Finance, Finance
Phil Triggs, Strategic Finance Manager,
Finance
Key
points raised during the discussion:
The
Chairman highlighted that the Board members should be conversant
with the principles of the breaches policy as a result of the
training they had undertaken. It was noted that the policy was a
work-in-progress and the Board was invited to comment, prior to it
being considered by the Pension Fund Committee on 11 November
2016.
The Board
noted the content and raised a few points of clarification. It was
confirmed that the breaches log would be reported to the Local
Pension Board on a regular basis.
The Board
queried what the possible consequences of a breach may be. Officers
outlined that it would depend on the nature of the breach, though
this may result in an internal review. It was noted that the
regulator had the power to impose a fine or intervene where
significant material breaches were identified. The Board
highlighted that fines were publicly reported by the regulator, and
this could have considerable reputational damage for the
fund.
The Board
proposed that the wording under ‘Effect’ in annex 2 was
expanded to include the Pension Fund Committee and
officers.
The Board
discussed the process by which a likely breach might be considered
by the Chairmen of the Local Pension Board and the Pension Fund
Committee. It was suggested that this was altered to allow a more
expedient consideration by the two Chairmen within a month of the
likely breach being reported, with the decision being reported to
the Local Pension Board at its following meeting.
Resolved:
The Board noted
the contents of the report.
Actions/further information to be provided:
Officers to update the breaches
policy to take into account the Board’s suggestions prior to
presenting it to the Pension Fund Committee for consideration of
approval at their meeting of 11 November 2016.
The Board is asked to note the
content of this report.
Minutes:
Declarations of interest:
None.
Witnesses:
Neil Mason, Senior Advisor
(Pension Fund), Finance
Alex Moylan, Senior Accountant,
Finance, Finance
Phil Triggs, Strategic Finance Manager,
Finance
Key
points raised during the discussion:
The Board
was informed that the employer accounting valuations were set in
compliance with one of two accounting standards. This produced a
prudent accounting valuation. Officers cited the example of further
education colleges, where the discount rate had been between 2.4
– 2.6%. This reflected a steady decline in government bond
yields, which had formed the basis of these standards.
The Board
commented that these valuations caused concern for employers when
reported, though it was also highlighted that it made no impact on
contributions. The Board confirmed that salary assumptions were
made on the basis of a common rate decided by the Pension Fund
Committee.
Neil Mason, Senior Advisor
(Pension Fund), Finance
Alex Moylan, Senior Accountant,
Finance
Phil Triggs, Strategic Finance Manager,
Finance
Key
points raised during the discussion:
Officers
highlighted that following a training session on 12 October 2015,
it had been proposed that the Board review the risk register on an
annual basis. The Board was informed that the only change was an
additional risk included regarding breaches (risk ref 19). The
Board was asked to note that this risk was treated partly through
the proposed breaches policy.
The Board
highlighted the pay and price inflation as posing a significant
risk to the Fund, particularly in light of the market response to
the European referendum. It was noted that the Pension Fund
Committee would be having training on the likely impact of events
in 2016 on the Fund, and Local Pension Board members were able to
attend.
Resolved:
The Board noted
the contents of the report.
Actions/further information to be provided:
Details of the Pension Fund
Committee training to be circulated to the Board.
The Board is asked to approve
its first annual report.
Minutes:
Declarations of interest:
None
Witnesses:
Neil Mason, Senior Advisor
(Pension Fund), Finance
Alex Moylan, Senior Accountant,
Finance
Phil Triggs, Strategic Finance Manager,
Finance
Key
points raised during the discussion:
The Board
reviewed its annual report. It was informed that the annual report
would be reported to the Pension Fund Annual General Meeting. Minor
amendments were proposed to take account that the report covered
activity in 2016/17.
Resolved:
The Board agreed the contents of the report, following minor
amendments to the compliance checklist to reflect that the report
covered activity in 2015/16.
Actions/ further information to be provided:
None.
48/16
EXCLUSION OF THE PUBLIC
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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.
PART TWO – IN PRIVATE
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.
49/16
REVIEW OF INTERNAL DISPUTE RESOLUTION CASES - QUARTER ONE 2016/17
The Board is asked to note the
contents of this report.
Minutes:
Declarations of
interest:
None
Witnesses:
Neil Mason, Senior Advisor (Pension Fund),
Pensions and Treasury
Alex Moylan, Senior Accountant, Finance,
Pension Fund and Treasury
Phil Triggs,
Strategic Finance Manager
Key points raised
during the discussion:
1.
The Board reviewed the Internal Dispute Resolution Cases report. It
was noted by officers that a learning point had been the need for
clearly documented decision-making on the part of the employer.
Resolved:
The Board noted the contents
of the report.
Actions/ further
information to be provided:
None.
50/16
PUBLICITY OF 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:
The Board agreed there would be no publicity
for items considered under Part 2.
51/16
DATE OF THE NEXT MEETING
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The date and time of the next Board meeting is
15 March 2017 at 10am.
Minutes:
The Board was informed that the current date
of the next meeting was 15 March 2017.
It was agreed that a meeting of the Board
would be scheduled in January 2017 to cover quarter three of
2016/17.
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