Venue: Committee Room C, County Hall, Kingston upon Thames, Surrey KT1 2DN. View directions
Contact: Andrew Spragg
Items
No.
Item
1/17
APOLOGIES FOR ABSENCE AND SUBSTITUTIONS
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Minutes:
Apologies were received from John Orrick.
Apologies were also given by Denise Le Gal, the Chairman of Surrey
Pension Fund Committee, who had hoped to attend.
It was noted that Alex Moylan, Senior
Accountant, was leaving the Pensions and Treasury team to take up
an appointment at Southwark Council. The Board thanked Alex for his
support and work.
Sue Grimstead, Operations Manager, Pension
Services
Neil Mason, Senior Advisor
(Pension Fund), Pensions and Treasury
Alex Moylan, Senior Accountant,
Finance, Pension Fund and Treasury
Key
points raised during the discussion:
The
Chairman introduced the item and took the Board through each action
in turn. The Board was informed that an update on Key Performance
Indicators would form part of the meeting (ref: 8/16). There was an
update expected on frozen refunds at the Boards next meeting (ref:
11/16). The Board confirmed that there had been no change to
governance structures anticipated as a result of the counsel
opinion and it was agreed this item would be removed from the
tracker (ref: 13/16). The Board confirmed there were no irregular
Freedom Of Information requests in the last quarter
(ref:22/16).
Officers
confirmed that the draft administration strategy was expected to go
to the Surrey Pension Fund Committee in May 2017 (ref:25/16) and
that the Board would see a provisional draft of this work as part
of the development of the new strategy.
The Board
was informed that a review of the Additional Voluntary
Contributions was currently being considered in collaboration with
the London local authorities (ref:26/16). This would enable an
efficiency of scale in undertaking the review work. The Board was
told that this work would be undertaken during 2017.
Officers
confirmed they would circulate a copy of the final administering
authority discretions with a summary of changes since the Board
reviewed it in July 2016 (ref:27/16). The Board was informed it
would receive an item on its March meeting on scheme employer
authority discretionary statements (28/16). The Board noted that
asset allocation would be included in the financial information for
the next Board meeting (ref:36/16).
The Board
was informed that the delay in providing annual benefits statements
had been reported to the regulator. The regulator had acknowledged
the report, agreed with the Fund view that the breach was not
material and noted that there was an improvement plan in place
(ref:41/16). Officers agreed to circulate the referral and
regulator response to the Board.
The Board
requested an update on the transfer to online benefit statements to
be brought to the next meeting (ref: 41/16).
The Board
reviewed its action tracker, and it was highlighted that several
changes would be made in response to comments concerning the action
tracker. The Board also agreed that it would have an item on the
future governance arrangements for pooled funds at an appropriate
future date. It was proposed that a horizon scanning session be
held in March to help identify key areas of interest to assist the
new Surrey Local Pension Board in 2017/18.
Actions/ further information to be provided:
Items for
15 March 2017:
an update
on frozen refunds
Scoping
process for the new administration strategy
Update on
scheme employer authority discretionary statements
To provide the Board with a verbal update on matters
discussed at the Surrey Pension Fund Committee.
Minutes:
Declarations of interest:
None
Witnesses:
Sue Grimstead, Operations Manager, Pension
Services
Neil Mason, Senior Advisor
(Pension Fund), Pensions and Treasury
Alex Moylan, Senior Accountant,
Finance, Pension Fund and Treasury
Key
points raised during the discussion:
The Board was
informed that the breaches policy and administrating authority
discretions had been approved by the Pension Fund Committee on 11
November 2016. The Committee had
considered an investment in the Darwin Leisure Development Fund. An
investment of £20 million in the Darwin Leisure Property Fund
in 2013 by the Pension Fund had seen a good return of 36.8%. The
Board was told that the Committee sought additional assurances
about the period of investment, and the contingency arrangements if
a leisure centre was to fail.
Officers advised the
Board that the Committee had reviewed the governance arrangements
for Borders to Coast. There had been questions raised about section
151 officer involvement, and the articles of association were being
discussed by legal representatives from each Fund. The articles of
association would require approval by the Council, and a paper
would be considered on 21 March 2017. The Board confirmed it would
review the articles at its meeting on 15 March 2017.
The Board was
informed that the Fund risk register had been updated to add the
outcome of the US election. It had also been requested by the
Committee that the register included an additional risk around
cyber security.
Actions/ further information to be provided:
The Board to receive a report
on the Borders to Coast articles of association for 15 March
2017
The Board is asked to note the
content of this report.
Minutes:
Declarations of interest:
None
Witnesses:
Sue Grimstead, Operations Manager, Pension
Services
Neil Mason, Senior Advisor
(Pension Fund), Pensions and Treasury
Alex Moylan, Senior Accountant,
Finance, Pension Fund and Treasury
Key
points raised during the discussion:
It was
noted that the valuation was the position as of 31 March 2016. The
Board noted that liabilities had decreased by £300 million,
and that an overall increase in the funding had put the Fund in an
improved position since its valuation in 2013. The Board was
advised that it was difficult to make comparisons with other funds
due to the different methodologies applied by different actuaries.
Officers commented that Hymans were considered to use a prudent
methodology.
The Board
was informed that the Government Actuary’s Department made an
actuarial assessment of all local government schemes as a basis for
comparison. This assumption was made using the methodology applied
to unfunded schemes: the Consumer Price Index + 3% to calculate
unfunded liabilities. This valuation had seen the majority of local
government pension scheme funds assessed as 100%
funded.
The Board
queried what impact the new methodology had on the discount rate
for employer. Officers commented that this had no material impact,
and the change had been intended to improve the monitoring of the
monthly ongoing position. This had the benefit of improving
strategic investment decision making, as it reduced the level of
fluctuation that had been caused by using a GILT-based rate during
a period of volatility in the GILT market.
The Board
reviewed each of the aspects that had changed the actuarial
assumptions. It was noted that changes in the investment experience
and membership experience had reduced the deficit. The Board was
informed that instances of mortality had decreased over the three
year period, and that the actuarial assumption was that longevity
would plateau in the coming years.
The Board
was informed that the new mechanism for categorising employers in
terms of risk had benefited some employer contribution rates. It
was also noted that this method of categorisation had had no
adverse affect on individual employers’ contribution rates,
when compared to the methodology adopted in the 2013
valuation.
Officers
commented that the new categorisation was the first step to a more
integrated investment strategy for the Fund, alongside the
unitisation of assets. It was noted that this would ensure that the
Fund could be more responsive to individual employer
positions.
The Board
queried how many employers had seen an increase in contribution
rates. It was agreed that further detail would be provided to the
next Board meeting.
Actions/ further information to be provided:
The Board to receive
information on the change in contributions rates and funding level
shown by type of employer for the March 2017 meeting.
Sue Grimstead, Operations Manager, Pension
Services
Neil Mason, Senior Advisor
(Pension Fund), Pensions and Treasury
Alex Moylan, Senior Accountant,
Finance, Pension Fund and Treasury
Key
points raised during the discussion:
The Board
was informed that the structure of the Pension Administration team
had been altered to ensure that there was a specific resource
dedicated to the Surrey Fund. It was noted that there was a
division of work-streams between new work coming in and work in
progress.
The Board
expressed concern that, despite previous assurances, a number of
Key Performance Indicators (KPIs) had not shown the progress
expected. The Chairman queried the timeframe for improvement, and
was informed that this an area the team was seeking to
address.
Officers
highlighted that there were several operational changes being made
to the administration team’s processes, and that these were
expected to improve data reconciliation and prioritisation of
tasks. The Board asked what demand analysis was undertaken and
informed that this was largely based on past experience. Officers
commented that there was work being taken to improve performance
monitoring across the team.
The Board
questioned what progress was made in regard to implementing an
online portal for employers. It was informed that issues with data
governance had meant delays, and that the Pension Administration
team were intending to pilot a new self service portal with the
larger district councils in the first instance.
The Board asked for clarification on
the following:
why
transfers in and out of the fund were not measured;
the reason
for an 18% drop in member satisfaction and the number of
respondents to the satisfaction survey;
the reason
for a drop in performance for retirement options being provided to
members following employer notification; and
whether
specific individual employers were repeatedly not providing
contributions within the 21 day statutory timeframe.
6.The Board was informed that the administration
strategy would see a number of changes to the KPIs the Fund
produced, and how they were presented. It was noted that it was
expected that a new performance monitoring framework and scorecard
would be developed for quarter 2, 2017/18. This would include more
customer service data to help understand member experience. The
Board was informed that it would have an opportunity to review the
scoping process for the new administration strategy at its meeting
in March 2017.
Actions/ further information to be provided:
The Board to receive a note
clarifying the queries related to the administration
KPIs.
That future KPI reports include
the statutory timescales where relevant to each KPI.
Sue Grimstead, Operations Manager, Pension
Services
Neil Mason, Senior Advisor
(Pension Fund), Pensions and Treasury
Alex Moylan, Senior Accountant,
Finance, Pension Fund and Treasury
Key
points raised during the discussion:
The Board
commented positively on the clarity of the report and subsequent
audit opinion. It was noted that a summary had not been produced as
was normally the case, due to the increased workload pressures
created by the triennial valuation.
The Board
was informed that the funding strategy statement reflected the
position prior to the completion of the Fund valuation. There would
be a new funding strategy statement prepared to take account of the
valuation.
Actions/ further information to be provided:
The draft funding strategy
statement to be circulated to the Board.
Sue Grimstead, Operations Manager, Pension
Services
Neil Mason, Senior Advisor
(Pension Fund), Pensions and Treasury
Alex Moylan, Senior Accountant,
Finance, Pension Fund and Treasury
Key
points raised during the discussion:
1.The Board queried progress against the auditor
recommendations. It was confirmed that the issue related to new
starter letters had been resolved. The Board was also informed that
the recommendation regarding cash balances had been
implemented.
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