The minutes were agreed as an accurate record
of the meeting.
42/22
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.
The Chairman
explained that there was an ongoing action for the board to
complete knowledge and understanding as part of the Board’s
training plan. TheLGPS Senior Officer
explained that audit was monitoring the completion of training and
thanked the board for completing the recent knowledge
assessment.
With regards to the
forward plan the new items 4a-c had been added to the plan at the
request of the Chairman.TheLGPS Senior Officer explained that in regard to 4a,
a response had been shared in June. With regards to 4b,
consultation responses would be shared once the consultation had
been completed and with regards to 4c, this was ongoing and reports
would be shared with the board at its next meeting.
The team was working
through its strategic business plan and would be updating the
forward plan accordingly in early 2023.
Recommendations:
That the Action Tracker and
Forward Plan be noted.
Neil Mason, Assistant Director
- LGPS Senior Officer
Nick Harrison, Chairman of
Surrey Pension Fund Committee
Key
points raised during the discussion:
The Chairman asked
theLGPS Senior Officer to expand upon the
net zero considerations for the Surrey Pension Fund and the Border
to Coast partnership pathway to net zero.
The LGPS Senior
Officer stated that the Fund had approved the six changes to the
risk register that the pension board had recommended. The funding
level as of 31 March 2022 was 108% and work was being undertaken
with employers around how this would flow into contribution rates.
The consultation on the responsible investment policy was launched
on 12 September and to date 6000 responses had been received. The
consultation would be taken to the responsible investment
sub-committee in the first week of January 2023.
The LGPS Senior
Officer explained that the Fund had been provided with a report by
Mercer which concluded that an immediate focus on companies with
less 1.5 increase in temperatures, excluding scope 3 emissions
would reduce the investable universe that the fund could invest in
by up to 85%. Officers had been asked to look at this and update
the terms of reference around how net zero would be
approached.Specialists in the field would be
instructed to conduct a report on the implications for the fund on
various different net zero scenarios. Border to Coast provided the
Fund with information on how they would seek to meet net zero by
2050.
The Chairman of the
Surrey Pension Fund Committee stated that the choices presented by
Mercer were stark and the committee wanted to set an achievable
target.
A Board Member
queried if an analysis of the likely impact on the fund would
firstly look at the impact on the investment returns of the fund.
The LGPS Senior Officer explained that investment theory would
suggest that a reduction in investable universe would increase the
volatility and potential for downside.
Actions/ further information to be provided:
That the Mercer report on net
zero impacts be shared with the Board.
The Chairman stated
that there had been a big improvement in the presentation of the
risk register.
The Head of
Accounting and Governance provided an update on the top three risks
including, Implementation of new financial systems leading to
delayed processing, data integrity issues or financial loss, Skills
/ knowledge gaps leading to inefficiency and poor performance and
Funding requirements higher due to actuarial assumptions materially
different to experience.
A Member of the Board
queried what risk was associated with dashboards. The LGPS Senior
Officer explained that the risk was in enabling the transfer of
information to be done correctly which in turn was reliant on
system providers. A number of people will have access to these
dashboards when they are introduced which will increase the number
of queries to the team about these.
The Board has
previously requested to be kept updated on progress relating to a
number of key administration projects and planned improvements
which may have an impact on members of the pension fund and the
purpose of this report is to provide an update on the current
status and progress against any specific target dates.
The Head of Service Delivery
introduced the report explaining that the report covered the last
quarter and specifically service performance for the last 6 months.
The Head of Service Delivery updated the Board on the audit
recommendations, our actual performance, the presentation of the
revised performance tables and backlogs.
It was explained that the
performance tables had been updated as per audit recommendations.
An update was given on the audit recommendations. New columns had
been added to the table including columns F and G around
outstanding cases. Another audit recommendation was around not
consistently meeting KPI's in the work areas being reported.
Service delivery managers now have the ability to monitor caseloads
via the insights software and are using this to consider changes in
priorities and resources.
The Chairman queried if anything
could be learnt from the loss of staff and what the reasons for
this was. The Head of Service Delivery explained that the service
ran a successful training programme which meant that people left
through promotions and natural progression to other roles and other
funds.
The Chairman of the Pension Fund
Committee queried what the consequences of low performance standard
for deferred status on the performance report meant. The Head of
Service Delivery explained that the numbers went up and down in
peaks and troughs and resources had been increased to reduce the
backlog. The consequences of low performance on deferred status was
that members were not being informed as quickly as the service
would like.
Officers were asked to provide an
update on transfers in and transfers out numbers and explained in
most cases the service was waiting on information from third
parties. In the past staff had not be trained on this process but
this was now being proactively addressed by the service delivery
manager. A bulk process to clear cases for deferred benefits was
being explored.
A Member of the Board suggested that
an extra column needed to be added to the performance table so
Member’s could measure performance from the last performance
report. The Member also asked for an exception paragraph to be
added to the report which picks up areas of concern.
The Chairman asked if the backlog
cases could be separated so those cases which would be ongoing for
a longer period of time could be differentiated out in the
performance report. The Head of Service Delivery estimated that it
would take two years to sort out the backlog.
With regards to Annex
3, it was queried if officers were surprised there had been so many
login issues. TheHead of Service Delivery stated that this
was expected as annual benefit statements would have gone out from
June-August and would be published via the MSS portal which would
have meant logging in to the portal to access statements. Forgotten
logins were understandable for this period.
Neil Mason, Assistant Director - LGPS Senior Officer
Paul Titcomb, Head of
Accounting and Governance
Key
points raised during the discussion:
TheLGPS Officer provided the Board with
an update on the current transformation plans which included to
successfully transition the Pensions Helpdesk from Business
Operations to the Surrey Pension Team, to develop a customer
insights strategy, to successfully transition Banking Controls from
Business Operations to the Surrey Pension Team, to continue
embedding the culture and training required in line with our Vision
and Mission.
There was an expectation that the transition of the Pensions
Helpdesk from Business Operations to the Surrey Pension Team would
go live at the end of November 2022.
The Head of Accounting and Governance explained that the
transition of banking controls had begun, the first stage of which
would be training the pensions team. A timing of full transition
would be provided in due course.
The transformation work would be absorbed into business as usual
and a head of change management was being recruited
too.
It
was agreed that as the transformation work was being absorbed into
the service a continuous improvement update would be provided to
the Board moving forward.
Actions/ further information to be provided:
For the Board to be provided
with acontinuous improvement update from the
pensions service as part of its forward plan.
This report considers the completed audits in the
2021/22 Internal Audit Plan and the progress made on agreed actions
since the previous update provided to the Board meeting on 29 July
2022.
Neil Mason, Assistant Director - LGPS Senior Officer
Paul Titcomb, Head of
Accounting and Governance
Elaine Laycock, Principal
Auditor
Key
points raised during the discussion:
TheHead of Accounting and Governance
provided the Board with an update on five internal audits. Some of
these had been completed whilst officers were working through the
findings on the others which were still in progress. The 2022/2023
Internal Audit plan had been agreed and was attached to the
report.
With regards to the
Pension Fund Banking Controls audit it was explained that a
progress update would be provided to the Board in the early part of
2023 although good progress had been made to complete the actions
listed in the audit. With regards to the review of Investment
Strategy targets, a Member of the Board asked if this was a review
of the targets or a review of how the targets were reached. It was
explained by the LGPS Senior Officer that there was a mismatch
between the asset allocation as it was and the asset allocation
‘to be’ and therefore we were out of step with the
asset strategy.
It was explained that
Northern Trust was the custodian of our investments. It was
imperative to ensure our general ledger reflects these investments
on a timely basis.
The Principal Auditor
explained that the Pension Fund was in its second year of having a
standalone Audit Plan. A brief summary was given of internal audit
activities for the pension fund for 2022/2023.
Neil Mason, Assistant Director - LGPS Senior Officer
Key
points raised during the discussion:
A Member of the Board
commented that they had found the first part of the LGA foundations
course helpful.
Referring to
paragraph 5 of the report, theLGPS Senior
Officer explained that the actuary had included short term
projections on inflation, so that the current inflation environment
was included in their analysis. Work was being undertaken on cash
flow analysis and from April 2023 pensioners would be paid 10%
more.
The LGPS Senior
Officer thanked theEmployer Manager for her
work on this project.
Neil Mason, Assistant Director - LGPS Senior Officer
Sandy Armstrong,
Technical Manager
Key
points raised during the discussion:
TheLGPS Senior Officer stated that the consultation on
TFCD was taking up a lot of officer time.
The Chairman
explained that booking was now openfor the
LGPS Governance conference 2023, which takes place on 19- 20
January 2023. The Board was recommended to attend.
The Technical Manager
explained that the implementation of the McCloud remedyin the Teachers’ Pension Scheme (TPS)
willmean some teachers will be
retrospectively eligible for the LGPS covering the period from
1April 2015 to 31 March 2022. The TPS did not
move to being a CARE scheme until 1 April 2015, prior to which it
was final salary. For the TPS implementing the McCloud
remedy,members affected will be put back
into the ‘legacy’ scheme (final
salary) from 1 April 2015to 31 March 2022 (remedy period) and then moved across to the
‘reformed’ scheme (CAREscheme)
from 1 April 2022. Around 18,000 teachers would be impacted by this
although it is unclear at present how many will be in the Surrey
scheme. Additional work would be created for the pensions
team.
A Member asked for
the LGPS Senior Officer to explain the cost cap at 2% and if this
was the cost of administration for the fund. The LGPS Senior
Officer explained that this was the entire cost for managing the
fund.
Members were asked to
confirm their attendance to the LGPS governance
conference.
Actions/ further information to be provided:
None
Recommendations:
For the report to be
noted.
52/22
DATE OF THE NEXT MEETING
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The next meeting of the Board will take place
on 17 February 2023.
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