Agenda item


The Board is asked to note the contents of this report and the verbal update at the meeting.


Declarations of interest:





Jason Bailey, Pensions Lead Manager

Neil Mason, Senior Advisor (Pension Fund), Pensions and Treasury

Key points raised during the discussion:


  1. The Board was informed that the 91% increase in the funding level had seen the majority of individual employer deficits decrease. Officers noted that there had not been a significant impact on contribution rates, with the exception of academies. It was explained that when academies converted, they were assessed at a low funding level due to their initial full funding of historic pensioner and deferred liabilities, this meant that future funding was accelerated due to there being no requirement to fund pensioner and deferred liabilities prior to conversion . The Board was informed that the bigger employers in the fund were part of a stabilisation funding programme, which meant contribution rates were not significantly affected in light of the funding level increase. This was intended to ensure longer term stability for those larger employers in setting their contribution rates.


  1. The Board discussed how community admitted bodies were able to improve their funding levels through providing securities such as a charge against property. It was noted that independent covenant firms were an option, and that legal and other costs for these arrangements were recharged to the employer. The Board discussed the different categorisations on the basis of probability and how this applied to different employers.


  1. The Board discussed Fund investments. It was noted that Mercer was revising its asset allocation on behalf of the Fund in light of positive performance. The Board highlighted that there was an opportunity to look at wider investments such as bonds or infrastructure investment, in order to ensure longer term security on the Fund’s returns. Officers commented that infrastructure investment would be a consideration, though this would be considered more viable in the pooled Fund arrangements once in place.


  1. The Board was informed that the Pension Fund Committee had made a commitment of £35-£40 million to Darwin Property Fund, contingent on a reduction in management fees. It had agreed an investment of £15 million to Standard Life, and declined a similar investment with HGA as it was felt that management fees had been too high.


  1. The Board discussed whether the Fund was considering a de-risking strategy trigger point for deficit management. Officers commented that the previous proposed trigger had been based on a gilts plus methodology, and that the new actuarial methodology of Consumer Price Index (CPI) plus did not permit a similar application. The Board expressed the view that this could be revisited in light of current Fund performance.


  1. The Board discussed the representations made by the public with reference to fossil fuel and “sin stock” investments. It had been agreed that a response from the Chairman of the Pension Committee would be supplied to address the key points raised in respect to this.


  1. Officers informed the Board that cyber security had been added to the Fund risk register. Board members queried what insurance arrangements were in place in respect to this. It was highlighted that fund managers were expected to undertake their own arrangements, and that the Pension Services would clarify whether it was covered under corporate insurance arrangements for the council.


Actions/ further information to be provided:


  • Officers to provide Pension Committee response to fossil fuel investments.
  • Officers to confirm insurance arrangements for Pension Services in the event of a cyber security issue




  • That the Pension Committee consider what appropriate measures could be taken in order to reduce risk in response to the increasing funding level.


Supporting documents: