Agenda item

This report provides an update on the Surrey Pension Fund’s (the Fund’s) risk based response to the Coronavirus crisis. It also provides an update on the market outlook and proposed actions that the Fund should take.

NB: Annexes 3 and 4 are contained within item 16 as they contain Part 2

information.

Witnesses:

Neil Mason - Strategic Finance Manager (Pensions)

Nick Weaver - Head of Pensions Administration

Steve Turner - Investment Consultant (Mercer)

Key points raised in the discussion:

1. The Strategic Finance Manager (Pensions) introduced the report and noted that the Committee had been provided with the Surrey Pension Fund Coronavirus Plan in March and explained that both the Surrey Pension Fund team and the Pensions Administration team were working from home as a result of Covid-19. The Fund team had adopted agile working beforehand, whilst initially that adjustment was more difficult for the Administration team due to the number of staff involved and the complexity of the operation.
2. He highlighted the Coronavirus Risk Register which was categorised into the four strategic objectives: Funding, Investment, Governance and Delivery. It was at present reviewed on at least a weekly basis with updates shared initially to the Chairmen of the Committee and the Board. There were no material changes to the risk register over the last month suggesting a move towards business as usual, it would however remain live until the move further into a recovery phase.
3. The Fund value reached a low in March of £3.8 billion which had recovered to £4.2 billion and Mercer had been commissioned to map the recovery scenarios from an investment perspective.
4. The Strategic Finance Manager (Pensions) commended the way the Pensions Administration team led by the Head of Pensions Administration had responded to the crisis moving the operation to agile working, the primary job of the Pension Fund was to ensure that members were paid the right amount of benefits and in a timely manner which had been achieved during the pandemic despite the peak in deaths.
5. In response, the Head of Pensions Administration thanked IT, the Pension Fund team and the Pensions Helpdesk for their support during Covid-19. Minor operational improvements had been made, but more fundamental changes to deliver a better service in line with the identified delivery risks were needed to address the backlog and legacy cases from weak house-keeping in which cases were not closed properly.
6. A representative from Mercer outlined the Fund’s priority of the topping-up of multi asset credit as part of its standard portfolio rebalancing. The Fund had excess cash available for investments and discussions were being had about where to invest in, one option was yield credit spreads which were a key asset for Western Multi-Asset Credit and were at a current high. The Strategic Finance Manager added that the Fund team were comfortable that excess cash could be invested after having undertaken a risk assessment on the impact to the employer base.

RESOLVED:

The Committee:

1. Noted the Surrey Pension Fund Coronavirus Plan.
2. Noted the Surrey Pension Fund Coronavirus Risk Register.
3. Noted the Investment Market Update provided by Mercer and approved the following recommendations:

·         Continue with the key strategic changes to the portfolio approved by the pension fund committee, at its meeting of 13 September 2019;

·         Prioritise topping up multi asset credit as part of standard portfolio rebalancing;

·         Continue with a review of the gilts allocation, in accordance with the approval of the pension fund committee, at its meeting of 13 March 2020;

·         Review the allocation to UK and global property as part of the planned transition to BCPP property funds.

Actions/further information to be provided:

None.