Witnesses:
Neil Mason, Strategic Finance
Manager (Pensions)
Nick Weaver, Head of Pensions
Administration
Anna D’Alessandro,
Director - Corporate Finance
Key
points raised in the discussion:
- The
Chairman noted that risk A22 on the Council’s move out of
County Hall was graded Red at the last Pension Fund Committee but
had since been changed to Amber, recognising that efforts were
being made to secure accommodation for the Pensions Administration
team at a location close to County
Hall.
- Responding
to a Member query, the Strategic Finance Manager (Pensions)
explained that moving the administration to a new location did not
pose any special logistical risks because it was already
ring-fenced from the other elements of Orbis. The Head of Pensions
added that it was important to house the Helpdesk and the
administration function in the same building in order to facilitate
cooperation and maintain a good working relationship.
- In response
to a Member query on the timescale of the move, the Director -
Corporate Finance stated that the move was not imminent and
explained that there was an options appraisal with Property
Services later in the year to further discuss the logistics of the
move. Finalisation of which directorates were moving to the new
civic heart in Woking and those which would be dispersed around
existing sites remained outstanding.
- The
Strategic Finance Manager (Pensions) discussed the review of
governance in the LGPS by the Standards and Outcomes Workstream and
the Compliance and Improvement Workstream working groups and how
the Fund was meeting the recommendations of SAB in order to develop
Phase III of the ‘Good Governance’ report which would
go to SAB next month.
- To increase
accountability, the Strategic Finance Manager (Pensions) explained
that the ‘Good governance in the LGPS’ report
identified the proposal for each administering authority to have a
single named officer - ‘the LGPS senior officer’ - who
was responsible for the delivery of the pension function. That may
be a relevant senior officer with good knowledge of the pension
function and, even if it was the Section 151 officer, a change to
the constitution would be needed.
- The
Strategic Finance Manager (Pensions) positively noted the
introduction of the requirement for s151 officers to carry out LGPS
relevant training which would ensure a good level of knowledge and
understanding to be passed between the Board, SAB and Pension Fund
Committee.
- Discussing
the recently approved Council budget, the Strategic Finance Manager
(Pensions) emphasised that the Surrey Pension Fund budget was
ring-fenced from it. In response, the Chairman noted that it was
good practice to separate the employing authority from the
administering authority and requested that training for Members of
the Board and Fund Committee be run alongside each
other.
- The
Strategic Finance Manager (Pensions) provided an update on the 2019
Valuation noting changes from 2016 to the Funding Strategy
Statement (FSS), including colleges and higher education
institutions which were adversely affected by the decrease in their
recovery periods and treated similarly to private companies. He
explained that the Pension Fund team were in consultation with the
Department for Education on the matter and the affected colleges
and admission bodies, with the change to come into effect on 1
April 2020. In response to Members, the solution was not one size
fits all with the affected colleges and admission bodies and the
priority was the Fund’s wider solvency.
- Responding
to a Member query on the differences in engagement between the
Board and Fund Committee, and Border to Coast (BCPP) with their
scheme members and employers, the Strategic Finance Manager
(Pensions) explained that pooling companies such as BCPP were asset
managers and not decision-makers - unlike Members of the Board and
Fund Committee which had representation on BCPP joint committee
meetings.
- The
Chairman commented that each local authority managed its own
strategic decision-making and the Strategic Finance Manager
(Pensions) noted that revised guidance on pooling from Government
detailed the level of discretion that pension funds retained. The
Strategic Finance Manager (Pensions) stated that there were clear
benefits for the Fund to pool with the larger resources available
within BCPP.
- A Member
queried the McCloud judgement which affected actuarial improvements
being returned to employers and the Strategic Finance Manager
(Pensions) responded that no remedy had been decided regarding
McCloud but given that the older scheme with an accrual rate of
1/60th it was inherently less generous than the new in the 1/49th
scheme and only the few members who had significant pay increases
would benefit from the underpin. The guarantee of the current
underpin expires in 2022, in itself, would not have a material
effect on the liabilities - there would be minor additional
charges.
- The
Strategic Finance Manager (Pensions) informed the Board that the
Pension Fund Committee was reviewing the Fund’s own
Responsible Investment (RI) Policy to develop its core investment
beliefs, balancing good returns and responsible investment -
spectrum of capital. The Fund’s RI would be assessed in
relation to the spectrum of capital and the selected areas within
the 17 UN Sustainable Development Goals with progress on the matter
to be provided at the next meeting of the Board.
- In response
to a Member, the Strategic Finance Manager (Pensions) noted that
the Pension Fund team and Members of the Committee were engaging
with the action group Divest Surrey which was affiliated with
Extinction Rebellion, to inform them of the Fund’s RI
approach.
- The
Chairman reported that the draft Administration Strategy had been
approved and the Strategic Finance Manager (Pensions) added that
the consultation on the strategy with scheme employers had been
extended.
RESOLVED:
The Board noted the content of
this report.
Actions/further information to be provided:
- That
Members of the Board and Fund Committee have future training
alongside each other.
- The Board
to receive an update on the Fund’s own Responsible Investment
(RI) Policy at its next meeting.