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Agenda, decisions and minutes

Venue: Delyn Committee Room, County Hall, Mold CH7 6NA

Contact: Maureen Potter 01352 702321  Email: maureen.potter@flintshire.gov.uk

Items
No. Item

70.

Declarations of Interest (Including Conflicts of Interest)

To receive any Declarations and advise Members accordingly.

Minutes:

Mrs McWilliam (Independent Advisor – Aon Hewitt) gave a presentation regarding the Pension Fund’s Conflict of Interest Policy and declarations of interest register. (A copy of the presentation was handed out to members).  She explained that all Committee Members and officers are required to complete declarations of interest forms.  She explained that for Councillors, this is in addition to the declarations of interest requirements as included in the Councils' Code of Conducts.

Mrs McWilliam said PFC members have to be mindful of potential conflicts of interest when making decisions related to the Clwyd Pension Fund. Examples include:

·         Every three years an actuarial valuation of the Pension Fund is carried out and if there is not enough money in the Fund, then employer contributions may have to increase. Employers have to think about affordability and what impact it will have on their budgets.  In particular, councillors have to wear two hats; the role on the Committee is to safeguard the Pension Fund rather than to consider the impact on their individual Councils budgets.

 

·         They need to act in the best interest of the members e.g. if there is an opportunity to invest in a new Council building then they need to make sure it is right for the Pension Fund rather than the Council.

 

The policy requirements also apply to the officers and the advisors (e.g. investment advisors should be open and transparent when providing advice that could lead to more business for their firm). 

Mr Latham (Clwyd Pension Fund Manager) handed out declaration of interest forms. 

Councillor Small asked about family members who work for Flintshire County Council and whether they had to be declared. Mrs McWilliam said yes as they could be a member of the LGPS (or could potentially be eligible in the future).

Councillor Llewelyn Jones declared a personal interest as being a member of the Clwyd Pension Fund for all items.

 

71.

Minutes pdf icon PDF 108 KB

To confirm as a correct record the minutes of the last meeting held on the  21st March 2017.

 

Decision:

It was agreed that the minutes could be received, approved and signed by the Chairman as a correct record.

 

Minutes:

The minutes of the meeting of the Committee held on 21 March 2017 were submitted.

 

RESOLVED:

 

It was agreed that the minutes could be received, approved and signed by the Chairman as a correct record.

 

72.

Appointment of Vice Chair

Appointment of Vice Chair and note that the Chair and Vice Chair are therefore appointed as Member and Deputy respectively of the Joint Governance Committee for the Wales Pooling Collaboration

 

Penodi Is-gadeirydd a nodi bod y Cadeirydd a’r Is-gadeirydd, felly, wedi’u penodi fel Aelod a Dirprwy, yn y drefn honno, o'r Pwyllgor Cydlywodraethu ar gyfer Cydweithredfa Cyfuno Arian Cymru

 

Decision:

Councillor Bateman was put forward by Councillor Mullin to be Vice Chair of the Pension Fund Committee. This was seconded by Councillor Small and agreed by all of the Committee.

 

Minutes:

Councillor Bateman was put forward by Councillor Mullin to be Vice Chair of the Pension Fund Committee. This was seconded by Councillor Small and agreed by all of the Committee.

 

73.

Clwyd Pension Fund Update pdf icon PDF 118 KB

To provide Committee Members with a high level summary of issues across the Fund and an update on the use of delegations since the last Committee meeting.

Additional documents:

Decision:

(a)       That the Committee considered the update and provide any comment;

 

(b)       That the Committee approve the revised organisation structure for the Technical Team and ring-fence the appointment of the Lead Technical Officer.   

 

Minutes:

Mr Latham provided an update on the Pension Fund.  He highlighted that he has reduced the number of reports under this agenda item given the new members to the PFC but said that these would be picked up as part of the Committee training.

 

Mr Latham asked if everyone was available on 19 July for the first day of training on Governance; this was agreed by all members. The second training day will be on funding occurring the week beginning 24 July, and this will be provided by the Fund Actuary.

 

Mr Latham informed the Committee that due to positive investment returns, the Pension Fund was 86% funded as at 31 March 2017. Nikki Gemmell (Support Actuary – Mercer) said that the funding position had improved further from the stated position in the papers – funding position was 89% at the end of May and was up to c90% funded in the last couple of days.  Kieran Harkin (Fund Investment Consultant – JLT Group) said that the value of the Fund’s assets was £1.746m as at end of May.  Mr Latham noted that the current funding level was as high as he had ever known.

 

Mr Latham drew attention to the issue on pages 32/33 of the papers as they are identical; he noted that page 32 is incorrect.  He said that it was regarding the ongoing monitoring of Fund Managers and there is nothing significant to highlight at the meeting.

 

Mr Latham distributed a document from LAPF Investments regarding pooling which members might find useful. Mr Latham and the Chair will be travelling to Cardiff on Thursday for the first Joint Governance Committee meeting.  The Wales Pool will be known as the Wales Pension Partnership.

 

Mr Latham said there was still some work to do regarding the Workforce planning of the Administration Section and the reorganisation of resources with succession planning and business continuity a  focus. He drew the Committee’s attention to Appendix 4 which shows the current structure and proposed structure for the Technical section. The additional cost following the restructure is minimal.

 

Councillor Bateman asked who the Lead Technical Development Officer was.  Mrs Burnham confirmed this is a new position in the Technical Team and will be ring-fenced within the existing team.  Mrs Burnham said that due to someone retiring they needed to restructure this sooner rather than later.  They are only looking at the Technical Team at the moment but going forward will look at the wider team as well.

 

Ms Brooks said that if it helped the new Committee members, the CPF Board had been looking at workforce planning within the Fund's staffing and supported any changes that would assist the team meeting the requirements of the business plan.

 

 

 

RESOLVED:

 

(a)       That the Committee considered the update and provide any comment;

 

(b)       That the Committee approve the revised organisation structure for the Technical Team and ring-fence the appointment of the Lead Technical Officer.   

 

74.

LOCAL GOVERNMENT (ACCESS TO INFORMATION) ACT 1985 - TO CONSIDER THE EXCLUSION OF THE PRESS AND PUBLIC

Exclusion of the Public and Press

Local Government (Access to Information) Act 1985 – To consider the exclusion of the press and public


Decision

The following item is considered to be exempt by virtue of Paragraph(s) 14 of Part 4 of Schedule 12A of the Local Government Act 1972 (as amended)

 

 

Gwahardd y Cyhoedd a'r Wasg

Deddf Llywodraeth Leol (Mynediad at Wybodaeth) 1985 – Ystyried gwahardd y Wasg a'r cyhoedd


Penderfyniad

Ystyrir bod yr eitem ganlynol yn eitem eithriedig yn rhinwedd Paragraff(au) 14, Rhan 4 yn Atodlen 12A Deddf Llywodraeth Leol 1972 (fel y'i diwygiwyd).

 

Decision:

RESOLVED:

That the press and public be excluded for the remainder of the meeting for the following item by virtue of exempt information under paragraph 14 of Part 4 of Schedule 12A of the Local Government Act 1972 (as amended).

75.

Markets in Financial Instruments Directive II (MiFID II)

To provide Committee Members with a presentation on the current status of MiFID II for Members to approve that the Fund follows the procedures in the FCA Handbook, when published, to be recognised as a Professional Investor

Decision:

(a)       That the Committee notes the potential impact on investment strategy of  becoming a retail client with effect from 3rd January 2018.

(b)       That the Committee agrees to the commencement of applications for elected professional client status with all relevant institutions, as soon as the FCA handbook is approved, in order to ensure it can continue to implement an effective investment strategy.

(c)        In electing for professional client status, the committee acknowledges and agrees to forgo the protections available to retail clients.

(d)       That the Committee agrees to approve delegated responsibility to the Chief Executive for the purposes of completing the applications and determining the basis of the application as either full or single service.

 

Minutes:

Mr Harkin gave a brief update on MIFID II and then handed over to Mr Buckland to go through the presentation as training for new members, and to clarify it for existing members. He then proceeded to talk through the details of the slides.

 

Mr Buckland highlighted the key points including informing them that the implementation of the MIFID II directive has been pushed back to January 2018, and that it will, on paper, increase the protection to local authorities as they will now be classed as “Retail clients” rather than “Professional Clients”. However,  the “Retail classification” will mean that local authorities will not be able to access complex investment products anymore. There will be a process to “opt-up” to “Professional Client” status, although the details of the process are yet to be confirmed. Concerns were raised about how the Clwyd Fund could prove the criteria required to opt up to be a professional client, and what the impact would be.

 

Mr Buckland noted that MIFID II also has implications for pooling as some local authorities within the same pool may be classed as professional clients whereas others will be retail clients. It was noted that Jeff Houston, of the LGA, has raised the issue that the LGPS could not invest in infrastructure as retail clients which is one of the aims of pooling.

 

Mr Harkin said that there will be more detailed investment training coming up regarding investments but if MIFID II was implemented in the way it was originally proposed, there could be serious impacts on funds which could cause the fire sale of assets e.g. retail clients would not be able to invest in some of the alternative assets (listed as real assets and private markets on page 15 of the slides).

 

Councillor Bateman asked whether Brexit would have an impact on MIFID II. Mr Harkin said it could have future implications but whilst the UK is still in the European Union, MIFID II will be in place. Councillor Bateman then asked if this was built into UK law; Mr Harkin said that as MIFID II would be coming into effect in January 2018, the UK would still be in the European Union and so would still be impacted regardless.

 

It is expected that the FCA will respond back on the consultation by end of June and the hope is that the opt-up procedure will be simplified and that the Clwyd Fund will be in a good position to do this.

 

Mr Latham said that the LGA have been working with fund managers to enable the local authorities to have a standard set of documents, so whilst all LGPS will have to complete them, they will be consistent  documents. The recommendation is that Flintshire County Council in its role as administering authority to the Clwyd Pension Fund opts up to professional status and that the Chief Executive be delegated the authority to take forward the application process with fund managers and advisers to “opt up” the Pension  ...  view the full minutes text for item 75.

 

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