Agenda item

(a)       That the Committee considered and approved the IAA draft and supported its recommendation to Council.

(b)       That the Committee delegated authority to the Chief Executive to approve minor amendments to the IAA before submission to Council.

(c)        That the Committee supported the new delegations between the Council, the new JGC and this Committee and recommend to Council that the Chair and Vice Chair would automatically be the Member and Deputy for the JGC.

(d)       That the Committee noted the progress made with the appointment of the operator.

 

Mr Latham (Clwyd Pension Fund Manager) introduced an update on the Working Together Project in Wales.

 

            Mr Latham explained the report was in three parts covering the Inter Authority Agreement (IAA), the required changes to the Councils’ Constitution (to reflect implementation of the new Joint Governance Committee (JGC)) and an update on the procurement of an operator.  The recommendations agreed by the Committee would be put to the full Council.

A summary of the main features of the IAA are as follows:

·         While the IAA is still a work in progress, it is not expected to change significantly and it will require a change to the Councils’ constitution.

·         It involves the creation of the JGC and an Officer Working Group (OWG).  The JGC would consist of an elected member representative from each of the 8 Constituent Authorities. The OWG will consist of officer practitioners where 2 officers per Authority will be members.

·         Each of the Constituent Authority’s represented will have one vote per member on the JGC.

·         The Chair and Vice-Chair of the JGC would be agreed at a later date.

·         A host council was needed to co-ordinate and link in with new JGC and Carmarthenshire County Council take on this role.

·         Allocation of costs, delegations and the arrangement to exit the Pool are also covered. In relation to governance, the IAA explains that there would be a training policy in place and provision for the JGC/OWG to take appropriate advice.

·         Although there is no scheme member representation co-opted onto the JGC, meetings will be open to the public and there are requirements to liaise with Local Pension Boards and hence their member representatives.

·         The location of the meetings will be rotated around the 8 Constituent Authorities.  Agendas, reports and minutes will be in Welsh and English, with a simultaneous translation of proceedings during the meetings.

·         With regards to the delegations to each Constituent Authority as set out in Schedule 2, it was recommended that these are delegated by Council to this Committee with the exception of points 5 & 6 (amendments to the IAA and termination of the agreement).  If there were any major amendments to these two points then would have to be reverted to Council.

 

            It was queried if the Host Council would change in the future.  Mr Latham explained that it could change in the future and Mrs McWilliam added that should the Host Council change, then it would need an amendment to the IAA.  This would have to be agreed by all Pension Fund Committees/Councils as it would be classed as a significant amendment.

 

            A question was asked about paragraph 7.1 of the IAA and how advice was to be provided.  Would Carmarthenshire County Council take on the role of monitoring officer for the pool?  Mr Latham explained that the expectation is it will likely be the Host Council. 

 

            Cllr Bateman asked about provisions for Voluntary Exits (page 36).  Mr Latham said it was hoped that this would not materialise but there was provision for any Fund to exit if circumstances changed.  

 

            It was also noted that if any Constituent Authority chose to leave, then they would have to meet all the costs associated with this. Mrs McWilliam explained that in practice there were not many other options.  Exit would need to be a long term decision and only extreme circumstances would lead CPF to consider leaving the pool.  Mrs McWilliam noted that in her opinion the biggest operational challenge would be selecting the right operator.  Cllr Wilson noted that the IAA includes provision for other Funds to join the pool.

 

            The nominations to the JGC have to be made by full Council rather the Clwyd Pension Fund Committee and it must be an elected member. It was proposed that the Chair and vice Chair are put forward as representative and substitute for the JCG.  This would be the recommendation from the Pension Fund Committee to full Council for a decision. The timing of this will be the AGM in May.  The Committee agreed with this approach.

 

            With regards to the procurement of the pool operator, the plan is that it will be in place by July 2017.  The Pension Fund Committee will be updated on this at future meetings.

 

            As part of the discussions Mr Hibbert read out the following statement regarding the IAA and made a number of points for consideration.

 

Statement

Introduction

UNISON has been at the forefront of improving the participation of Scheme members in the decision making processes of their Pension Funds. This pressure has led to the creation of Local Pension Boards (with equal employee and employer representatives which assist Pension Fund Committees. Clwyd Pension Fund Committee also has a co-opted Scheme Member Representative with voting rights selected by the recognised NJC trade unions. This position is currently held by Steve Hibbert, UNISON.

The pooling of pension funds to generate economies of scale, access to larger investment opportunities and reduce investment costs (both known and currently unknown by the individual funds) is generally welcomed by UNISON and should be a benefit to the scheme members and employers alike.

Tory Chancellor Osborne’s statement that these pooled funds would be ‘British Wealth Funds’ with the implication that investment decisions could be diverted to ‘pet’ investment projects for the government of the day and therefore the opportunity to use Local Government worker’s pension monies to ‘generate positive publicity’ for political means rightly raised concerns throughout the Funds and the trade union. UNISON sponsored a petition which received sufficient signatures to afford a debate in Westminster Hall and also helped generate more than 23000 responses to the government consultation none of which made any fundamental changes to the proposal.

Steve Hibbert, UNISON and the scheme members are grateful for the efforts of Officers, the Chair and colleagues (both Elected Members and trade union reps) through the Joint Council for Wales, to ensure scheme member representation on the Joint Governance Committee of the welsh pool, which have unfortunately been rebuffed.

Clwyd Pension Fund Committee is now being asked to ratify the proposed Inter-Authority Agreement (IAA) that will govern the approved welsh pooling arrangement, the Joint Governance Committee (JGC).

Scheme Member Concerns

Marcus Jones M.P. the Pension Minister, during the debate confirmed:

 

 “I assure Hon. Members that there is an opportunity for trade union representation on pools. That is a matter for the individual pools themselves and depends on their governance arrangements, but the individual local authority members that support each scheme will have the right to be part of setting up those pooling governance arrangements, and it will therefore be their decision on whether union representatives are on the pools”.

However, I understand that only one has chosen to do this. Excuses given include the Local Government Act prevents anyone but Elected members to be on these bodies. Indeed the Flintshire’s Monitoring Officer’s advice (para. 1.06) is that “the nominations to the JGC (representative Member and Substitute…must both be elected members of a Council and members of the Pension Fund Committee”.

Point for Consideration – This Committee should not agree to the delegations outlined in para. 1.06 without sight and understanding of the Monitoring Officer’s advice to Flintshire County Council regarding the requirement that only Elected Members of the Committee can be nominated as Representative Member and Substitute.

During previous debates at Clwyd Pension fund Committees, I have raised concern regarding the location of meetings of the JGC, the power held by the chair and the ability of one fund to influence all. The current IAA falls short of what I have previously suggested would mitigate those concerns.

Point for Consideration – This Committee should not agree to the proposed IAA on the grounds that in order to reduce the possibility of undue influence that the Chair and location of the meetings should rotate around the funds on a meeting by meeting basis.

Schedule 3 (.10) requires the JGC to “liaise with Pension Boards as appropriate in line with CIPFA Guidance…” (my italics).

Point for Consideration – This Committee should not agree to the proposed IAA on the grounds that the requirement to liaise with Pension Boards is insufficiently clear without the CIPFA Guidance and I’d suggest insufficiently robust with the CIPFA Guidance.

Point for Consideration – This Committee should not agree to the proposed IAA on the grounds that it includes a greater requirement to engage with Pension Boards than is expressed for this Committee.

If this Committee accepts that the (elected) Member Representative or their (elected member) substitute acts on behalf of this Committee, what is the mechanism for seeking the mandate of this Committee prior to casting any votes?

Point for Consideration – This Committee should not agree to the proposed IAA on the grounds that its position cannot be gained on voting matters ahead of any vote taking place.

Schedule 6, para. 6.1 allows for each Committee to propose motions to the JGC but these must be seconded (as normal).

Point for consideration – This Committee should not agree to the proposed IAA as its nuanced positions may not be supported by others and therefore never be debated at the JGC.

 

I therefore propose that:

1.    Clwyd Pension Fund Committee does not approve the draft Inter-Authority Agreement and does not support its recommendation to Council

 

2.    Clwyd Pension Fund Committee does not support the delegations outlined in para’s. 1.05 and 1.06 as it allows for a lower standard of Governance in the Pool than Clwyd Pension Fund currently benefits from.

I’d suggest to the Committee that in passing the above, there wouldn’t be a severe impact on the Pooling process (as Chairs and Officers can continue to meet as now) but there would be a short delay in the formalisation of the JGC whilst the Pool reconsiders its position regarding scheme member representation (chosen by the recognised trade unions) and revises the IAA accordingly so that it can be ratified by this Committee, through an additional meeting if necessary.

            Mrs McWilliam responded recommending that the Committee assess each Point of Consideration in turn. Mrs McWilliam also advised that the Committee needed to decide as a whole which points needed to be taken forward (if any). 

Point for Consideration – This Committee should not agree to the proposed IAA on the grounds that in order to reduce the possibility of undue influence that the Chair and location of the meetings should rotate around the funds on a meeting by meeting basis.

            Mr Hibbert’s concern is over one Fund’s dominance over the meetings – the JGC Chair should change with each meeting.  

            Cllr Wilson said that the 8 members will decide on the Chair of the JGC but Mr Hibbert’s main concern is that this decision is made in unrecorded pre-meetings as opposed to the actual meeting which undermines the overall governance.  Mr Latham explained that they need a consistent voice for the Welsh Pool as there will be national meetings as well as cross pool meetings.  He stressed that Carmarthenshire County Council would be the Host Council only and not the lead council.  The Chairman highlighted that the Joint Chair meetings have been very focussed on working together.

            Mrs McWilliam queried with Mr Hibbert that his stance was that the PFC recommend that the IAA is not signed and Mr Hibbert confirmed this was the case on the basis of the points made in his Statement.

            The Committee were then asked to vote on whether to approve the IAA as drafted at the moment in relation to the location and chair i.e. not to require rotation of location and chair at each meeting.  The result of the vote was:

For - 5

Against - 2

Point for Consideration – This Committee should not agree to the proposed IAA on the grounds that the requirement to liaise with Pension Boards is insufficiently clear without the CIPFA Guidance and I’d suggest insufficiently robust with the CIPFA Guidance.

AND

Point for Consideration – This Committee should not agree to the proposed IAA on the grounds that it includes a greater requirement to engage with Pension Boards than is expressed for this Committee.

These two points were considered and voted on concurrently.

            Mr Hibbert highlighted his concern about the lack of mechanism  to allow engagement with the Committee before decisions are made at the Joint Governance Committee.  He stressed he was not suggesting officers or elected members would not be acting out of remit.  .  

            Mr Owen (Employer representative Clwyd Pension Fund Board) said in his view this would be dealt through the existing mechanisms once the IAA is agreed but Mr Hibbert stated that he would prefer all these matters to be clearly defined at the outset.

            The Committee were then asked to vote on whether to approve the IAA as drafted at the moment in relation to the areas covered by the points for consideration.  The result of the vote was:

For - 6

Against - 1

Proposal - Clwyd Pension Fund Committee does not support the delegations outlined in para’s. 1.05 and 1.06 as it allows for a lower standard of Governance in the Pool than Clwyd Pension Fund currently benefits from.

The Committee were then asked to vote on whether support the delegations outlined in para’s. 1.05 and 1.06 as drafted.  The result of the vote was:

For - 6

Against - 1

            The Committee then agreed the first three recommendations, subject to an amendment that the Chair and Vice Chair would automatically be the Member and Deputy for the JGC.

 

RESOLVED: