Agenda item

(a)  That the Committee approved the business plan in Appendix 1 relating to the period 2019/20 to 2021/22 subject to the addition of an objective relating to asset pooling and a note clarifying the increase in investment manager fees.

Mr Latham noted that the aim of the business plan is to demonstrate that the Fund is managing its risks (financial and operational) and how this will be resourced. He noted that the majority of the items within the business plan this time are ongoing and were therefore included in last year's plan with the exception of some bespoke projects.

Mr Latham noted that the business plan contains the Fund's mission statement for the Fund and the objectives from the key policies and strategies of the Fund.

Mr Everett recommended that they should add an objective covering a specific risk relating to balancing the needs of the Fund and the pool, noting the positive and negative risks of being within the pool. Mr Latham agreed and commented that the Investment Strategy Statement would also require updating.

Mr Hibbert asked whether working with the Actuary on the valuation would be every four years rather than every three years. Mr Middleman said that this is being discussed and will be subject to a consultation and so can only be updated once the changes in Regulations come into force so it is correct that at the moment the plan refers to three years.

Mr Latham directed the Committee to the four bullet points at the bottom of page 30. He noted that the top and bottom bullet points (relating to transitioning assets to the pool and implementing benefit structure changes as a result of national changes) are external factors that affect the Fund. However, the Fund need to ensure that they still keep on top of the other key areas (e.g. continuing to promote our online facilities and finalising the roll out of improved systems to employers) as there is a risk that the external factors take the resources away from the other areas.

Mr Latham highlighted pages 31 and 32 which show that the Fund still has a positive cashflow but that more work will be done on this as part of the actuarial valuation.

Mr Hibbert asked about the fund manager fees and whether it would be worthwhile including a footnote to explain what proportion of the fees have increased due to manager cost transparency and which are due to additional costs. The footnote could include why the fees are increasing and what the Fund are doing about it, as he knows that there are reasons which are not explained here. Mrs Fielder agreed with this comment. Mrs Fielder confirmed that most of the fee increases are due to manager cost transparency where they declare all costs given that many are now signed up to the transparency code. Mrs Fielder noted that it is difficult to estimate performance fees and that transaction costs tend to be small.

A lot of work goes into these numbers and the figures reflect the increase in the asset size of the Fund. Mr Hibbert noted his view is that the estimates of the Clwyd Pension Fund fees are better than what he normally sees. Mrs McWilliam agreed that a short note would be useful as it would reduce the potential for criticism from third parties if it explained that a significant amount of the increase is due to greater cost transparency from managers.

Cllr Jones queried the budgeted outsourcing numbers on page 32, which have increased from £300,000 to £900,000. Mr Latham confirmed that it is not an increase in cost as such. The main reason is that Project Apple has delayed some work and so some costs will come through in 2019/20 rather than 2018/19. Therefore remainder of the unused 2018/19 budget has therefore been moved to 2019/20, which relates to the GMP reconciliation and backlog outsourced projects.  

Mr Latham directed the Committee to page 37 which sets out training and conference dates for their diaries and it is suggested that they attend.

Mr Latham then highlighted some of the key tasks relating to governance.  He noted one of which is to develop a business continuity plan on the back of the recent continuity testing carried out by the team. Mr Everett agreed that the pension fund should develop this as part of the Council's work on business continuity.

Mr Latham discussed G6 and noted that the SAB had appointed Hymans to consider effectiveness of governance in LGPS administering authorities, particularly around avoiding conflicts between the pension fund responsibilities and other administering authority responsibilities. It was noted that the project is no longer being referred to as separation.  A questionnaire will be sent to funds to collect their views on whether separation is needed.

Mr Hibbert asked about the review of co-opted and local Board members, in particular the scheme member representative for the trade unions and whether they are able to reappoint the existing representative, subject to the usual democratic processes. Mrs McWilliam confirmed that the decision is up to the trade unions who will be asked to nominate an individual, and they can choose to re-nominate and existing representative if they wish.

Mrs Fielder discussed the funding and investment items within the business plan. The Fund are looking to review their responsible investment policy. It was noted that cashflow and liquidity will be considered as part of the valuation process when contributions are reviewed. The actuarial valuation and investment strategy review will take place this year and the asset pooling work is ongoing.  Mrs Fielder will continue work on the employer risk management framework.  Mrs Fielder summarised by saying it is expected to be another busy year for the Fund and advisors.

Ms Meacock discussed the key administration items; they are developing an under/overpayment policy which is also required as part of the GMP reconciliation and the review of the administration strategy which is planned for approval in June 2019.

Item A6 relates to the amendment regulations from MHCLG which change the entitlements to some partners benefits where a scheme member has died. This is a backdated change and so they need to revisit previous death benefit cases to see if their payment should increase or decrease. This project will be dealt with once Project Apple has been completed.

Item A7 relates to members where the Fund scheme members have moved and the Fund does not know the new address details. They may be reaching retirement and so need to be traced. In addition, the Regulations state that all refunds must be paid within 5 years of the member’s leaving date. As the reform took place from 1 April 2014, the 5-year point of new scheme is coming up in April 2019 and so they need to try to trace those members before the period ends.

Item A12 refers to the ongoing implementation of iConnect which now has several employers on it including two of the main Councils. Moving forward Mrs Robinson and the ELT team will be working with Wrexham CBC to go transition onto iConnect.

Mrs Robinson noted that half of the ELT team are currently working on Project Apple and the other half are pushing through the priority cases, for example death cases and retirements which will require a payment. They have also been working on iConnect for Wrexham CBC. Mrs Robinson noted a longer term objective is to consider if any other employers, in addition to Wrexham CBC and Flintshire CC, could benefit taking the services offered by the ELT team.

Mr Hibbert asked if there was a paragraph on stock lending to be included in the Investment Strategy Statement. Mr Latham confirmed that this is already included.

RESOLVED:

(a)  That the Committee approved the business plan in Appendix 1 relating to the period 2019/20 to 2021/22 subject to the addition of an objective relating to asset pooling and a note clarifying the increase in investment manager fees.