Issue - meetings

a)      The Committee considered and commented on the update.

b)      The Committee reviewed and approved the newly created Clwyd Pension Fund EDI Policy

            Mr Latham took the Committee through each paragraph of this report, including progress against the business plan and current developments including the Pension Regulator’s (TPR) new General Code of Practice and the update from the Scheme Advisory Board (SAB).

            Mr Middleman of Mercer explained that the statement from SAB on LGPS surpluses was broadly as anticipated and is consistent with the way CPF’s funding strategy addresses surplus which is centred on contribution sustainability in the long term. The statement raises potential conflicts of interest when setting contribution rates. He explained that through its strong governance structure and dialogue with the main employers, the Fund ensures these potential conflicts are well managed and considered by officers and Committee. Other key parts of the statement included employer specific investment strategies where employers are exiting funds, and partial terminations where employers remove part of their liability. These issues are less relevant for the Fund principally because the majority of CPF employers are public sector bodies who are not expected to exit the Fund. However, if this becomes an issue in future, the matter will be brought to Committee for consideration.

            Mr Hibbert commented that Central Government appears to incorrectly view LGPS surpluses as a means of reducing Council Tax and as a pot of money for Government to direct. He noted the language used around the Government wishing not to direct funds on how or what to invest in, but to make general suggestions. He felt that if the Government provides an environment in which investments can grow, the Fund will find them and invest in them where suitable.

            Cllr Shallcross asked whether the ‘line’ between surplus and deficit had been moved to reflect the growing pot size needed to provide pensions for the aging population. Mr Middleman confirmed that when funding strategy is looked at and contributions are set, life expectancy and the aging population are taken into account to ensure the funding available is appropriate to meet these needs. He noted that the rate of growth of life expectancy is currently reducing based on latest data, which will be a discussion point to consider at the next valuation and will be picked up later this year as part of the interim funding review.

            Mr Latham handed to Mr Turner who explained the paragraph on Sharia Law. Mr Turner said it is useful to have this issue clarified by SAB, and though further advice is still to be delivered, there is expected to be minimal impact on the Fund’s investments. Concerns around Sharia Law are typically a concern for defined contribution pensions and Sharia compliant investment options can be offered in these schemes. However, this solution does not apply to the way LGPS funds invest. The clarification from SAB and the legal opinion will provide useful guidance in this area.

            Mrs McWilliam asked whether Sharia Law had ever been considered as part of the Fund’s AVC fund choices, and whether it should be. Mr Turner was not aware of this having been  ...  view the full minutes text for item 38