Agenda item

The Committee approved the Business Plan in Appendix 1 relating to the period 2021/22 to 2023/24, including the budget therein for 2021/22, which includes some changes to the existing staffing structure as noted therein.

            Mr Latham introduced the proposed Clwyd Pension Fund business plan for the next three years and noted the following key points:

• He thanked the team efforts in preparing the business plan and stated that it did not include any new major matters.
• He highlighted that it was good practice to regularly review Fund policies so this was included.
• Given its importance, climate change was now being considered separately within the plan.
• Pooling guidance is due to be released and this could have a significant impact on the Fund.
• The Fund will undergo an interim actuarial review this year. The interim review helps employers' budget planning and allows their finance officers to identify in advance expected costs that will arise as a result of the next actuarial valuation.
• The administration and communications section is now separated into areas that are regulatory driven or not.

Mr Hibbert asked for a report from the JGC on their stock lending activity, as promised. Mr Latham confirmed that this is reported at every JGC meeting, however it was a confidential item. Mr Latham confirmed he will investigate how this information can be shared with the Committee.

            In presenting the introductory section of the Business Plan, Mrs Fielder made the following key points:

·         She noted the introduction from page 128 and the changes made in the Fund update to the structure charts (highlighted on page 129).

·         In addition to business as usual, the Fund had identified the areas of focus for the next three years on page 134 to 137.

·         As part of the cashflows, the Fund had been quite conservative in estimating 2022/23 contributions given that this will be the next year after the actuarial valuation.

·         The estimations of drawdowns and distributions in private markets had continued to be difficult following the COVID-19 related market volatility seen in February and March 2020. In the past year, the Fund’s distributions were higher than expected. The estimated net distributions in excess of drawdowns were c£17 million compared to original budget of c£8 million. This highlighted the difficulty to estimate this figure.

On the lump sum payments on page 139 of the agenda, Councillor Bateman queried the increase on actual budgets of c£3 million. Mrs Fielder confirmed this figure included both retirement lump sums and death grants. She noted it was difficult to determine lump sums that members plan to take when they retire as members have the option to commute which results in a larger lump sum in return for a smaller pension.

Mr Vaughan noted the following key points regarding the operating budget 2021/22 on page 140.

·         Overall, the governance expenses were budgeted at c£2.9 million, which was a slight increase on last year’s budget.

·         The budget for the investment manager expenses were c£20.8 million.  

·         Employee costs had increased, but this was due to additional costs in relation to the McCloud remedy programme. He added that the budget did not include any inflationary increases, apart from employees with pay of less than £24,000.

·         There was an increase in IT costs also in respect of additional work surrounding the McCloud judgment.

·         The additional costs relating to the McCloud remedy programme were c£645k as outlined separately at the bottom of page 140.

·         The overall operational budgeting costs were c£26.2 million.

Councillor Bateman queried the significant increase of investment consulting fees. Mr Vaughan clarified that the increase was due to planned project work in respect of mostly private markets and responsible investment. This was in the main work that would tail off over this and the next few years.

Mr Everett stated the potential annual pay award for 2021/22 (set nationally) remains a financial risk for all public sector employers.

Mrs Fielder expected the training sessions to remain virtual over the next few months and welcomed views from the Committee and Board around how training should be delivered in the future.

RESOLVED:

The Committee approved the Business Plan in Appendix 1 relating to the period 2021/22 to 2023/24, including the budget therein for 2021/22, which includes some changes to the existing staffing structure as noted therein.