Agenda item

(a)        The Committee approved the Fund’s Business Plan including the budget for 2023/24

(b)        The Committee agreed the proposed changes to the administration team’s staffing structure at a total cost of just over £64k.

            The Chair handed over to Mr Latham and the Pensions Administration Manager, Mrs Williams, to introduce the Business Plan. Mr Latham explained that the business plan is designed to provide useful information for stakeholders, as well as being a critically important part of the Fund’s governance and management arrangements.

            Mr Latham talked through the structure of the business plan, highlighting key points including the staffing structure, the main strategies and objectives, and business as usual. The objectives were taken from the Fund’s existing strategies/policies which had previously been approved.

            Mr Latham explained the proposed key governance actions for the three years on Page 66, focusing on 2023-24. These included undertaking a training needs analysis, work on succession planning, business continuity and cyber risk, as well as external matters including responding to the Government’s implementation of the Scheme Advisory Board (SAB) Good Governance Review and compliance with the Pension Regulator’s (TPR) new General Code.

            Mr Latham then discussed the proposed funding and investments actions for 2023-24, including further work on managing climate risk, the UK Stewardship Code, asset pooling, and external developments including DLUHC guidance and consultation exercises which may result in changes for the Fund.

            The Chair handed over to Mrs Williams to present the second recommendation. Mrs Williams explained the background to the proposed changes to the Fund’s staffing structure, which involved introducing a new Principal Pensions Officer role:

            The recent recruitment drive in the administration team, while successful, had created a strain on resources while new staff were being trained. This alongside an increase in day-to-day business as usual tasks as well as project work, led to difficulty meeting legal and internal KPIs.

            The recommendation for a Principal Pensions Officer for a new project team was intended to protect business as usual by separating smaller projects to allow the Operational team to focus on the day-to-day business as usual tasks. This would reduce the risk of backlogs occurring and the potential need to outsource work externally at higher cost.

            The recommendation also formed part of business continuity planning, to assist with staff retention, succession planning and professional development. The role was intended to be appointed as a job share, which had been successful for the Principal Officer roles in the past, meaning two Lead Pension Officers would be trained by existing Principal Pensions Officers.

            Mrs Williams then took the Committee through the proposed key actions for administration from page 81 focussing on 2023-24, highlighting the current focus on workloads and business as usual meaning few new items were being proposed. She highlighted retrospective calculations for CARE revaluation, the McCloud remedy, and other expected national changes.

            Mr Latham presented the remainder of the Business Plan, including the proposed Fund’s three-year cashflow and budget for 2023-24. Highlights included:

The three-year cashflow showed the scheme maturing over time with total payments exceeding total income. This trend was expected to continue. The Fund’s Private Markets commitments were expected to cover any shortfall in the coming year. The Rebalancing Portfolio row of the cashflow projection represented the potential need to consider taking cash from investments to fund pension benefits in future years. Cashflow is monitored quarterly and reviewed annually, highlighting the ongoing difficulties in appointing a Fund accountant as a significant risk.

            The Operating Budget for the year showed a reduction in governance expenses due to the Fund reducing its support from consultants, assuming all vacant posts were recruited. The proposed cost of advice on Private Markets had also reduced as the Fund would be transitioning these to WPP.

It was assumed an estimated 5% increase to the value of the Fund, when estimating fund management fees.

The Budget included the proposed administration staffing changes, subject to approval.

            Mr Latham addressed the final points on the Business Plan:

The Risk Register on Page 60 - the investment risks were higher than target, due to the nature of investment markets these risks could never be insignificant while ensuring sufficient investment return.

            The Training Plan on page 65 - the results of the Training Needs Analysis will be incorporated into the plan as required.

            The Chair thanked both Mr Latham and Mrs Williams and commented that succession planning is vital especially given the age profile of senior Fund Officers.

            Mr Latham thanked the Committee for their support with the Business Plan.

RESOLVED:

(a)        The Committee approved the Fund’s Business Plan including the budget for 2023/24

(b)        The Committee agreed the proposed changes to the administration team’s staffing structure at a total cost of just over £64k.