Agenda item

The Committee noted the Governance update.

Mr Latham took the Committee through this quarterly update report, highlighting the following:

-       Paragraph 1.02 on the spring budget discussed the Government intention to move to fewer pools, with assets in excess of £50bn. The WPP would be well below this new threshold. When pooling was first introduced, Wales was exempt from the previous threshold, however it was unclear if this exemption would apply to any new threshold.

-       Regarding the training plan in paragraph 1.06, Mr Latham explained that the Pensions Regulator’s General Code had been delayed and therefore the training scheduled for 26^th April would either be cancelled or repurposed for investment governance training in which case in-person attendance would be preferred. The Committee would discuss this with officers following the meeting.

            Mr Hibbert expressed concerns about the rationale for the changes in ratings in risk 3 relating to conflicts of interest and fiduciary responsibility in paragraph 4.02 of the report.   He wanted to make it clear that since joining the Committee in 2014 he had been committed to acting in the interest of all scheme members.  He noted his ongoing concerns around the perceived lack of appetite to divest where engagement is failing referencing the fact that some areas, he has previously highlighted relate to assets of less than £30m within the Tactical Asset Allocation Portfolio. His view was that using the risk of not meeting future liabilities as a reason for not doing certain things was inappropriate in many situations such as in relation to the TAA example. He considered that if the change in rating of risk was a direct criticism of his personal capabilities and integrity, he would have no choice but to resign from the committee. Mr Hibbert left the meeting at this point.

            The Chair stated what a valuable member of Committee Mr Hibbert was and he would be truly sorry if he were to resign. He agreed with Mr Latham, the Head of Clwyd Pension Fund, that they would set up a meeting with Mr Hibbert to persuade him to stay on the Committee.

            Mr Latham explained that he had not had any advance notice of Mr Hibbert’s intentions. He referred to the points highlighted by Mr Hibbert and explained that there is training and a plan of action to look at how these points can be progressed. He agreed that Mr Hibbert was an extremely valuable member of the Committee would be disappointed if he did not continue to be a member. He particularly highlighted the value of Mr Hibbert being a voting scheme member representative.

            Councillor Rutherford highlighted that he was a full-time officer for Unison but in another area and he had not been aware of Mr Hibbert’s intentions. He also expressed his concern about Mr Hibbert not continuing to being a member of the committee noting Mr Hibbert was always passionate about his responsibilities and has added so much value to the fund with his input over the years.

            Councillor Swash noted that he felt some of the concerns raised by Mr Hibbert were valid and he was also very sad at the turn of events. Cllr Swash also asked for clarification around the reasons for the change in risk in paragraph 4.02.

            Mrs McWilliam agreed what a valuable member of the committee Mr Hibbert is and how disappointed she was at the fact he felt the conflict of interest risk change was directed at him which was not the case.  She then went on to clarify that the change in the rating of the risk was aligned to a point made at the previous Committee meeting, where Committee members had recognised it was important to get proper advice before any decisions were made and particularly in relation to areas such as climate change. She reminded the Committee that the investment subject matters that were being discussed were extremely technical.  If proper and clear advice is not provided, then there is a risk that the Committee do not fully understand changes being proposed and the implications of those changes, and therefore there is a risk that inappropriate decisions could be made. She highlighted that the risk is still low – it had been changed from very low to low and she expected that it would revert to very low after the decisions being made at the Committee in June, following the training in May.  She finished by saying that it is important that risk registers are regularly updated to respond to situations as they arise.

            [Post meeting note – In a separate discussion after the Committee between Mr Hibbert, the Chair and Vice Chair, Mr Hibbert was able to discuss in greater depth his concerns and frustration with the format of virtual meetings. At the conclusion of that discussion, Mr Hibbert agreed to remain on the Committee.]

 RESOLVED:

The Committee noted the Governance update.