Agenda and minutes

Venue: Virtual Meeting - Online access

Contact: Laurence Ellis  Email: Laurence.Ellis@RBWM.gov.uk

Video Stream: Click here to watch this meeting on YouTube

Items
No. Item

328.

Introduction and Apologies

To receive any apologies for absence.

Minutes:

Apologies of absence received from Kieron Finlay and Julian Curzon.

329.

Declaration of Interest pdf icon PDF 108 KB

To receive any declarations of interest.

Minutes:

No declarations of interests.

330.

Minutes pdf icon PDF 195 KB

To approve the Part I minutes of the meeting held on 18th November 2021.

Minutes:

RESOLVED UNANIMOUSLY: That the minutes of the meeting held on 18th November 2021 be approved as a correct record.

331.

Scheme and Regulatory Update

To receive a verbal update.

Minutes:

Kevin Taylor, Pension Services Manager, introduced the verbal report, bringing 5 current issues to the attention of the Board. He started with the McCloud age discrimination remedy.

 

A Parliamentary Bill, the Public Service Pensions and Judicial Offices Bill, was laid before Parliament in July 2021 and made amendments to the Public Service Pensions Act 2013 in order to rectify unlawful age discrimination. As expected, it confirmed the remedy period as covering membership from the date of Scheme reform, 1st April 2014 for the Local Government Pension Scheme (LGPS) to 31st March 2022 for eligible members.

 

However, there had been further amendments to the Bill which would impact the McCloud remedy for LGPS. These amendments extend the scope of people potentially affected by the unlawful age discrimination. Originally, those in scope extended to scheme members who were within 10 years of retirement and were in the scheme on 31st March 2012. The amendments would extend in scope members to all who were in the scheme prior to 1st April 2012 and who do not have a disqualifying period. The increased scope of this amendment would create more work and require more resources in order to administer. In addition, administrators would need to collect more data for an increasing number of members to check who had been affected by the underpin.

 

While the new legislation was still being deliberated and guidance still awaited, it was anticipated that pension funds would need to have a plan to resolve the McCloud issue and implement the new remedy by 1st October 2023 in spite of new LGPS regulations and guidance expected to be released in Spring 2022.

 

Alan Cross, the Board Chairman, asked if it would be a realistic task to implement a plan in spite of the timescale, the potential people in scope, the resources available and complexity of the task. He also asked what representative bodies were saying about the situation. Kevin Taylor replied that the LGA (Local Government Association) had similar concerns in regard to conducting such a task without the relevant guidance being issued. He mentioned the difficulty in accessing data for many individuals which could go back many years. This would involve a lot of work for scheme administrators and scheme employers alike.

 

Jeff Ford wondered if RBWM Council was in a position to provide the information from many years prior. Nikki Craig stated that scheme employers are required to retain payroll data for 6 years plus the current year and that it would seem to be appropriate to start collecting data as soon as possible. Philip Boyton, Pension Administration Manager, replied that all scheme member records were up to date as of 31st March 2014 and from this date different scheme employers were in different positions with data depending on when they onboarded the i-Connect system. It was acknowledged there would be challenges in obtaining the data for certain scheme member records.

 

Kevin Taylor reassured Board members that pension records held by the Berkshire Pension Fund  ...  view the full minutes text for item 331.

332.

Administration Report pdf icon PDF 220 KB

To note the contents of the report.

Additional documents:

Minutes:

Philip Boyton, the Pension Administration Manager, introduced the item. He first highlighted to the Board that the figure for scheme employers yet to be on-boarded to i-Connect was 135 rather than 138 as the report stated. This was because, Volker Highways was split on the pension administration system with two distinct employer codes.

 

He also stated that there was continued progress with i-Connect, with a remaining 58 scheme employers, which represent circa 2,500 scheme member records, to on-board the i-Connect system in the next 12 months. He added that while Berkshire Pension Fund sought to have all scheme employers with 10 or more scheme members on-boarded to i-Connect by 31st March 2022, there had been some issues with scheme employers, such as some scheme employers stopped engaging with the Berkshire Pension Fund or did not have the functionality within their payroll systems to connect to i-Connect.

 

Nikki Craig suggested whether continuing to change the future date by when the Pension Fund would have all remaining scheme employers on-boarded onto the i-Connect system was worthwhile given the reasons some scheme employers had not already on-boarded.  Officers agreed but will continue to endeavour to encourage all current and new scheme employers to onboard the i-Connect system.

  

Alan Cross asked what the largest numbers of members would be involved in the 58 scheme employers, speculating that the high circa 2,500 scheme member records meant that some scheme employers would have a higher number of scheme members. Philip Boyton answered that while the number of scheme members under scheme employers would vary in size; and he added that trust employers had larger numbers of scheme members. He also added the numbers should not be in the thousands.

 

Jeff Ford sought clarification as to whether employers who were on-boarded onto the scheme were automatically required to sign up to i-Connect and if there was any penalty to employers who did not sign up. On the first point, Philip Boyton said that i-Connect would be one of the first things discussed with employers regarding their options around connectivity; and added that i-Connect was the Pension Fund’s preferred method. On the second point Damien Pantling, Head of the Pension Fund, indicated that a penalty would require legislative backing.

 

Philip Boyton then moved onto Special Projects, starting with the McCloud Judgement. He stated there was a recent meeting of the Southern Area Pension Officer Group (SAPOG) in regard to the new reforms to local pensions schemes under the Public Service Pensions and Judicial Offices Bill and how these other pensions funds were dealing with it. Philip Boyton mentioned Buckinghamshire Pension Fund and Hampshire Pension Fund began to collect historical hour and week data from their respective scheme employers with somewhat incomplete responses as well as increasing the size of their administration teams.

 

When Alan Cross asked if there were discussions at Berkshire Pension Fund on taking a similar route to the other pension funds, Philip Boyton responded there  ...  view the full minutes text for item 332.

333.

Risk Register pdf icon PDF 167 KB

To note the contents of the report and register.

Additional documents:

Minutes:

Alan Cross commented that there had been a major review and rewrite of the Pension Fund’s risk register at the previous board/committee cycle. He also mentioned that there was a comprehensive workshop session held on 25th January 2022 for the Pension Fund Committee which some Board members had attended.

 

Damien Pantling mentioned that during this session, it was recommended that the Pension Fund Committee approve to do comprehensive annual risk review sessions with officers and the Pension Board analyse and deliberate on the risk register. The Board noted the amendments that had arisen at the workshop described in the report.

334.

Administering Authority Discretions Policy pdf icon PDF 169 KB

To note the contents of the report.

Additional documents:

Minutes:

Damien Pantling introduced the item. As legally required, the Administering Authority, RBWM, for the Berkshire Pension Fund was required to publish an Administering Authority Discretions Policy. He reported that there were no material changes to Administering Authority Discretions Policy since 2018, when it was last reviewed. Though there had been some revisions to coincide with changes to LGPS regulations. It had been reviewed alongside the Employer Decisions Policy to ensure they complemented one another and that there were no contradictions.

335.

Pension Fund Abatement Policy pdf icon PDF 171 KB

To note the contents of the report.

Additional documents:

Minutes:

Damien Pantling introduced the report item. He reported the Pension Fund Abatement Policy was last reviewed in 2019 and there had been no major changes apart from minor wording changes. He also stated that the officers’ recommendation was to continue with the decision to not reduce pensions for retired members re-employed in Local Government service.

336.

Governance Compliance Statement pdf icon PDF 168 KB

To note the contents of the report.

Additional documents:

Minutes:

Damien Pantling introduced the item. He reported the Governance Compliance Statement was last reviewed in 2019 as part of a standard periodic review. There were no material changes, apart from the governance structure chart being updated which would be published on the Pension Fund’s website.

 

Damien Pantling announced that it was intended to update the training framework plan and records for the next meeting cycle with Pension Fund Committee in July 2022 and the Pension Board meeting June 2022. Once the Pension Fund Committee approved the training framework planning records, officers would append these to the governance compliance statement.

 

The Board then discussed the scheme employer representative membership on the Pension Board (in the context of what was agreed at an earlier meeting). Kevin Taylor stated a change in Board membership would require amending RBWM’s constitution. Nikki Craig suggested to convey this to Karen Shepard, Head of Governance, and hoped the Constitution could be amended at a future Full Council meeting.

337.

Business Planning pdf icon PDF 252 KB

To note the contents of the report.

Additional documents:

Minutes:

Damien Pantling introduced the item. He said that the annual budget for the administration of the Pension Fund and an annual cash flow projection once approved by the Pension Fund Committee would be appended. There was a delegated authority to the Head of Pension Fund (as the budget holder) to approve expenditure from the approved budget.

 

Damien Pantling indicated that the Pension Fund budget may not have been brought to the Board in recent years.

 

Damien Pantling also announced that he presented to the Pension Fund Committee a workplan for 2022/23. (This would also broadly be the Pension Board workplan).

 

The Board then discussed and commented on the key items of the report.

 

In reference to the Cash-Flow Forecast and Controllable Budget, Jeff Ford asked for clarification on whether the Employee Related Expenses effectively came down to the salaries budget, and whether the Management Expenses covered the investment costs of employing people to look after the funds. Damien Pantling confirmed this. Jeff Ford also asked if the drop in Management Expenses from 2019/20 to 2020/21 was due to the effect of the Fund joining LPPI (Local Pensions Partnership Investments). Damien Pantling believed it was because of efficiencies that came from a pooling arrangement as well as moving from a non-actuarial valuation year to a valuation year.

 

Alan Cross asked about the cashflow under key assumptions and risks. Damien Pantling explained that the cashflow was negative when taking into account the benefits and the contributions received on a primary basis; however, the cashflow would become positive because of the deficit recovery plan.

 

Alan Cross asked if the deadline for the audited statements for the 2021/22 accounts was 30th November 2022. Arthur Parker confirmed this.

338.

Investment Strategy Statement pdf icon PDF 258 KB

To note the contents of the report.

Additional documents:

Minutes:

Damien Pantling introduced the report item. The ISS (Investment Strategy Statement) was more specific in terms of target return and target income yield to match the cashflow for forecast.

 

The draft ISS was pending for second review with the actuary as well as being commented on by the LPPI (Local Pensions Partnership Investments). However, the draft had been reviewed by Pension Fund officers, the Pension Fund’s independent advisers and a couple of Pension Fund Committee members as well as the Board Chair who had all provided comments. The final draft would be presented to the Pension Fund Committee for approval.

 

In reference to Berkshire Pension Fund investing in 5% of its assets “locally”, Alan Cross commented that there would need to be caution because 5% of the Fund’s asset would involve the large movement of funds which could cause disinvestment from some areas and raise questions on these funds as well as create significant risk. It was explained that “local” in this context meant the UK.

 

Nikki Craig wondered whether members of the Pension Fund Committee may struggle to comprehend the Investment Strategy Statement. Damien Pantling replied that the Committee have the benefit of two independent advisers and LPPI.

339.

Responsible Investment Update pdf icon PDF 270 KB

To note the contents of the report and update.

Additional documents:

Minutes:

Damien Pantling introduced the report item. He stated this was the second time the responsible investment update had been made available to the public as part of the Pension Fund Committee agenda. The ‘green’ and ‘brown’ investment indicators, the former focused on renewable energy while the latter focused on carbon-intensive or fossil fuel extracted businesses, were reported in the public domain as accuracy could be placed on the balance sheet assets.

 

Damien Pantling discussed the LPPI’s Responsible Investment Policy Annex on Climate Change, which included several points: recording the net zero 2050 commitment, exclusion of fossil fuel extraction companies from the global equities fund and prioritising climate change in shareholder voting guidelines.

 

Before concluding, Damien Panting announced an AOB (any other business). He stated that during the last Pension Fund Committee meeting, there was an approval item whereby Committee was to set up a Task-and-Finish group in due course in order to ensure that the responsible investment policy was regularly updated.

340.

LOCAL GOVERNMENT ACT 1972 - EXCLUSION OF THE PUBLIC

“That under Section 100(A)(4) of the Local Government Act 1972, the public be excluded from the remainder of the meeting whilst discussion takes place, on the grounds that they involve the likely disclosure of exempt information as defined in Paragraph 3 of part I of Schedule 12A of the Act."

Minutes:

RESOLVED UNANIMOUSLY: That under Section 100(A)(4) of the Local Government Act 1972, the public be excluded from the remainder of the meeting whilst discussion takes place on the grounds that they involve the likely disclosure of exempt information as defined in Paragraphs 1-7 of part I of Schedule 12A of the Act.

341.

6 December 2021 Committee Papers

To note the contents of the report.

                          

342.

Verbal Report of Papers to be Taken to 7 March 2022 Committee Meeting

To receive a verbal update.