To receive any apologies for absence.

There were no apologies for absence received.

To receive any declarations of interest.

Councillor Stephen Newton, Wokingham Borough Council (Advisory Panel), declared that his wife was a member of the scheme

To approve the Part I minutes of the meeting held on 19^th June 2023.

The Part I minutes of the meeting held on 19 June 2023 were approved as a true and correct record.

To note to report.

Damien Pantling, Head of Pension Fund, delivered the quarterly reviewed Risk Register aligned with the Risk Management Strategy. The report was taken as read but Damien Pantling highlighted the disclosure of 18 proposed changes including three deletions with a total of 43 risks on the revised Risk Register.  

Damien Pantling drew attention to two risks. Firstly, he drew attention to the addition of climate change risk in respect of both physical and transitional climate risk, it was noted the risk was flagged as red before mitigation.  

Damien Pantling noted the other changes were to risk scores of risks 26 and 44 relating to the McCloud remedy. He noted the new regulations that were laid in early September and coming into force on 1 October 2023 and the fund had some way to go to be fully complaint. 

Damien Pantling said they were making good progress and in the process of recruiting a Technical Officer to help deliver the project. He noted they would be delivering a high level implementation plan before the next Committee cycle. Damien Pantling continued by saying they were not alone in this journey and the was an issue facing much of the Local Government Pension Scheme, LGPS. 

(Councillor Tisi joined virtually at this time) 

Councillor Majeed questioned the removal of Brexit as a standing risk and what kind of risks were being looked at with the direction of Brexit still uncertain? Damien Pantling responded by saying the risk was covered under general geopolitical risk and general external risk as it was now considered a less specific risk. 

Councillor Da Costa noted that climate change or environmental risk is not limited to investments but also liabilities and the funds operations. He questioned the funds missing staffing areas and reasonings for this, Councillor Da Costa also asked if when looking at the key service provider Local Pensions Partnership Investments, LPPI, if they had a similar view of staffing risk associated with them? 

Damien Pantling highlighted that whilst it had been difficult filling vacant posts, it was a problem facing much of the public sector. He also noted that staffing risks with LPPI would be a question for them to answer in Part II of the meeting.  

Councillor Da Costa asked at what stage do we consider increasing wage offerings to address staffing shortages? Damien Pantling replied that the fund did not have discretion on that and it was a Council decision.  

Alan Cross, Chair of the Pension Board, noted that he had reviewed and commented on the draft of the Risk Management report and at the Board meeting in the morning they had agreed the Risk Register is moving in the right direction but one question they had proposed to Damien Pantling was to scrutinise the residual scores and ensure the highest scores align with day-to-day challenges.  

Alan Cross also commented on staffing, indicating that in the event of serious crisis, collaboration with HR colleagues would be necessary. He acknowledged that whilst there were current vacancies they  ...  view the full minutes text for item 131.

To note the report.

Damien Pantling introduced the report on Statutory Policies. Damien Pantling explained this was the annual review of two of the pension funds statutory policies and said that detailed changes were discussed in both the Committee pre meet and the Pension Board meeting.

Damien Pantling outlined the summary of changes made to the pension fund’s statutory policies which included the introduction of a paperless policy in the Communication Strategy Statement, aligning with sustainability and cost efficiency objectives. He added that the Administration Strategy Statement had been streamlined to better reflect the funds in house administration functions and integration of the Administration Service Level Agreement, SLA, into the same policy document for improved accessibility.  

Councillor Da Costa asked two questions, firstly he asked about the scope for improving engagement with the Board, panel members and encouraging regular questions. Secondly, he asked if an independent third party had reviewed the SLA for potential improvements. 

Damien Pantling responded by outlining existing engagement initiatives which included the annual general meeting for all fund members, annual employer meeting, and regular engagement with the larger employers including the unitary six councils. Damien Pantling acknowledged the challenge of engaging with the cast number of scheme employers and expressed openness to suggestions for improvements. Damien Pantling then explained the purpose of the SLA in the Administration Strategy, emphasising that it delineates the expectations between employers and the administering authority. He continued that the SLA is designed for the relationship between the employers and the fund, not for an outsourced administration function. 

Councillor Da Costa asked if the individual employers had come back and made any comments. Damien Pantling replied that it had not gone out to consultation as there are no material changes that would impact employers positively or negatively, the exercise is primarily a streamlining initiative and considering pragmatism and the balance of seeking comments on an already approved document. Alan Cross added that the document was consulted with employers at earlier iterations so employers would have had the opportunity to comment on it at an earlier stage.  

The Chair asked that they presumed any new employer joining the scheme would read it and have the opportunity to comment on it. Damien Pantling confirmed this stating that it is added as an appendix to the pack provided to all new employers as part of the admission process.  

AGREED: That the Pension Fund Committee notes the report: 

                      i.Approves the revised Communications Strategy Statement as set out in Appendix 1 to this report; and  

                              ii.ii) Approves the revised Pensions Administration Strategy Statement as set out in Appendix 2 to this report. 

To note the report.

Philip Boyton delivered the Administration Report on Quarter 1 from 1 April to 30 June 2023. The report was taken as read but highlighted some points.  

Philip Boyton directed members to page 77 of the pack highlighting the scheme employer key performance indicators related to i-Connect and data exchange with participating employer payroll departments. Philip Boyton noted the consistent high performance from employers and positive improvement of over 5.5% by academies and schools compared to the previous quarter. He noted the challenges with academies and schools sharing common payroll providers which impacted submissions in bulk. Philip Boyton said there was progress in onboarding scheme employers to i-Connect with over 250 scheme member records picked up last quarter.  

Philip Boyton said there was increased engagement with Trusts, the largest remaining employers, for onboarding to i-Connect. He attributed the engagement surge to turnover of staff within employers or their third party payroll providers. Phillip Boyton added this had had a positive impact of avoiding manual year end exercises through i-Connect onboarding.  

Philip Boyton addressed the fluctuating picture of processing deceased members on page 78, Key Performance Indicators, Chart 5B. He acknowledged the ongoing challenge and said that a recent team meeting aimed to gain a better understanding of the fluctuation. Philip Boyton said actions taken from the meeting included a consultation planned with the LGA for training on what constitutes deceased member processing and engagement with the software provider, Heywood Pension Technologies, to improve the processing of information through AI. 

Philip Boyton discussed the engagement methods with scheme members and employers, referring members to page 80, Chart 1.6 in the pack. Philip Boyton said there were various engagement methods, including pension surgeries, presentations and training events. He stressed the commitment to provide two pension surgeries per year to each unitary authority with additional ad hoc training for new payroll and HR staff. Philip Boyton said he had confidence in the effectiveness of engagement strategies, noting readily available access to other LGPS pension fund strategies and said that the amount of engagement through pension surgeries with scheme members was greater than other LGPS funds.  

Philip Boyton spoke on the final regulations for the McCloud remedy laid on 8 September 2023. The regulations delayed take effect from the 1 October 2023 and the changes may affect a scheme member if they were paying into the LGPS or another public service pension scheme before 1 April 2012, paying into the LGPS between 1 April 2014 and 31 March 2022 or have been a member of a public service pension scheme without continuous break of more than 5 calendar years. Philip Boyton said the regulations were under review and an external advertisement was published on 4 September 2023 to appoint a Technical Officer. Philip Boyton said that they had recently appointed Gavin Roberts as the new Pensions Administration Manager. 

Philip Boyton said that the McCloud remedy had been added to the Risk Register as mentioned earlier. He said they had  ...  view the full minutes text for item 133.

To note the report.

Damien Pantling delivered the report into Responsible Investment. He offered some background on the agenda item saying there was a significant effort involved from his team, independent advisors, the investment manager LPPI and the actuarial consultants Barnett Waddingham. Damien Pantling said they have delved into the flaws in the industry’s climate modelling approach as highlighted by the Institute and Faculty of Actuaries background paper. Damien Pantling said the industry faced a growing disparity between scientific and investment management perspectives. He said in trying to address this challenge they initiated a cost-benefit analysis on remodelling climate scenarios and transitioning to a bottom-up model. Damien Pantling said that after consideration they proposed two options. The first was to delay any bottom-up analysis until December 2025, aligning with compulsory TCFD reporting and maintaining consistency with industry standards.  

Damien Pantling said the second recommendation was to refrain from making changes in alternative modelling approaches at this stage. He said this decision was based on the merit of maintaining consistency and comparability within the LGPS community and this was backed by TCFD principle 5. Damien Pantling said that they acknowledge the flaws in the current models and they are committed to evolving their approach over time. He continued that they recognised the infancy of climate scenario analysis and it was an ongoing project. Damien Pantling said that both Barnett Waddingham and LPPI had emphasized that they were at the early stages of the journey in climate scenario analysis. He said that discussing and addressing the topic was a positive step forward in building awareness and understanding.  

Damien Pantling said that LPPI had aligned the Responsible Investment report with their existing RI policy and the positive news is the continued reporting of the split between brown and green exposures.  

Damien Pantling concluded the report by saying they recommended re-establishing a task and finish group to review the RI policy a year after its last approval.  

Councillor Tisi said he agreed with the observation that responsible investment is still a growing area and the Committee seemed to be making commendable progress. Councillor Tisi said he recognised the significance of comparability in responsible investment disclosure referring to TCFD principle 5. Councillor Tisi asked about green and brown investments in the dashboard and asked to clarify on whether their definitions align with those used by other pension funds.  

Richard Tomlinson, LPPI, responded by saying the classification of certain assets has been widely debated, including at EU forums and different taxonomies. He said he broadly supports the definitions used and he indicated that aligning them with the majority of taxonomies would likely lead to similar conclusion. Richard Tomlinson continued by saying there were ongoing debates such as whether nuclear assets were green or brown, he clarified that nuclear assets were not included in the presented data.  

Councillor Tisi raised a follow up question to Richard Tomlinson on whether the industry was moving towards commonality in terms of definitions? Richard Tomlinson said he did think it was moving towards commonality.  

Councillor  ...  view the full minutes text for item 134.

To consider passing the following resolution:

“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.”

RESOLVED UNANIMOUSLY: That under Section 100(A)(4) of the Local Government Act 1972, the public be excluded from the remainder of the meeting 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.

To approve the Part II minutes of the meeting held on 19^th June 2023.

To note the report.

To note the report.