Damien Pantling, Head of Pension Fund, introduced the item and explained that since the last meeting, he had looked at the impacts of inflation on both assets and liabilities, and was comfortable that these risks were reflected appropriately in the register. This had been reviewed by Barnet Waddingham, the Fund’s actuary, and LPPI, the Fund’s investments advisor.

Councillor Hilton, Vice-Chairman, asked in relation to risk PEN017 if any significant opportunities had arisen through other fund’s having to sell off assets in order to pay off gilt debts.

Damien Pantling stated that generally speaking, the Fund didn’t hold any products which contributed to the recent liquidity crunch (LDI investments). In terms of asset buying opportunities, it was being reviewed and would be taken into consideration when redrafting the investment strategy statement, which would come to the next Committee meeting.

Councillor Da Costa asked why the risk register reflected a high likelihood of unexpected employer contributions in PEN024.

Damien Pantling stated that the likelihood figure of 3 was a mid-risk. Affordability from an employer perspective was being challenged, and to describe the risk as a 2 would be inappropriate given the state of public finances.

Councillor Da Costa asked for clarification on risk PEN027.

Damien Pantling stated that the mitigations within the risk register had been put in place to reduce this risk, which resulted in a medium risk.

Councillor Da Costa asked if the McCloud case would have a significant impact on the fund.

Damien Pantling stated that there were three ways to look at the McCloud case – financial, administrative and from an employer perspective. The case would have an estimated 1% impact on the value of the liabilities which was already factored in. From an administration perspective, there would be a significant impact as the work that would be carried out would be legally required. From an individual employer perspective, this impact could be significant for individual employers but would be looked at on a case by case basis.

Councillor Da Costa asked if PEN032 was likely to be such a high risk.

Kevin Taylor, Pension Services Manager, stated that the risk was high before any mitigations were put into place. As a result of the treatments that were put into place, the actual net risk was green. The key item was to ensure that pensioners would be paid their pensions, treatments were in place to ensure that this would happen.

Councillor Da Costa asked if the cyber security policies relating to risk PEN035 were continually being updated, and whether the Fund outsourced this work.

Kevin Taylor clarified that there were two sides to this work – the system software provider had its own set of key factors in place to ensure against cyber security risk, which the Fund received regular updates about. The Fund was also supported by the borough and its cyber security risk policy.

Councillor Da Costa asked if any independent checks were carried out on behalf of the system software provider which would serve to add extra reassurance.

Kevin Taylor confirmed that these checks were in place and were included in the annual external audit.

Councillor Da Costa asked if PEN045 was as high a risk as detailed in the register.

Damien Pantling stated that it was a red gross risk before mitigations, but after these mitigations it was classed as yellow.

Councillor Da Costa thanked the Fund for their work on the risk register.

Councillor Sharpe, Chairman, stated that it was important to consider items which were not on the register going forward, as it was the unknown elements which could become a threat.

Aoifinn Devitt, advisor to the Committee, stated that some of the risks on the register may be temporary, for example Covid, but it was better to err on the side of caution in order to have the most comprehensive actions in place to reduce these risks.

Councillor Sharpe, Chairman, stated that the new risk register made it much easier to assess risks and understand actions that were being taken to mitigate these risks.

Alan Cross, Chair of Berkshire Pension Board, echoed the Chairman’s comments and stated that 3-4 years ago, a pandemic would’ve been a classic example of an unknown risk.

 RESOLVED UNANIMOUSLY: That the Pension Fund Committee notes the report and;

i)               Approves the updated risk register including any changes since the last approval date, putting forward any suggested amendments as may be necessary; and,

ii)             Approves publication of the updated risk register on the Pension Fund website.