Agenda item

Governance arrangements - the role of the investment working group

To consider the report.

Minutes:

The Deputy Director and Head of Finance introduced the report that proposed governance arrangements for the Royal County of Berkshire Pension Fund (BPF). The BPF would begin pooling its investments with the Local Pensions Partnership (LPP) from 1 June 2018.

 

The Panel were informed that the role of the current investment working group would change as the BPF would no longer undertake its own investments or select fund managers. This would become the responsibility of LPP. There were a number of responsibilities that the BPF, and the Royal Borough of Windsor and Maidenhead as administering body, would retain.

 

The group would undertake more of a monitoring role as well as providing expert professional advice to the Pension Fund Panel. The newly named Investment Group would:

 

·         Review the Fund’s long term investment strategy and where necessary make recommendations to the Pension Fund Panel.

·         Advise on strategic and/or tactical asset allocations proposed by LPP.

·         Restrict and control the range of asset allocations used by LPP as set out in the Policy Portfolio.

·         Consider appropriate risk management strategies to include the matching of pension  liabilities with suitable investments and where necessary make recommendations to the Pension Fund Panel.

·         Monitor and review the investment activity.

·         Review and report on the performance of the Fund and where necessary make recommendations to the Pension Fund Panel.

 

It was proposed that Law Debenture be retained to advise on non-investment matters and avoid any conflict with the Panel and that the Investment Group would comprise of:

 

·         Pension Fund Panel Chairman (Chair) and/or

·         Pension Fund Panel Vice Chairman.

·         One Advisory Pension Fund Panel member.

·         Deputy Director and Head of Finance (s151 Officer).

·         Not less than two strategic independent advisers appointed in accordance with arrangements determined by the Pension Fund Panel.

 

During discussion the Panel agreed that it would be better to undertake the additional costs of securing independent advisors to help the group undertake its role with LPP.  It was felt that the group should also retain its role in producing the investment strategy. 

 

The Chairman mentioned that the group may not retain investment responsibilities but it would continue to monitor investments.  He would also like other boroughs to continue to work with the group. 

 

The Panel supported the retention of two independent advisors being retained by the group as the better we were informed the better decisions would be made.  It was noted that the retention of two would be a saving not being made via pooling, but it was the correct way forward to ensure the right bedding down process was undertaken.

 

Cllr Hilton mention that with regards to the report’s recommendations should we also add a recommendation that the Investment Group should also make recommendations on legacy assets.  The Head of Finance informed that they would not have that authority.  Cllr Law mentioned that the only role would be to question LPP on their decisions if they did not conform with the Investment Strategy. 

 

The Panel were informed that the only assets LPP would seek our consent on would be the consent assets.  The Investment Group could ask LPP to look at legacy assets to see if they should be removed.  We are joining LPP as a client and there needed to be mutual engagement for the relationship to develop. 

 

With regards to the Investment Groups terms of reference on agenda pack page 99 it was agreed that the production of the Investment Strategy would be included and that point six would include ‘final approval’.

 

With regards to the quorum the Chairman mentioned that the Investment Working Group always had two Panel members on it to be quorate and he felt that this should continue.  For this to happen it was recommended that substitutes be available or that recommendations could be voted on by email.  As the group were only making recommendations to the Panel it was questioned if they needed to be quorate. 

 

Resolved unanimously:  that the Pension Fund Panel notes the report and:

 

·         Agrees to the proposal for a revised investment group in light of pooling guidance.

·         Agrees the terms of reference for the Investment Group and instructs the Deputy Director and Head of Finance to secure the terms of reference within the administering body’s constitution.

·         Agrees that the Deputy Director and Head of Finance in conjunction with the Chairman and Vice-Chairman of the Panel undertake the appointment of a second independent adviser with a final decision to appoint to be made at a future Panel.

 

 

 

 

Supporting documents: