Agenda and draft minutes

Pensions Committee
Friday, 7th February, 2020 10.00 am, MOVED

Venue: Oak Room, County Buildings, Stafford. View directions

Contact: Mike Bradbury  Email: michael.bradbury@staffordshire.gov.uk

Items
No. Item

31.

Declarations of Interest

Minutes:

The following Member declared an interest in accordance with Standing Order 16.5:-

 

Member

Minute No.

Interest

Reason

Colin Greatorex

39

Personal

Member of Warwickshire County Council's Pension Scheme

 

32.

Minutes of the meeting held on 27 September 2019 pdf icon PDF 116 KB

Minutes:

The Director of Corporate Services referred to minute number 21 relating to Staffordshire Pension Fund Annual Report and Accounts 2018/19 and indicated that the final version of the Report and Accounts had been signed off by the Chairman prior to being published by the 1 December 2019 deadline.

 

RESOLVED – That the minutes of the meeting of the Pensions Committee held on 27 September 2019 be confirmed and signed by the Chairman.

33.

Minutes of the Pensions Panel held on 20 September and 3 December 2019 pdf icon PDF 124 KB

(a)  20 September 2019

(b)  3 December 2019

Additional documents:

Minutes:

Mr Jenkinson referred to minute number 26 relating to Responsible Investment (RI) Report Quarter 3 2019 and indicated that he welcomed the Pensions Panel’s decision to report on RI in the “public” part of its meetings, as such information was of interest to all members of the Pension Fund.

 

RESOLVED – That the minutes of the meetings of the Pensions Panel held on 20 September and 3 December 2019 be noted.

34.

Strategic Asset Allocation (SAA) Review 2019 pdf icon PDF 217 KB

Report of Director of Corporate Services and Hymans Robertson

Additional documents:

Minutes:

The Committee were informed that, at its meeting on 3 December 2019, the Pensions Panel received a report from Hymans Robertson LLP (Hymans) outlining the activity that had taken place in reviewing the Staffordshire Pension Fund’s SAA.

 

In order to assess the appropriateness of the high-level strategy, i.e. the balance between return seeking assets (e.g. equities) and defensive assets (e.g. bonds), Hymans had carried out Asset Liability Modelling (ALM). This was done in conjunction with the Hyman’s Actuarial team, ahead of the 2019 Actuarial Valuation of the Fund. The aim was to ensure that varying investment strategies and the assumptions made about investment returns in each of those strategies could be factored into the Valuation assumptions; which in turn would be used in setting future levels of Employer contributions. The review was carried out with additional input from Advisors and Officers of the Fund.

 

The results of the ALM were presented to the Pensions Panel at its meeting in June 2019. They concluded that the current investment strategy provided a good chance of meeting the Fund’s long-term funding objectives based on the current levels of contributions being paid. And whilst there may be some scope for modest reductions in the Fund’s investment risk in the future, this was not being advocated at the current time.

 

Having established that the high-level strategy remained appropriate, the next stage of the review was to consider the detail of the asset allocation and the various mandates in operation. It was considered important to do this with regard to the objectives of asset pooling and the likely investments that would be offered by LGPS Central Limited.  Hyman’s recommendations are summarised in the following table as the likely ‘direction of travel’ for the Fund over the next 2-3 years, as it moves from its Current Benchmark towards its Long-Term Benchmark. Further discussions may need to take place in relation to the detail around several of the proposed changes.

 

Asset Class

Mandate

Current Manager

Current

Benchmark (%)

Long Term

Benchmark (%)

UK Equities

Active

Aberdeen

Standard

6.25

5.0

 

UK Equities

Passive

Legal & General

6.25

5.0

 

Global Equities

Active

Longview,

JP Morgan

LGPS Central Ltd

23.0

25.0

Global Equities

Passive

Legal & General

24.0

20.5

 

Global Equities (Factor Based)

Passive

TBC

5.0

5.0

 

Private Equity

Active

Various

3.5

3.5

Total Equities

 

 

68.0

64.0

Property

 

Colliers

10.0

10.0

Private Debt

 

Various

5.0

5.0

Infrastructure

 

TBC

1.0

5.0

Hedge Funds

 

Goldman Sachs

2.0

-

Total Other Return-Seeking Assets

 

 

18.0

20.0

 

UK Corporate Bonds

Active

LGPS Central Ltd

6.5

5.0

 

UK Index Linked

Passive

Legal & General

6.5

5.0

 

UK Gilts

 

 

-

5.0

Cash

 

 

1.0

1.0

 

Total Defensive Assets

 

 

14.0

16.0

 

 

 

 

100.0

100.0

 

In response to questions from Mr Jenkinson, the Director of Corporate Services indicated that:

 

·         Infrastructure was considered to be a return-seeking asset rather than a defensive asset, although it was recognised that some Infrastructure investments could be considered defensive assets if the primary reason for investing in such was to seek stable cashflows

·         The timetable for moving from the current  ...  view the full minutes text for item 34.

35.

Training Needs Analysis and Training Policy 2020/21 pdf icon PDF 407 KB

Report of Director of Corporate Services

Additional documents:

Minutes:

The Committee were informed that Section 248A of the Pensions Act 2004, as amended by the Public Services Pensions Act 2013, required that trustees of occupational pension schemes should be trained and have knowledge and understanding of the law relating to pensions, the role of trustees, the principles of scheme funding and investment, and the management and administration of pension scheme benefits.

 

At their meeting on 8 December 2017, the Pensions Committee reaffirmed their commitment to the CIPFA Knowledge and Skills Framework (CIPFA KSF) and the adoption of a high-level Training Plan covering the 8 key knowledge areas of the CIPFA KSF. The Committee noted that CIPFA KSF was mandatory for Local Pensions Board Members, and whilst it was currently only a recommendation for Committee Members and Senior Officers, such as the S151, following the Good Governance Project commissioned by the Scheme Advisory Board (SAB) and undertaken by Hymans Robertson, it was anticipated that something similar to the CIPFA KSF would become mandatory for all. 

 

The Director indicated that training for Pensions Committee Members in 2018/19 and 2019/20 consisted of a number of elements. Some of these were directly in response to the results of the previous training needs analysis (TNA), e.g. Performance Measurement and Cost Benchmarking, whilst some were dictated by the areas of focus for the Fund in the short to medium term, e.g. Strategic Asset Allocation Review and the 2019 Actuarial Valuation. In many instances, training was undertaken as part of routine Committee meetings and delivered by the Actuary. Pensions Committee Members also attended a workshop where they considered Responsible Investment and as a result agreed a new set of Investment Principles for the Fund. Some new Members of the Committee also attended Pensions Fundamentals training.

 

All Pensions Committee Members and Local Pensions Board Members were asked to complete a new TNA during December 2019. An analysis of the responses found that there were differences in individual Members’ knowledge but based on the responses received, the Committee (c57% response rate) had improved on its 2018/19 scores overall and the Pensions Board (c83% response rate) was marginally down on its 2018/19 scores, however, with several new Members very recently appointed, this was not a surprise. The Director added that it was pleasing to see an improvement across all of the 8 areas of knowledge generally, but particularly so in relation to ‘Investment Performance and Risk Management’ (6) and ‘Actuarial Methods, Standards and Practices’ (8) given these had been the two main areas of focus throughout 2018 and 2019.  Furthermore, the responses had shown that there was a suitable level of knowledge across the membership of both the Pensions Committee and Pensions Board and which enabled those bodies to be effective. 

 

The Committee were also informed that, having considered the detailed results from the 2019 TNA, training proposed for 2020/21 was likely to include the following:

 

      June / July - Portfolio Evaluation Limited and CEM Benchmarking – refresher training at Committee on Performance Measurement and Cost Benchmarking;

•  ...  view the full minutes text for item 35.

36.

Exclusion of the Public

The Chairman to move:

 

‘That the public be excluded from the meeting for the following items of business which involve the likely disclosure of exempt information as defined in the paragraph of Part 1 of schedule 12A of the Local Government Act 1972 indicated below’

Minutes:

RESOLVED That the public be excluded from the meeting for the following items of business which involve the likely disclosure of exempt information as defined in the paragraphs of Part 1 of Schedule 12A of the Local Government Act 1972 indicated below.

 

PART TWO

 

The Committee then proceeded to consider reports on the following issues:

37.

Exempt minutes of the meeting held on 27 September 2019

(Exemption paragraph 3)

Minutes:

(Exemption paragraph 3)

38.

Exempt minutes of the Pensions Panel held on 20 September and 3 December 2019

(Exemption paragraph 3)

 

(a)  20 September 2019

(b)  3 December 2019

Minutes:

(Exemption paragraph 3)

39.

LGPS Regulations - Admission of New Employers to the Fund

(Exemption paragraph 3)

 

Report of the Director of Corporate Services

Minutes:

(Exemption paragraph 3)

40.

Local Government Pension Scheme (LGPS) - LGPS Central Pool Governance and Financial Reporting - Final Audit Report 2019/20

(Exemption paragraph 3)

 

Report of the County Treasurer and the Director of Corporate Services

 

 

Minutes:

(Exemption paragraph 3)

41.

LGPS Central Ltd Budget and Strategic Business Plan 2020/21 and Cost Savings Model Review

(Exemption paragraph 3)

 

Report of the Director of Corporate Services and the County Treasurer

Minutes:

(Exemption paragraph 3)