Agenda item

Staffordshire Pension Fund Business Plan 2021/22

Report of the Director of Corporate Services

Minutes:

The Committee were informed that for reasons of best practice and good governance, it was important for the Pensions Committee to consider and approve an annual Business Plan for the Pension Fund.

 

They noted that, with regard to progress against the 2020/21 Plan, as well as continuing to do the ‘day job’ and the increasing challenges that this presents ordinarily, the majority of the Treasury & Pensions Team faced additional challenges as they moved to home working during March 2020 due to the Covid-19 pandemic. The team had continued to work from home since then and, in addition to delivery of a Business Plan, had adapted many of their day to day working practices to maintain a high standard of service provision to all stakeholders. However, successes hadstill been achieved in several areas of the 2020/21 Business Plan including;

 

·               Following a scaled down promotional campaign, due to the pandemic and the wider move to home working, increasing the awareness and use of the Member Self Service / My Pension Portal and issuing most of the Annual Benefit Statements electronically by 31 August 2020;

 

·               Continuing to make good progress with i-Connect; and

 

·               Following a competitive tender process, the re-appointment of Hymans Robertson as the main Investment Advisors to the Pensions Panel.

 

Understandably, several planned activities for 2020/21 had been delayed or scaled back but good progress had still been made, for example:

 

·               A Covenant Monitoring process had been developed which would sit alongside the Hymans on-line Funding Level Review tool; and

 

·                Following the 2019 move to Utmost plc, scoping work and data collection had begun for the external review of Additional Voluntary Contribution providers. 

 

Full details would be included in the final outturn report to be presented to the Pensions Committee at their meeting in June 2021.

 

The Committee were informed that the Business Plan for 2021/22 was, once again, split into 2 distinct sections.  The first section dealt with Key Development Activities, which aimed to make the way the Team worked more efficient and effective. The second section dealt with the activities that the team needed to undertake as part of the day job, but which impacted significantly at certain points in the year or which happened as a by-product of another activity e.g. finalising the year end data. Once again, several of last year’s development activities had now been re-categorised into Business as Usual activity, including the continuing implementation of i-Connect, the engagement with payroll providers and producing the Annual Accounts in line with CIPFA’s new reporting requirements.      

 

Several areas that the Treasury & Pensions Team had identified as Key Development Activities in 2021/22 included:

         

·               Planning for the implementation of remedial action arising from the McCloud / Sergeant judgement (& possibly Goodwin) to include collection of retrospective data from Employers – Approximately 31,000 Fund members were in scope;

         

·                Re-tendering for the Administration System provider, which will include the need for an externally hosted platform service;

 

·                Promoting and encouraging the use of Member Self Service / My Pension Portal to Retired Scheme Members (with the aim of issuing the majority of P60s and payslips electronically);

 

·               Assessing the output from the Scheme Advisory Board’s Good Governance Review and considering how best to implement any actions identified; and

 

·                Developing a Staffordshire Pension Fund Climate Strategy and Climate Stewardship Plan.

 

As well as continuing to focus on their day to day accounting, investment monitoring and stewardship activities, the key development activities for the Pensions Investment Team throughout 2021/22 would focus on Responsible Investment (RI) and particularly reporting around Climate Change.  Working with LGPS Central Ltd and Hymans Robertson, Officers would use the data from the Climate Risk Report, alongside further analysis, as a baseline from which to develop a Climate Strategy. The work would consider the impact of different investment strategies for the Fund, with Paris-aligned carbon targets and the delivery of a Net Zero Commitment in a stated future timeframe. Alongside the Climate Strategy, the Fund would also look to develop a Climate Stewardship Plan. This would help Fund Officers to focus their engagement on the specific investments and investment managers who were contributing most to climate risk.

 

The Committee also noted that the primary risks to the continued delivery of a pension’s administration, accounting and investment monitoring service to the high standards achieved were;

 

·                   Having a team of staff, sufficiently resourced, with the right experience to cope with changes to Government Legislation E.g. McCloud;

·                   The ability to deal with an increasing number of Employers and the challenge and complexities their different requirements present;

·                   The increasing fragmentation of payroll provision and the requirement for accurate and timely data; and ultimately 

·                   The need to ensure that the correct Pensioner Members are paid on time with the correct amount.

 

These, and other risks, were further analysed in the Pension Fund’s Risk Register, the latest version of which would be presented in full to the Committee at its meeting in June 2021.

 

The Chairman referred to the implications of the McCloud judgement and requested that regular updates be provided to the Committee.

 

Mr Alcott enquired about the impacts of the Covid-19 pandemic on the Fund and, in response, the Director indicated that although the Fund had not seen an increase in the number of members retiring, there had been an increase in the number of persons taking deferred benefits.

 

In response to a question from the Chairman in relation to the increased actuarial fees and also in the fees paid to Investment managers, the Director indicated that the increase in actuarial fees was as a result of the 31 March 2019 triennial valuation year; and that the increase in Investment Manager fees was largely the result of the strategic decision to move more into private markets, which was acknowledged to be a more expensive asset class in which to invest. The increase in assets under management also impacted the level of fees paid. Cllr Sutherland also referred to the indicative costs of the Fund over the period 2020/21 – 2022/23 and indicated that he would like to see more visibility on costs.

 

RESOLVED – That the Staffordshire Pension Fund Business Plan for 2021/22 be approved and that the key challenges be noted.

Supporting documents: