The Report and appendices are attached.

Chris Norton (Strategy and Commissioning Manager – Treasury, Pension, Audit & Risk) introduced the report and highlighted that the Warwickshire Pension Fund had a responsibility for administering the Local Government Pension Scheme (LGPS) for around 200 employers as well as the County Council, with a membership of approximately 50,000 individuals.

Chris Norton commented that an increase in ‘Level 3’ investments, those most difficult to measure, had been observed as an outcome of coronavirus. He commented that it had been determined to include a risk assessment within the report to address potential areas of risk, including the impact of the pandemic on markets. Maintaining cashflow had been identified as a priority since the introduction of lockdown measures. The Pension Fund was a long-term entity; it was reasonable to anticipate swings in the market such as those observed as an outcome of COVID-19.

Councillors Dirveiks, Gifford and Horner stated that they were also members of the Pension Fund Investment Sub-Committee, which did not require a declaration of interest but was considered worthy of note.

James McLarnon (Grant Thornton) outlined the key areas of interest within the report. He advised that the significant areas of risk highlighted in the Audit Plan, which had been produced prior to the outbreak of COVID-19, were consistent with those of the prior period. He advised that the net assets of the fund were the most reliable benchmark to calculate the extent by which a misstatement in accounts could be material to a user’s understanding of the governance of the fund. This equated to less than 1% of net assets of the prior year (approximately £20million) which was in-line with the previous period.

Councillor Cargill enquired whether the impact of the UK’s departure from the European Union had been considered by the external auditor.

Grant Patterson (Grant Thornton) advised that the completion of the 2019 Annual Evaluation had effectively set contributions to the fund for a period of three years. This applied to Warwickshire County Council and the other participating employers. He advised that the impact of Brexit, as well as that of COVID-19, would be apparent at the conclusion of this three-year period.

Grant Patterson also advised that actuaries had identified a remedy to the fiscal challenges brought about by the McCloud judgement; it was hoped that this would mitigate the material effect on the fund. However, he stated that this created a risk to all pension funds and similar cases within the judicial system could be anticipated.

Chris Norton commented that, in recognition of the complexities of long-term planning, actuaries provided a probability rating for the achievement of funding levels across a 19-year period. In response to the McCloud judgement the probability rating had been increased by approximately 10% which improved the outlook for long-term stability.

Andrew Felton (Assistant Director, Finance) expressed confidence that, by means of ongoing risk modelling by actuaries and engagement with participating organisations within the scheme deemed to be ‘at risk’, the long-term outlook for the fund was positive.

Grant Patterson highlighted the  ...  view the full minutes text for item 3