Agenda and minutes

Apologies were received from Sean McGovern and Victoria Moffett.

(as stipulated by the Public Sector Pensions Act 2013 and set out in Annex A of the Board Terms of Reference).

The Chair stated that he worked for the Local Authority Pension Fund Forum and also for a firm of American lawyers which had Pension Fund clients although these did not include Warwickshire.

The minutes of the meeting held on 12 July 2022 were approved as an accurate record.

Arising from the minutes, the Chair raised a query regarding annual allowances and the value of scheme benefits reaching £40,000. Vicky Jenks (Pensions Admin Delivery Lead) explained that the value of a particular pension would be calculated at the start and end of each financial year and the difference would be multiplied by 16. If it was greater than £40,000 then the annual allowance had been exceeded.

Regarding the metrics relating to climate change, Chris Norton (Strategy and Commissioning Manager – Treasury, Pension, Audit and Risk) said that if chosen correctly, these could be used to check against the risks associated with greenwashing; that is, a product being marketed as environmentally friendly when it was not.

The item was introduced by Vicky Jenks, who provided members with an update on the work of the administration team. The main project being worked on was the member self-service portal. This year’s pension statements had been provided digitally, except for cases where the member had opted in to continue receiving paper copies. All deferred annual benefit statements had now been released; there had been errors in a small number , meaning not all of the statements were ready by the deadline, as these were still being worked on. Vicky Jenks said 98 per cent of the active annual benefit statements had been released by 6 August. There were issues with 354 statements as there were queries with the data provided by the employer. Overall there had been a reduction in the number of queries at year end. The introduction of the iConnect system was credited with helping this. Responding to a point raised by the Chair, Vicky Jenks said takeup to member self service had been quite good. If anyone contacted the Fund with a query they would be directed to the portal and asked to set up an account. Steps were also being taken to promote the portal amongst employers. At the time of the report being published 24 per cent of eligible scheme members had signed up, and it was expected this figure had increased since. It was noted that awareness on pensions was increasing nationally, and a campaign was due to start at the end of the month. Vicky Jenks said the data was being checked on a more regular basis by the pensions team and the funds actuary  and it it had been noted thatdata quality had improved..

Responding to a point raised by the Chair, Vicky Jenks said not all of the key performance indicators were on target to be met due to workload priorities. For example the Fund had undergone a valuation this year and resources had needed to be allocated to this as a priority. However the performance of a number of KPIs were improving and processes were being looked at to see if efficiency could be improved further. Vicky Jenks said the timescales for the KPIs would be available in the annual report. The Chair expressed his concern at the low level of letters being sent that notified dependents of pensionable amounts, which was KPI 9 on the chart in the report appendix.

Regarding breaches, Vicky Jenks said there had been an ongoing  issue with the Birmingham Diocese Academy Trust. This was because it had not been possible to get the required information from them in a timely manner following a change of payroll provider. It was eventually progressed following a conversation with the Trust’s chief financial officer. Although six breaches were listed, these were all from the one employer who have 6 schools with in their Trust.. The Trust was now using iConnect and it was not anticipated there would be any issues in the future. Vicky Jenks said the  ...  view the full minutes text for item 2.

Martin Griffiths advised that the report encompassed a number of reports that had previously been considered on an individual basis, such as the risk register and the forward plan. It was noted that the forward plan said Hymans Robertson would be present at the next Board meeting to provide a presentation on the valuation process. There had been no need to update the training schedule since the previous meeting. However places were still available on Hymans Robertson-run knowledge and skills assessment courses if members required them. The Chair said that although the courses were useful, members did not know which questions they were answering incorrectly and how they could further improve their knowledge and understanding.

Martin Griffiths said the risk register had been updated to reflect recent changes in market volatility and the Fund could not control this. However there were three items on the register whose risk level had decreased following the successful implementation of mitigation measures. Risks associated with climate change had increased, as the Fund only has a limited influence of global factors affecting climate change. More robust policies had been introduced in relation to governance.

Responding to a query raised by Alan Kidner, Chris Norton said the key performance indicators were reviewed by officers to ensure clarity that the actions were having the desired effect. Members asked if the key performance indicators could be sent to them via email ahead of the next meeting, in addition to a paper copy being provided.

Members noted the contents of the report.

Chris Norton informed the Board that the business plan consisted of 38 actions for the year, which would relate to the annual pensions report. The majority were on track to be met but some actions had a red or amber rating, and the reasons for these ratings were outlined in the report. It was noted the red ratings related to publication of the Pension Fund accounts. Chris Norton said there were capacity issues with external auditors, who were having difficulty recruiting and retaining staff. He said Warwickshire was not the only Pension Fund affected and this was a national issue. Andy Felton said this would not cause risks to individual pension holders, and when the audits were completed they would remain at a high standard. However it was anticipated that delays to external auditing may persist for a number of years.

The Chair asked if the Board could have sight of an external audit report next time one became available. He said the views and feedback of the Board could be of assistance to the Pension Fund Sub Committee. Andy Felton said these could be shared once they were made public, otherwise they would have to be treated as an exempt item.

Members noted the contents of the report.

Chris Norton introduced the item by stating there were issues with market volatility at the moment. The funding level had increased over the quarter ending 30 June from 104 per cent to 122 per cent, due to volatility relating to inflation and interest rates. Despite this, operational cashflows were broadly neutral and there was little stress being put on investments. Longer-term investments continued to remain better than the benchmark.

Regarding stewardship, members were advised that the Pension Fund Investment Sub Committee had agreed to award two private mandates to two different fund managers. The investment structure would be looked at by the Committee at its December meeting. The cashflow amounts were noted, with uncertainty over whether the timing of when cash would be drawn by private market funds being highlighted as a risk. Climate change continued to be the a significant challenge affecting investments and the work of the Pension Fund.

Chris Norton said the Fund was looking to recruit a new investment analyst to the investment and governance team, as well as a senior accountant. Chris Norton said Sukhdev Singh would be leaving the Fund and thanked him for all of his hard work supporting the Fund.

Responding to a question from Jeff Carruthers, Chris Norton said the Fund was in a position to be able to manage short-term issues. If inflation was going to continue to remain a longer-term risk, then this would be more difficult to manage and plan for.

The Chair noted that Hymans were used as both actuary and investment advisor and said there had been some debate as to whether there should be a degree of separation between actuary and advisor, although he stated his belief it could be beneficial to have the same firm in both roles. He added it would be for the Fund to decide which course of action to take. Chris Norton said representatives of Hymans received the appropriate paperwork relating to the various pensions committees and would attend special interest meetings. Regarding the use of two different firms in relation to stewardship, the Chair said it was important they both voted in the same way as this would benefit the Pension Fund.

Members noted the contents of the report.

Members noted the contents of the minutes of the most recent meetings of the Pension Fund Investment Sub Committee and the Staff and Pensions Committee, which had been circulated after publication of the meeting agenda. There were no comments made on their contents. The Chair noted that the Sub Committee would often have exempt papers, and stated that other Pension Boards would also have access to them although others would not. He suggested consideration be given to whether it would be appropriate for the Board to have access to the exempt papers.

The Chair stated he had been sent a three-page paper from Hymans Robertson about its investment strategy. He said it was a well written report and advised members to try reading it if possible.