Agenda item

Chris Norton (Strategy and Commissioning Manager – Treasury, Pension, Audit & Risk) presented this report which set out the Business Plan for Warwickshire Pension Fund for 2022/23, including objectives, strategic priorities, and an action plan. He stated that the total membership of the Fund had increased by 5% over the course of a year. The objectives of the Fund remained unchanged and actions to monitor activity for the coming year had been set out within the Plan.

Councillor Gifford praised the commitment within the Plan to continue to develop Environmental, Social and Governance (ESG) monitoring and to respond to climate change. He stated that the implications of the war in Ukraine further demonstrated the need to transition away from fossil fuels.

In response to the Chair, Chris Norton advised that membership of the Fund had expanded due to an increase in the number of people changing jobs and moving between organisations, as well as an influx of personnel employed by academy trusts.

Councillor Kettle stated that, although Risk Monitoring would be covered as a separate agenda item, it was important that the Business Plan refer to specific risks. For example, the war in Ukraine constituted a political risk which required consideration when managing a global portfolio. He stated that a 5% increase in membership was positive; however, this also presented an economic risk, should demographics change in the longer-term.

Councillor Kettle stated that it was positive that the Plan recognised the importance of cashflow management; however, inclusion of a five-year projection would be informative. He stated that there was a good understanding of the Fund’s liabilities but suggested that evidence of the scale of cashflow operations (and underlying asset management) be included.

Councillor Kettle highlighted reference in the Business Plan to pooling. He emphasised that Border to Coast Pension Partnership (BCPP) was not the Fund’s sole partner and raised concerns at the prospect of BCPP diversifying. He stated that there was a need for well-researched products, adding that specific attention was required to the potential risks of the Fund working with multiple partners.

The Chair observed that, unlike the Pension Fund Business Plan, most commercial business plans were not made publicly available. He asked what scope was present to include detailed information relating to the Fund’s strategy.

Chris Norton advised that more detail could be added to the Plan without compromising confidentiality, including information relating to risk monitoring and cashflow.

In response to the Chair, Andrew Felton (Assistant Director, Finance) advised that Investment Beliefs agreed by the Sub-Committee had set pooling as the preferred approach; however, there was scope to move in other directions.

Councillor Gifford commented that pooling had been introduced with the intention of cutting costs and providing a means to fund domestic infrastructure projects. He suggested that it would be informative to ascertain if a reduction in fees had been realised.

The Chair stated that, as a shareholder of BCPP, Warwickshire Pension Fund could exert influence; however, if the Fund’s objectives were not being met, it could withdraw from the arrangement. He emphasised that government policy continued to advocate pooling; however, new guidance was anticipated later in the year.

Councillor Kettle stated that information such as the value of the Fund and the number of contributors was already publicly available in audited accounts. He stated that having this information in the Business Plan would contribute to an improved understanding of the status of the Fund for interested parties.

There was discussion of additional material to be added to the Business Plan. The Chair sought a view on whether to approve the Business Plan or request changes.

It was suggested that amendments be made to the Business Plan prior to delegated approval being sought from the Chair. Details would be circulated to members of the Sub-Committee.

Resolved:

That the Pension Fund Investment Sub-Committee delegates responsibility for approval of a reworked Warwickshire Pension Fund Business Plan for 2022/23 to the Chair with input from the Assistant Director for Finance, prior to circulation of the finalised document to members of the Sub-Committee.