Agenda and minutes

Members are asked to declare any interest and the nature of that interest which they may have in any of the items under consideration at this meeting.

Rob Austin declared a personal interest as a member of LGPS and has an AVC with prudential. Councillors Phil Bignell and Graham Lawman disclosed pecuniary interests as their wives are deferred members of LGPS.

To confirm the Minutes of the meeting of the Committee held on XXX.

The minutes of the previous meeting held on 25 July 2022 were agreed as a true and accurate record of the meeting.

To receive communications from the Chair.

The Chair welcomed everyone to the meeting and thanked them for attending at the earlier start time of 1pm.

RESOLVED: That the Pension Fund Committee noted the action log.

At the Chair’s invitation, the Audit Manager presented the Internal Audit report and explained that internal audit was part of a shared service arrangement last year hosted by Milton Keynes and WNC had since then moved away from this and started hosting an in-house service from 1 April 2022. Since 1 August, a new Head of Audit and Risk had joined the authority and the team were continuing to build resilience and provide assurance. The report demonstrated audit’s annual commitment to providing assurance to the Pension Fund Committee and the audit covered the 2021/2022 period. The audit had been comprehensive in scope with the addition of 3 areas being added which were KPI reporting, identification of breaches and risk monitoring and reporting. The Audit Manager praised the good working relationship he had with the pensions management team, with 2 issues being raised during the audit process that had been resolved in the time of the report being finalised and shared that overall, the audit was positive with a substantial rating and assurance in terms of the systems design.

Members asked questions regarding the decision to move to in-house provision and the Audit Manager and Assistant Director of Finance (Strategy) confirmed this was decided by the section 151 officer and approved by cabinet. Members asked for more information regarding areas of non-compliance detailed in the report and the Head of Pensions responded that the team did not have the most effective system in place to manage year end data queries with scheme employers but had moved Jo Kent within the team to manage this area and streamline the process going forward.

The Chair thanked the Audit Manager and Principal Auditor for their comprehensive report.

RESOLVED: That the Pension Fund Committee considered and noted the findings from Internal Audit work during 2021-22.

At the Chair’s invitation, the Governance and Regulations Manager summarised the report and explained that in terms of KPIs there were an exception of 4 that were not on target and as explained in section 5.13 and 5.14, this was due to performance issues, staff illness and vacancies within the team. Other than this, the report was positive with employer contributions for the 3-month period April to June 2022 recorded as 100% paid on time, and there were no internal dispute resolution procedure cases or breaches to report. The Governance and Regulations Manager concluded the administration report and invited members to ask questions.

RESOLVED: The Pension Fund Committee noted the contents of the report.

At the Chair’s invitation, the Governance and Regulations Manager presented the report and explained that the Pensions Dashboards Regulations 2022 as previously discussed at pension fund committee was the legal duty placed on pension schemes to provide information to allow individuals to access pension details in one place. The Governance and Regulations Manager explained that due to the complexities of the LGPS the staging data had been delayed slightly to a staging date of 30 September 2024 to connect to a Pensions dashboard and a date of 1 April 2025 to make scheme member data available. The current position was that the pension team had received a report from AON and a detailed project plan had been created and was currently being reviewed and this would enable the team to get ahead of the curve.

The Scheme Advisory board annual report was published on 13 June 2022 which captured the highlights of the year up to 31 March 2021 as detailed in section 5.2.2 of the report. The total membership increased by 1.08% to 6.226 million and assets had increased by 23.4% to £342 billion. Members could read the full report via the link in the report for further information.

In terms of the academy guarantee, the government confirmed on 21 July 2022 that they would continue to provide this to LGPS funds. The pension team would continue to monitor this and report in future if there were any changes.

Finally, the Governance and Regulations Manager highlighted the training plan was contained in appendix A and reminded members of the conflicts of interest training session taking place on 25 November 2022 which they should have all received an invite for. Members were asked to check their inboxes and advise if this hadn’t been received, and a link would be provided for any members to watch the training back if they were not available on this date. The Conflicts of Interest Policy would then be delivered at the December meeting for approval.

The Head of Pensions explained they were organising investment strategy training and potentially ESG training provided for members with Mercer which would enable Pensions Fund Committee to approve the investment strategy and save duplication. This would enable the committee to gain a deeper understanding of these topics and ensure the committee meetings could keep to the 2-hour time.

The Governance and Regulations Manager concluded that AON had provided a summer programme of basic level training for members last year and this was needing review and alternative options explored going forward for training. A future training plan would be brought to the next committee meeting in December.

RESOLVED: That the Pension Fund Committee noted the report.

The Head of Pensions presented the report and explained that the table on page 52 demonstrated the business plan activity. There were two new activities, the first amber related to the delay in the new code of practice being published and the second similarly related to the additional voluntary contribution review which was also an agenda item to be discussed later in the meeting. He explained the good governance review had been delayed centrally but understood that this would be published soon. The fourth amber rating related to the processing of undecided leaver records, and this had been raised with the section 151 officers and the fifth amber was relating to the delay with starting the website and digital communications activity but was on track to complete within the overall timescale.

Members discussed the report.

RESOLVED: That the Pension Fund Committee noted the business plan update and approved the two new activities set out in paragraphs 4.18 and 4.19.

At the Chair’s invitation, the Governance and Regulations manager presented the report and explained that the team were initially awaiting the release of the new code of practice before conducting the review which was due to come into force in November 2021. However, this had been delayed and it was felt prudent to review in line with the existing code of practice, the review had also been highlighted as an action that arose from the internal audit as explained earlier in the meeting by the Audit Manager. The plan was to seek members approval of the reviewed policy based on the current code and then revise the policy as necessary when the new Code of Practice was in place. The Governance and Regulations Manager explained that the policy was important to ensure the right mechanisms and reporting methods were in place and following the correct procedures. The policy would be reviewed within 6 months of the new singular code being in force and if there were no material changes, the committee would be updated in the Governance and Compliance standing report, rather than the full report coming back to the committee.

Members discussed the report and questioned table item 9.4/9.5/9.7 relating to the Head of Pensions being responsible for the single point of decisions. The Governance and Regulations Manager agreed that they could add to this to clarify in the policy.

RESOLVED: That the Pension Fund Committee approved the revised Reporting Breaches of the Law to the Pensions Regulator policy.

At the Chair’s invitation, the Pensions Service Employer and Communications Manager summarised the report and invited members to ask any questions.

RESOLVED: That the Pension Fund Committee:

(1) Noted the entry of one designating body to the Northamptonshire Pension Fund.

(2) Noted the Committee of two employers ceasing participation in the Northamptonshire Pension Fund.

The Governance and Regulations manager presented the forward plan and explained that the report had been updated to include Investment Sub-Committee agenda items going forward and the funding strategy item would be moved to the March meeting to save duplication of work.

The Chair praised the inclusion of Investment Sub-Committee items as it was an excellent way forward to keep the committee informed of big decisions being taken.

RESOLVED: That members noted the forward plan.

The following report(s) contain exempt information as defined in the following paragraph(s) of Part 1, Schedule 12A of Local Government Act 1972.

Paragraph 3 – Information relating to the financial or business affairs of any particular person (including the authority holding that information).

Members are reminded that whilst the following item(s) have been marked as exempt, it is for the meeting to decide whether or not to consider each of them in private or in public. In making the decision, members should balance the interests of individuals or the Council itself in having access to the information. In considering their discretion members should also be mindful of the advice of Council Officers.

Should Members decide not to make a decision in public, they are recommended to resolve as follows:

“That under Section 100A of the Local Government Act 1972, the public and press be excluded from the meeting for the following item(s) of business on the grounds that, if the public and press were present, it would be likely that exempt information falling under the provisions of Schedule 12A, Part I, Paragraph(s) 3 would be disclosed to them, and that in all the circumstances of the case, the public interest in maintaining the exemption outweighs the public interest in disclosing the information.”

The Chair moved that the remainder of the meeting be held in private:

That under Section 100A of the Local Government Act 1972, the public and press be excluded from the meeting for the following item(s) of business on the grounds that, if the public and press were present, it would be likely that exempt information falling under the provisions of Schedule 12A, Part I, Paragraph(s) 3 would be disclosed to them, and that in all the circumstances of the case, the public interest in maintaining the exemption outweighs the public interest in disclosing the information.

RESOLVED: Members agreed that the public and press were excluded from the remainder of the meeting and the Pension Fund Committee moved into private session.

The private minutes of the previous meeting held on 25 July 2022 were agreed as a true and accurate record of the meeting.

At the Chair’s invitation, the Pensions Service Employer and Communications Manager introduced the report and explained the presentation would give detail on the schedule with activities, look at employer level results and with previous valuations the pension team would normally be presenting at the November meeting, and this was due to the great work undertaken by the team and improved processes. He continued that the bulk of the content of the report looked at the review of the funding strategy update and how we treat employers, methodologies, cessations and how the exit position is calculated. The next steps following the valuation would be a consultation with employers and an update would be brought to the committee in December.

He then invited Robbie McInroy from Hymans Robertson to deliver the presentation on the Northamptonshire Pension Fund Actuarial Valuation and Funding Strategy Update.

RESOLVED: That the Pension Fund Committee:

(1)   Noted the presentation and the valuation update.

(2)   Noted the Whole Fund valuation results

(3)   Approved the draft FSS for consultation with Scheme employers

(4)   Approved the draft cessations policy for consultation with    Scheme employers.

At the Chair’s invitation, the Governance and Regulations Manager presented the report and explained the committee had previously discussed the performance standard of Prudential in 2019 and had originally decided to move away from Standard Life. However, no action was taken as the Covid-19 pandemic occurred and prudential changed their administration platform which had caused issues for LGPS funds. Although the service had slightly improved, there were still performance issues, and these had been raised in multiple formats as detailed in appendix A. The Governance and Regulations Manager explained that the Aon findings concluded it would be prudent to conduct another review in 12 months’ time.  Prudential are currently the main competitor in the market, and it was hoped that they would resolve their service performance issues with the emergence of the new competitor in the market. In light of this, the service administration of both Prudential and Legal and General will be reviewed at the 12-month point. The Governance and Regulations Manager highlighted the recommendation and concluded her report.

RESOLVED: That the Pension Fund Committee approved the review of review of Legal and General and Prudential’s administrative performance in 12 months to enable a decision on the removal of Standard Life to be made.

At the Chair’s invitation, the Governance and Regulations Manager summarised the report and explained it was a continuation update for the committee. Following the cyber security surveys, the conclusions had been provided to the 4 riskiest suppliers as detailed in section 5.1 of the report, and the next stage would be to send a survey to WNC in terms of business solutions and Mercer in terms of investment. The team were aiming to send these in the next couple of weeks with a view to provide an update at the next Pensions Committee in December.

In terms of the cyber hygiene guidelines, these had now been produced and had been reviewed by the local pension board in July and were considered as robust. The Governance and Regulations Manager highlighted that the pensions committee were to consider these guidelines as detailed in appendix A for approval. She explained the test phishing email exercise had not gone to plan but the team had not incurred any cost for this, the email had gone out, but the recording of the results had failed.

Finally, regarding the cyber incident response plan, the fund was working with Aon to develop a Fund specific template which will be cross referenced with the WNC IRP once it has been developed. For assurance to the committee whilst the IRP is being developed, the business continuity plan is in place and underwent a complete review in 2021.

The Chair thanked the Governance and Regulations Manager for her comprehensive report.

RESOLVED: That the Pension Fund Committee noted the progress made against the Cyber Strategy Action Plan (Appendix A) and approved the Cyber Hygiene Guidelines (Appendix B)

At the Chair’s invitation, the Head of Pensions presented the ACCESS update and explained that the joint committee had been rescheduled with the passing of HM the Queen, as detailed in section 5.3 of the report the meeting was not quorate.  The Head of Pensions reassured members regarding the Woodford scandal and connection with Link, who undertook a similar role for the Woodfood fund as they due for ACCESS. There was concern regarding news of the potential FCA fine (£50m) and restitution payments (£306m) for Link leaking into the public domain. He assured members that in a virtual call with Link they provided reassurance around these matters. Legal advice had been sought and a Link failure was perceived as low risk, and in any case, assets are not held by Link but by the depository Northern Trust.

Members discussed the report.

RESOLVED: That the Pension Fund Committee noted the report.

The Chairman to advise whether they have agreed to any items of urgent business being admitted to the agenda.

There were no items of urgent business.