Agenda and minutes

Pension Committee - Tuesday, 27th September, 2022 7.00 pm

Venue: Civic Offices, St Nicholas Way, Sutton SM1 1EA

Contact: Andy Gemmell, Committee Services Officer Tel: 020 8770 4990, Email: committee.services@sutton.gov.uk

Items
No.	Item
17.	Welcome and introductions Minutes: The Chair, Councillor Cryss Mennaceur, welcomed those present and watching the live stream.
18.	Apologies for absence and declarations of interest View the background to item 18. Minutes: Apologies for absence were received from Councillor Peter Geiringer, for whom Councillor Eric Allen attended as a substitute and provided apologies for lateness. There were no declarations of interest.
19.	Minutes of the previous meeting View the background to item 19. To approve as a correct record the minutes of the meeting held on 5 July 2022. Supporting documents: Minutes , 05/07/2022 Pension Committee , item 19. PDF 121 KB Restricted enclosure 5 View the reasons why document 19./2 is restricted Minutes: RESOLVED: That the minutes of the previous meeting held on 5 July 2022 be agreed as an accurate record.
20.	Any urgent business View the background to item 20. To consider any items which, in the view of the Chair, should be dealt with as a matter of urgency because of special circumstances (in accordance with S100B(4) of the Local Government Act 1972). Minutes: There was no urgent business.
21.	Annual Report and Accounts 2021-22 Supporting documents: (5) Annual Report and Accounts 2021-22_ (R) _ Pension Committee _ 20220927 , item 21. PDF 160 KB (5a) DRAFT LBS Pension Fund Annual Report 2021_22 , item 21. PDF 2 MB Minutes: The Head of Pensions Investments introduced the report alongside the Pensions Finance and Investments Manager. In response to questions, officers advised that the Fund had grown in value from £812m in 2020/21 to £854m in 2021/22 i.e. an increase of 5%. The investment performance of the Fund for the one year period to 31 March 2022 stood at 7.1% which was below the Local Government Pension Scheme (LGPS) sector of 8% (median). Officers clarified that staff from the South London Waste Partnership were part of the Sutton Pension Fund however have recently moved to Croydon Council’s Pension Fund as Croydon are the contracting authority, when this happens an assessment is done on those members benefits and the £15m is the transfer of those funds from one fund to another.. Officers advised the Committee that recommendation 2.1 is standard procedure and this allows the Strategic Director of Resources to make the necessary changes following the results of the external audit, officers informed the Committee that they do not expect any major changes. Officers informed the Committee that the cash flow position over the next two years should stay above positive and that this is monitored on a daily basis, officers also noted they are not likely to use any investment assets to pay Pension benefits as there are sufficient funds. RESOLVED: To approve the Pension Fund Annual Report 2021/22 and delegate to the Strategic Director of Resources, in consultation with the Chair of the Pensions Committee, any changes that are required to be made to the Pension Fund Annual Report 2021/22, as a result of the external audit. To approve the updated Governance Compliance Statement contained within the Annual Report (pages 89 to 102), which reflect recent changes to the governance arrangements of the Fund.
22.	Pensions Administration Update Supporting documents: (6) Pensions Administration Update_ (R) _ Pension Committee _ 20220927 , item 22. PDF 180 KB Minutes: The Head of Insurance and Pensions Administration introduced the report. In response to questions, officers advised the skills shortage of pension professionals is at more senior levels. Officers clarified that money saved from the restructure will be reinvested into the service in order to clear any existing backlog of processes. Officers informed the Committee that paper benefits statements are no longer issued and statements are accessed online via a self-serve website. Officers noted that some overdue cases are awaiting third party action. Officers clarified that they are unable to separate backlog cases from the SLA statistics, which would have allowed officers to update the Committee on the performance of backlog and business as usual processes independently. Officers informed the Committee that staff members have been taking on more responsibility due to vacancies, however, support is being provided by the Fund’s benefits consultant, Aon. Officers clarified that the restructure will change responsibilities of some of the staff and add capacity, which will alleviate pressures on the team. The Committee noted the lack of a year-end response from a scheme employer. Officers assured the Committee that this will not affect the results of the triennial valuation process. RESOLVED: To note the report.
23.	Risk Register Update Supporting documents: (7) Risk Register Update_ (R) _ Pension Committee _ 20220927 , item 23. PDF 155 KB (7a) Appendix A - Risk Register - LBS Pension Fund - Risk Register , item 23. PDF 104 KB Minutes: The Head of Pensions Investments introduced the report. In response to questions, officers advised that if interest rates were to rise it would be helpful for the Fund as this increases the discount factor from the actuary however if inflation rates were to rise this would have a negative impact. Officers clarified that the risk rating assigned to backlog processes is appropriate for the level of data that is held. Officers advised the Committee that work would be done to expand the risk to be able to provide more accurate data and increase the risk if appropriate. Officers advised the Committee that the Council is taking numerous actions to improve cyber security, which include training on phishing and an ongoing scheme alongside Cyber Essentials. Officers noted that business continuity procedures are in place and are continuously being developed. RESOLVED: To review the current Risk Register for the Pension Fund at Appendix A.
24.	Responsible Investment Policy Supporting documents: (8) Responsible Investment Policy_ (R) _ Pension Committee _ 20220927 , item 24. PDF 109 KB (8a) LBS Responsible Investment Policy , item 24. PDF 134 KB Minutes: The Head of Pensions Investments introduced the report. In response to questions, officers advised the NetZero target is 2050 to match the Government’s target. Officers advised the Committee that the Investment Strategy Review is taking place and the results will be brought to the December meeting of the Committee. RESOLVED: To review and approve the updated Responsible Investment Policy for the Fund at Appendix A.
25.	Work Programme Supporting documents: (9) Work Programme Update_ (R) _ Pension Committee _ 20220927 , item 25. PDF 157 KB Minutes: No questions were raised. RESOLVED: To note the updated work programme for the Committee.
26.	Investment and Manager Performance to 30 June 2022 Supporting documents: (10) Investment and Manager Performance to 30 June 2022_ (R) _ Pension Committee _ 20220927 , item 26. PDF 172 KB (10a) Appendix A - Quarterly Performance Report June 2022 (Mercer) reissue , item 26. PDF 1 MB Restricted enclosure 22 View the reasons why document 26./3 is restricted Restricted enclosure 23 View the reasons why document 26./4 is restricted Minutes: The Pensions Finance and Investments Manager introduced the report. In response to questions, officers advised that there are concerns for the long term performance of investments due to the current economic conditions. Officers advised the Committee that the Sutton Pension Fund is cash flow positive. Officers clarified that equity markets have experienced a negative impact and officers are looking at options going forward as part of the Strategy review. Officers advised that the longer term performance was negatively impacted by Diversified Growth Funds, this asset class as a whole did not deliver and fulfil its objective of downside protection. This asset class will be reviewed as part of the light touch strategy review. The Committee queried the list of fund managers and whether this was excessive for a fund of this value, officers clarified that there is no set amount of managers a fund should have and most funds worth £1bn would have 10 to 12 managers. Officers noted that this does increase the burden on governance however this is alleviated by assistance from the London Collective Investment Vehicle. RESOLVED: To note the performance of the Fund during the quarter ended 30 June 2022.
27.	London Collective Investment Vehicle Update Supporting documents: Restricted enclosure 25 View the reasons why document 27./1 is restricted Minutes: The minutes of this item were exempt.
28.	Exclusion of the public and press The following motion should be moved, seconded and approved if the committee wishes to exclude the public and press to deal with reports revealing exempt information: “That the public and press be excluded from the meeting for the following items of business on the grounds that they involve the likely disclosure of exempt information as defined in paragraph X Schedule 12A of the Local Government Act 1972.” Minutes: The motion to exclude the public and press from the remainder of the meeting was moved by Councillor Cryss Mennaceur and seconded by Councillor Sunita Gordon ahead of the London Collective Investment Vehicle Update item. RESOLVED: That the public and press be excluded from the meeting for the following items of business on the grounds that they involve the likely disclosure of exempt information as defined in paragraph 3 Schedule 12A of the Local Government Act 1972.