Agenda and minutes

Pension Committee - Tuesday, 27th June, 2023 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
1.	Welcome and introductions Minutes: The Chair, Councillor Cryss Mennaceur, welcomed those present.
2.	Apologies for absence and declarations of interest View the background to item 2. Minutes: Apologies for absence were received from Councillor Andrew Jenner and Councillor Patrick Magnus with Councillor Eric Allen attending as a substitute. There were no declarations of interest.
3.	Minutes of the previous meeting View the background to item 3. To approve as a correct record the minutes of the meeting held on 14 March 2023. Supporting documents: Minutes , 14/03/2023 Pension Committee , item 3. PDF 121 KB Restricted enclosure 5 View the reasons why document 3./2 is restricted Minutes: RESOLVED: that the minutes of the meeting held on 14 March 2023 be agreed as an accurate record.
4.	Any urgent business View the background to item 4. 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.
5.	Appointment of a Vice Chair Minutes: Councillor Cryss Mennaceur proposed that Councillor Sam Martin be elected as Vice Chair of the Pension Committee. This was seconded by Councillor Tom Drummond. RESOLVED: Councillor Sam Martin be appointed as Vice Chair of the Pension Committee.
6.	Work of the Pension Board 2022 to 2023 Supporting documents: 6. Work of the Pension Board 2022 to 2023_ (R) _ Pension Committee _ 20230627 , item 6. PDF 201 KB Minutes: The Independent Chair of the Pension Board introduced the report. The Committee noted the vacancy on the Pension Board and queried what progress had been made to appoint a new member. Officers advised three applications had been received and following a ballot, the new member would be appointed at the end of July. RESOLVED: To note the report.
7.	Pension Fund Business Plan and Budget Supporting documents: 7. Pension Fund Business Plan and Budget_ (R) _ Pension Committee _ 20230627 , item 7. PDF 171 KB 7a. Pension Fund Business Plan and Budget_ (R) _ Pension Committee _ 20230627 , item 7. PDF 166 KB 7b. Pension Fund Business Plan and Budget_ (R) _ Pension Committee _ 20230627 , item 7. PDF 55 KB Minutes: The Head of Insurance and Pensions Administration introduced the report. The Committee discussed the proposed budgets for 2023/24. The Committee noted the difference between transfers going in and out, officers advised that the budgets were based on historical trends and that the Fund has no control over the actual numbers of members transferring in and out benefits. Officers advised that 2022/23 was the first full year as part of the shared service and as such additional costs were avoided as the same consultants, actuaries, benefit consultants etc. were used which provided savings. Officers advised they were anticipating a high spend this year on administration based consultancy due to various projects. In response to questions regarding staff vacancies, officers advised the budget is predicted on all vacancies being filled. The Committee discussed the Pensions teams recent three award wins and queried the criteria for the awards. Officers advised the criteria considered staffing, policies, consultant procurement process, investments, diversity, joint working and governance arrangements. The Committee raised concerns about cyber security and queried how secure the Pension Fund is and the mitigations that are in place. Officers advised that as part of the governance review, a cyber policy was developed and implemented and due diligence takes place with the fund managers to determine how secure their data is. Officers further advised that membership data is hosted locally and is secured by the Council’s own cyber security arrangements. In response to questions, officers clarified the policy is reviewed at least annually and a formal review will take place every three years. The Committee noted a presentation on the cyber security arrangements was presented to the Pension Board and queried if it could be brought to a future meeting of the Committee, officers agreed to this. Members noted the governance review that recommended the introduction of a cybersecurity policy was carried out by Aon. RESOLVED: 1. To approve the business plan for 2023-26. 2. To approve the budget for 2023-24.
8.	Pension Administration Update Supporting documents: 8. Pension Administration Update_ (R) _ Pension Committee _ 20230627 , item 8. PDF 174 KB 8a. Pension Administration Update_ (R) _ Pension Committee _ 20230627 , item 8. PDF 240 KB Minutes: The Head of Insurance and Pensions Administration introduced the report. The Committee noted the Superannuation Contributions Adjusted for Past Experience (SCAPE) discount rate methodology and queried how officers are managing the impact on scheme members, officers advised that they were managing the expectations of the scheme members and where it will impact a time-sensitive divorce case, officers will give it priority and manually calculate it if possible. In response to questions regarding monthly returns, officers advised it will smooth processes due to not receiving an influx of data each year. Officers further advised it will allow the team to pick up on monthly data trends rather than waiting for the end of year validation. RESOLVED: To note the update.
9.	McCloud Remedy Project Update Supporting documents: 9. McCloud Remedy Project Update_ (R) _ Pension Committee _ 20230627 , item 9. PDF 177 KB 9a. McCloud Remedy Project Update_ (R) _ Pension Committee _ 20230627 , item 9. PDF 36 KB 9b. McCloud Remedy Project Update_ (R) _ Pension Committee _ 20230627 , item 9. PDF 41 KB Minutes: The Head of Insurance and Pensions Administration introduced the report. RESOLVED: To note the report.
10.	Governance and Risk Update Supporting documents: 10. Governance and Risk Update_ (R) _ Pension Committee _ 20230627 , item 10. PDF 169 KB 10a. Governance and Risk Update_ (R) _ Pension Committee _ 20230627 , item 10. PDF 78 KB Minutes: The Head of Insurance and Pensions Administration introduced the report. The Committee noted the ongoing issues with the administration software. Officers advised there have been improvements but it’s still not at the level we would expect. The dissatisfaction has been raised with senior individuals at the software company and officers are in regular contact with the provider. In response to questions, officers further advised the core functions of the software are acceptable and it’s the additional components such as reporting that is where the issues often lie. The Committee requested to know how much we pay for the software, officers advised the figure does change depending on components but would look at this following the meeting and share with members. The Committee queried if the senior management check of all calculations that produce values over £100,000 are for all calculations or specific types, officers advised this is on all calculations. The Committee noted the two inaccuracies on the annual benefits statements and queried what these were, officers advised they are investigating and will make the necessary template or data changes required. RESOLVED: To note the update and the risk register.
11.	Work Programme Update Supporting documents: 11. Work Programme Update_ (R) _ Pension Committee _ 20230627 , item 11. PDF 158 KB Minutes: The Head of Pensions Investments introduced the report. RESOLVED: To note the updated work programme for the Committee.
12.	Quarterly Investment Performance Supporting documents: 12. Investment and Manager Performance to 31 March 2023_ (R) _ Pension Committee _ 20230627 , item 12. PDF 188 KB 12a. Appendix A - London Borough of Sutton Pension Fund Q1 2023 , item 12. PDF 1 MB Restricted enclosure 27 View the reasons why document 12./3 is restricted Restricted enclosure 28 View the reasons why document 12./4 is restricted Minutes: The Head of Pensions Investments introduced the report alongside colleagues from Mercer. The Committee queried if we are still going to generate enough income to cover additional costs from the 10.1% increase, officers advised the Pension Fund invests in asset classes that will generate income and the Sutton fund is one of few that is cash flow positive without the need for investment so do not consider the 10.1% to be a concern at this point in time, however it is difficult to predict future economic changes which may change this assumption. Officers advised the Committee that the Sutton Fund is a long term investor and would advise holding onto investments for three to four years. Members noted the increase in funding level from March 2022 to March 2023. Officers advised a key factor of the triennial valuation is how we assess the liabilities of the fund and the percentage at the time of valuation was 4.3%, which is a determining factor in the funding level. The Committee discussed the funds exposure to fossil fuels and noted the difference percentages listed in the reports, officers advised this was a mistake in the report and they would seek clarity on the figure and let members know. Officers further advised the Committee that they would seek to engage with managers to aim for net zero and renewable energy. Officers informed the Committee of their preference to engage with managers rather than disinvest and lose their influence. RESOLVED: 1. To note the performance of the Fund during the quarter ended 31 March 2023. 2. To note the funding level as at 31 March 2023. 3. To note the progress on implementing the investment strategy 2023.
13.	London Collective Investment Vehicle Update Supporting documents: Restricted enclosure 30 View the reasons why document 13./1 is restricted Restricted enclosure 31 View the reasons why document 13./2 is restricted Minutes: The minutes of this item were exempt.
14.	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 Tom Drummond during 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.