Agenda and minutes

There were no apologies for absence.

If a Councillor has a disclosable pecuniary interest in a particular item, whether or not it is entered in the Authority’s register of interests, or any other significant interest which they consider should be declared in the public interest, they should declare the existence and, unless it is a sensitive interest as defined in the Member Code of Conduct, the nature of the interest at the commencement of the consideration of that item or as soon as it becomes apparent.

At meetings where members of the public are allowed to be in attendance and speak, any Councillor with a disclosable pecuniary interest or other significant interest may also make representations, give evidence or answer questions about the matter.  The Councillor must then withdraw immediately from the meeting before the matter is discussed and any vote taken.

Where Members of the public are not allowed to be in attendance and speak, then the Councillor with a disclosable pecuniary interest should withdraw from the meeting whilst the matter is under consideration. Councillors who have declared other significant interests should also withdraw from the meeting if they consider their continued participation in the matter would not be reasonable in the circumstances and may give rise to a perception of a conflict of interest.

Councillors are not obliged to withdraw from the meeting where a dispensation to that effect has been obtained from the Standards Committee.

There were no declarations of interest.

To approve the minutes of the meeting held on the 21^st July 2021.

This item includes an appendix which contains information exempt within the meaning of Schedule 12A to the Local Government Act 1972 and is not for publication.

The appendix has been circulated to Committee members only. Any discussion on the contents of an exempt appendix will require the Committee to pass the proposed resolution at the end of the agenda to exclude members of the public and press from the proceedings for that discussion

RESOLVED:

That the minutes of the meeting held on the 21^st July 2021 were approved.

Draft minutes of the Pensions Board meetings held on the, 9^th June 2021 (for information)

RESOLVED:

That the minutes of the meetings held on the 9^th June 2021 were noted.

This paper refreshes the Committee with information on a niche alternative asset class in Leisure Development. A presentation will be provided by Darwin Alternatives (Darwin), a leading asset manager in this field, and with an established foothold in the Local Government Pension Scheme (LGPS) with a view to making an investment allocation. 

Matthew Hopson (Strategic Investment Manager), presented the report and gave a summary of the key points. It was noted that a presentation would be provided by Darwin Alternatives (Darwin), a leading asset manager in this field, and with an established foothold in the Local Government Pension Scheme with a view to making an investment allocation. 

Anthony Esse and James Penney (Darwin) gave a presentation and noted the following key points, relating to the Darwin Leisure Development Fund:

-        Invested in UK holiday parks, particularly consolidating fragmented smaller operators and improving the offering to generate greater returns.

-        Focused on income rather than capital growth as a driver of return.

-        Utilised modest gearing to help finance acquisitions and redevelopment.

-        Committed to ensuring that it focused on Environmental, Social and Governance (ESG) factors and working towards the portfolio achieving net zero emissions by 2050.

-        Provided a diversified investment opportunity with low downside risk but substantial upside potential.

-        There was strong focus on operating the portfolio in a sustainable and responsible manner.

-        The benefits of the Leisure Development Fund’s strategy were also outlined.

-        Darwin had developments in national parks across the Peak District and Lake District. A proposal for a signature site was also being considered at Blenheim Palace in the near future.

Councillor Jonathan Caleb-Landy enquired how Darwin protected the biodiversity of the local area where the developments took place. In response Anthony Esse (Darwin) explained that the Leisure Development Fund was working towards achieving net zero emissions by 2050 and had put in place a series of environmental aims and targets for the Darwin Escapes holiday parks to help achieve this goal. This included achieving a biodiversity net gain when undertaking any development work. The Fund was also actively working to reduce emissions, waste and energy use where applicable on all sites.

Councillor Jonathan Caleb-Landy asked what controls were put in place to ensure that the developments were progressing on schedule and building costs were limited as a result of the Covid-19 pandemic. In response Anthony Esse (Darwin) provided a summary of the measures that were put in place to avoid potential delays and additional costs for new developments, noting that the majority of their materials, including the food and beverage producers were locally sourced.

Michael Adam (Co-opted Member) asked for further clarification to be provided on the barriers to entry into the market for this particular asset class. In response James Penney (Darwin) explained that Darwin were the only large-scale asset manager who operated in this asset class and were the first movers bringing this strategy to mainstream investors. He outlined the key barriers to entry, noting that these were mainly around planning permission and land. However, all of Darwin’s portfolio locations were situated in areas of outstanding natural beauty. There were high barriers to entry for new assets due to competing demands for land use. In addition, this asset class provided a different approach to investment in comparison to its competitors due to  ...  view the full minutes text for item 5.

This paper provides the Pension Fund Committee with a progress log of the recommendations that came from that review, and results achieved to date on them.

Phil Triggs (Director of Treasury and Pensions) presented the report and gave a summary of the key points. This paper provided a progress log of the 32 recommendations that came out of the independent review of the governance arrangement for the Pension Fund and the results achieved to date on them. The log showed that good progress had been made, with 9 recommendations implemented, and 12 commenced.

Councillor Rowan Ree enquired how often the log of recommendations was updated. In response Phil Triggs (Director of Treasury and Pensions) confirmed that this was refreshed regularly between Committee meetings. He also provided further clarification on recommendations 5, 30 and 31.

RESOLVED:

That the Pension Fund Committee noted the report.

This paper provides the Pension Fund Committee with summary of the Pension Fund’s overall performance for the quarter ended 30 June 2021.

This item includes an appendix which contains information exempt within the meaning of Schedule 12A to the Local Government Act 1972 and is not for publication. The appendix has been circulated to the Committee members only.

Any discussion on the contents of an exempt appendix will require the Committee to pass the proposed resolution at the end of the agenda to exclude members of the public and press from the proceedings for that discussion

Patrick Rowe (Pension Fund Manager), presented the report and gave a summary of the key points.

It was noted that Appendix 3 provided information about the Pension Fund’s investments and performance. In general, this had been a positive quarter for equity markets.

Overall, the investment performance report showed that over the quarter to 30 June 2021, following the downturn in markets caused by the Covid-19 outbreak, the market value of the assets increased by 47.4m to £1,260.6m.

The Fund was in line with its benchmark net of fees by delivering a return of 4.2% over the quarter to 30 June 2021, and the estimated funding level was 94.0% as at 30 June 2021. Over the year to 30 June 2021, the Fund overperformed against its benchmark by 1.6%, returning 14.3% overall.

RESOLVED:

That the Pension Fund Committee noted the report.

This report follows up on update reports presented previously to the Pension Fund Sub-committee on the actions agreed by the Committee on 3 February 2021 to appoint Local Pension Partnerships Administration (LPPA) to provide the Pension Administration service from 24 January 2022.

David Hughes (Director of Audit, Fraud, Risk and Insurance) presented the report and gave a summary of the key points.  It was noted that Officers were making good progress against the project workstreams. Four of the key areas were now complete. These included, workforce and recruitment, Surrey County Council (SCC) exit plan, undecided leavers project and the budget.

Councillor Guy Vincent asked for further clarification to be provided on the nature of the issues faced with SCC and how it got to this stage. In response David Hughes (Director of Audit, Fraud, Risk and Insurance) provided an overview of the key concerns that had arisen relating to the performance issues leading to the independent review and subsequent decision to exit the arrangement with SCC. It was noted that there were legacy data issues with Capita and BT that had impacted SCC’s ability to maintain accurate pension records. In September 2019 it came to light that SCC, as part of the triennial review data provision, had fallen below expected standards for data quality and the delivery of day to day administration tasks that supported the pensions function.

RESOLVED:

That the Pension Fund Committee noted the report.

This paper sets out a summary of the data quality issues for the London Borough of Hammersmith & Fulham Pension Fund and the mitigations the pension manager is taking on behalf of the Fund to improve these.

Eleanor Dennis (Pensions Manager) presented the report and gave a summary of the data quality issues for the Council and the mitigations the Pension Manager was taking on behalf of the Fund to improve these. The processing of legacy cases had not increased at the pace expected due to technical problems. ITM had been temporarily unable to access the Altair system and process the legacy data to bring member files up to date. However, the second tranche of data cleansing project has had excellent results, as ITM have provided a 91% success rate.

RESOLVED:

That the Pension Fund Committee noted the report.

This paper sets out a summary of the performance of Surrey County Council (SCC) in providing a pension administration service to the Fund. The Key Performance Indicators (KPI’s) for the period January 2021 – July 2021 inclusive are shown in the Appendix 1.

Eleanor Dennis (Pensions Manager) presented the report and gave a summary of the performance for SCC in providing a pension administration service to the Fund. The Key Performance Indicators for the period (January to July 2021) were still below the desired level that we required from our administrators, but we had continued to see improvements in key areas such as deaths and transfers. The pensions manager continued to work with SCC to understand the activity trends and challenge poor performance.

Councillor Guy Vincent enquired what measures were in place with Local Pensions Partnership Administration (LPPA) to ensure that similar issues did not arise again. In response David Hughes (Director of Audit, Fraud, Risk and Insurance) explained that that there was a clear mechanism in place for identifying and dealing with poor performance issues, including provision within the LPPA delegation agreement for an improvement plan to be implemented to manage their performance effectively. Eleanor Dennis (Pensions Manager) noted that going forward it was vital to recognise the importance of continuously monitoring the performance on a quarterly basis to ensure that the highest quality of service was being provided by LPPA.

Councillor Guy Vincent enquired if the Council would be compensated for the performance failings of SCC and the additional charges paid to ITM. Eleanor Dennis confirmed that there would have been a charge from SCC to bring in a contractor to carry out the work and that direct control over the quality of the work, by appointing ITM, was determined to be the best approach to deal with this matter.

Councillor Rowan Ree asked for further clarification to be provided on the likely impact on those members where their data had not been reported accurately. In response Eleanor Dennis (Pensions Manager) outlined the different implications for members and provided a summary of the possible outcomes for those individuals.

RESOLVED:

That the Pension Fund Committee noted the report.

LOCAL GOVERNMENT ACT 1972 – ACCESS TO INFORMATION

Proposed resolution: Under Section 100A (4) of the Local Government Act 1972, that the public and press be excluded from the meeting during the consideration of the following items of business, on the grounds that they contain the likely disclosure of exempt information, as defined in paragraph 3 of Schedule 12A of the said Act, and that the public interest in maintaining the exemption currently outweighs the public interest in disclosing the information