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The minutes are published. No summary has been written yet.
1.1 No apologies were received.
2.1 Members confirmed the following declarations of personal interest: Councillor In Receipt of Pension Contributor Huw Bevan NONE Self Glyn Caron Self and wife Self and son-in-law Veronica Crick Husband Self Jon Horlor NONE Self Peter Jones Wife Self and wife 2.2 In addition to the above, Councillor Veronica Crick also confirmed a personal interest as a board member of Bron Afon Community Housing.
3.1 The minutes of the meeting held on 13 December 2021 were confirmed as an accurate record.
4.1 The Committee noted the minutes. 4.2 As the Chair of the Committee was retiring in May 2022, the ACER paid tribute to his contributions to the Fund, the Wales Pension Partnership (WPP) and the Local Authority Pension Fund Forum (LAPFF), adding that he would leave a significant gap at Fund level and WPP level. The HoP echoed the above comments and thanked the Chair for his invaluable support.
5.1 The HoP thanked colleagues for their support in preparing the detailed budget and highlighted the following key headlines from the report: • In preparing the budget, several key assumptions had been made, including those listed within paragraph 4.6 of the report. • The Fund only held as much cash as was operationally prudent and there was plenty of liquidity within the Fund’s equities investments if cash was required. • The table within paragraph 6.1 of the report set out a summary of the indicative income and expenditure for the Fund for 2022/23, together with a revised estimate for 2021/22. The revised increase in management expenses reflected a strong period of investment performance and growth where fees were paid based on the value of assets under management. The positive message for 2022/23 was that the Fund was expected to remain cash flow positive where income increases outweighed expenditure increases. 5.2 Following questions from the Committee, the HoP made the following points: • Examples were given of various oversight and governance costs, and it should be seen as a positive that costs were increasing in this area as it highlighted the focus that had been made around enhanced governance, particularly in areas associated with the WPP which continued to evolve and assume further responsibility over the investment management of Fund assets. • The revised figures around early retirements for 2021/22 had been used in order to shape the 2022/23 estimates; however these figures were subject to variation. 5.3 The Pensions Committee agreed to note the contents of the report. 5.4 The CLO left the meeting.
6.1 The HoP highlighted the following key headlines from the report: • The Pensions Committee had made a commitment to revise the policy and he thanked the Responsible Investor Working Group (RIWG), the Pension Board and the Fund’s advisors for their input. • Targeted and specific training had been supplied via the WPP regarding stewardship and voting and engagement. • The objectives of the policy review and the areas of focus were listed within paragraphs 5.1 and 6.1 of the report respectively. • The WPP had achieved signatory status under the UK Stewardship Code, which was very pleasing for the Fund and Wales as a whole. • The RIWG had recommended that the policy was reviewed annually, rather than every three years. 6.2 Following a question from the Committee, the HoP confirmed that the policy dealt with broader issues of responsible investing, including human rights. 6.3 The Pensions Committee agreed to: (i) Note the extent of work undertaken by the RIWG in the context of this policy review; and (ii) Approve, subject to any final comments or suggestions from members of the Local Pension Board, the revised RI policy under Appendix 1 of the report.
7.1 The HoP highlighted the following key headlines from the report: • The WPP Joint Governance Committee (JGC) had not met since the last meeting of the Pensions Committee in December 2021. • Investment performance was generally positive, apart from Emerging Markets; however this sub fund had only launched in October 2021 and would be considered in a future report to the Committee. • With regards to Tranche 5 – Alternative Investments (Private Markets), an extensive procurement process had reached the final stages and it was expected that a recommendation to appoint “Allocators” across three asset classes would be put before the JGC at their meeting on 23 March 2022. Once this had taken place it was anticipated that a report would be considered by the Pensions Committee at its meeting in June 2022 regarding progress and commitments to the sub fund. 7.2 The Pensions Committee agreed to note the contents of the report.
8.1 The PM highlighted the following key headlines from the report: • A staffing update was provided within paragraph 4 of the report, which included several recent appointments. Training and development would be important over the forthcoming months and the Pension Section would be in a much stronger position as a result of the above. • The next formal Actuarial Valuation of the Fund was due to be carried out as of 31 March 2022 and in preparation of this, officers had met with the Actuary and were carrying out a data cleansing exercise on the data that was held within the system. • A cyber security update was provided within paragraph 6 of the report, and it was very pleasing that no issues were found during the tabletop exercise carried out during November 2021. • Since the report had been published the number of members signed up to My Pension Online had increased to 8,034 (15.6% of the Fund’s total membership) and the number of employers submitting their data to the Fund through i-Connect had increased to 36 out of 57 employers. • The Fund continued to work on the McCloud project, updating members records with service breaks and change of hours, and the Pension Administration system was upgraded in December 2021 in order to assist with this work. 8.2 Following a question from the Committee, the PM confirmed that the Goodwin ruling was currently being considered by the Department for Levelling Up, Housing and Communities (DLUHC) and further information was expected in the forthcoming months. 8.3 The Pensions Committee agreed to note the content of the report.
9.1 The HoP highlighted the following key headlines from the report: • The Fund posted a positive return of +3.69% in the quarter, marginally underperforming the benchmark return of +3.71% by -0.02%. In cash terms this equated to an increase in Fund value of approximately £141m to £3.898bn. Performance across the various asset classes was generally positive and Equities investments provided a good source of diversification. Property investments had also emerged strongly since the COVID-19 pandemic. • It was pleasing to report that long-term performance across all timeframes was ahead of the benchmark. • Recent events in the Ukraine had provided a challenge to all investors; however the Fund’s exposure to Russia was very small and indirect via pooled investments, and not directly linked to any sanctioned companies. • The WPP had made a clear statement to disinvest in Russia as soon as practicably possible and the Fund’s advisors had held very frequent meetings with investment managers regarding exposure to Russia and the Fund had been comforted by the information provided. 9.2 The IA provided the following headlines from Appendix 2 of the report: · The pandemic and Russia’s invasion of the Ukraine had caused the greatest impacts on markets recently, with concerns around supply chains, inflation, energy prices and COVID-19 variants. Recent lockdowns in China due to their zero COVID aims would add uncertainty to the Asian markets. · Record inflation levels had been seen recently and although it was hard to predict, the portfolio needed to be prepared for any changes. The US Federal Reserve believed that inflation was likely to be a short-term issue, with high rates not expected in the medium or long-term. · Equities Markets and Emerging Markets had experienced a negative year to date. With regards to Emerging Markets, questions had arisen around governance issues in light of the widespread response to Russia’s invasion of the Ukraine. · Rising interest rates and inflation provided a poor environment for bonds; however they continued to act as a ballast within the portfolio. · Local investments around the ‘levelling up’ expectations covered the whole of the UK, not specific regions. 9.3 The RA provided the following headlines from Appendix 3 of the report: · As of 4 March 2022, the Fund’s exposure to Russia was estimated at around £6.7m, or roughly 0.17% of Fund assets and a detailed breakdown of exposure was provided in the table on page 114 of the agenda. The RA advised the Committee that it was highly likely that the residual value of the Fund’s exposure to Russia could be expected to be zero by 31 March 2022. · Given the sanctions imposed and the closure of the Russian stock market it had been extremely difficult for the Fund’s investment managers to actively divest positions at this stage. However, there was a clear intention to take this action as soon as practically possible. · Extracts from Fidelity had been included within the report in order to highlight the strict legal issues that investment managers now had to comply with regarding exposure to Russia. · The report included a timeline of actions at national, regional and multi-national level as well as the effects on the banking and finance sector. · Issues would be seen regarding supply chains relating to energy, wheat, oil, etc; however other markets would fill these voids in time. 9.4 The ACER left the meeting. 9.5 Following questions from the Committee, the IA and RA made the following points: • Some commentators had recently referred to China as ‘uninvestable’ due to its regulatory decisions. China’s close links with Russia added another layer to these concerns and would require further monitoring. • Serbia could provide a boost to European car manufacturers due to its lithium deposits; however Serbia had been historically close to Russia, and this would therefore require monitoring. • It was difficult to see any reversal regarding the sanctions imposed upon Russia unless there was a regime change. It was suggested that once oil supplies had been sourced from elsewhere it was possible that Russia would be viewed as a failed state. 9.6 The Pensions Committee agreed to note the investment performance that had taken place during quarter four of 2021.
10.1 The HoP highlighted the following key headlines from the report: • He was very grateful for the input of the Pension Board regarding this item and confirmed that they had previously suggested that all items on the Risk Register be reviewed annually, which was now taking place. • One risk score had moderately increased during the quarter, risk FI21, and another had moderately decreased, risk FG1, with the rationale being shown in red and the risk highlighted yellow. • A typing error would be amended within the risk register, as the potential impact score of risk FI21 had not been updated. • With regards to risk FI21, he reassured members of the Committee that mitigation controls were robust, and this area would be monitored. 10.2 The Pensions Committee agreed to note the updated risk register.
11.1 The PM highlighted the following key headlines from the report: · Members of the Pensions Committee and Pension Board had taken part in the Hymans Robertson’s Local Government Pension Scheme (LGPS) National Knowledge Assessment during November 2021. The purpose of the assessment was to gain an understanding of the knowledge and understanding levels of the Torfaen Pensions Committee and Pension Board, with results being used to feed into next year’s training plan. · The survey asked participants to indicate which topics they would like to receive training on, and the top 6 areas identified were listed in paragraph 5.6 of the report. 11.2 Several members of the Committee commented that the fundamentals training that they undertook in 2017 was very valuable, and new members would benefit from this training too. It was also suggested that holding hybrid training sessions should be explored, particularly in light of issues around transport, parking, etc. 11.3 The Chair stated that training around Environmental, Social and Governance (ESG) issues and climate change would be important for new members. 11.4 The Pensions Committee agreed to note the updated training log and training programme provided within the report.
12.1 The next meeting is scheduled to take place on 13 June 2022.
13.1 The Committee agreed to the exclusion of the press and public from the meeting as presentations and meeting papers were not for publication because in accordance with paragraphs 12 and 14 of part 4 of Schedule 12a of the Local Government Act 1972 (as amended by the Access to Information Variation Order Wales 2007), it contained information about a particular individual and information relating to the financial and business affairs of particular persons including the Council and in all the circumstances of the case the public interest in maintaining the exemptions outweighs the public interest in disclosing the information. 13.2 The Chair invited members of the Pension Board to continue observing the meeting.
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