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The minutes are published. No summary has been written yet.
1.1 Apologies were received from Councillor Jon Horlor.
2.1 Members confirmed the following declarations of personal interest: Councillor In Receipt of Pension Contributor Karl Gauden NONE Self, wife, step-daughter and step-daughter’s partner Nicholas Simons NONE Wife Alan Slade Self Self David Williams Self and wife In the process of becoming a contributor Nathan Yeowell Father and two other family members (aunts) In the process of becoming a contributor 2.2 In addition to the above, Councillor Gauden also declared a personal interest due to his work as a Unison official.
3.1 As all five members in attendance were new to the Pensions Committee; the Committee was not in a position to confirm the minutes. 3.2 The Pensions Committee agreed to note the minutes of the meeting held on 14 March 2022.
4.1 The Committee noted the minutes.
5.1 The HoP introduced the report and confirmed that the existing governance arrangement had been in place since June 2019. The arrangement had been agreed by the Pensions Committee and Pension Board, it promoted transparency and also provided a better understanding during the Pensions Committee and Pension Board decision-making process. 5.2 The Pensions Committee agreed that the following arrangement should remain in place on an indefinite basis: (i) When Pensions Committee Members attend Pension Board as observers, they are entitled by virtue of their Pensions Committee membership to remain for items which are exempt from publication. (ii) When Pension Board Members attend Pensions Committee as observers, they are entitled by virtue of their Pension Board membership to remain for items which are exempt from publication. (iii)Both these recommendations to be subject to: a) The ultimate discretion of the Chair of the meeting who would retain the right of exclusion where it was felt to be necessary/appropriate; and b) Recognition that the Standards of Conduct as set out in the Council’s Constitution and Pension Board Terms of Reference apply. 5.3 The PS left the meeting.
6.1 JR highlighted the following key headlines from the report: • The table in Exhibit 1 summarised the financial audit risks and the corresponding audit work planned in response. • The proposed audit fee had increased to £43,439, which represented a 4.3% increase compared to the 2021 fee. • The timetable for the audit plan could be seen within the table in Exhibit 4 of the report. 6.2 JR confirmed that the audit was in line with the previous audit, except for the risk around private market investments. 6.3 On behalf of the Pensions Committee, the Chair praised officers for their work regarding the current the audit. 6.4 The Pensions Committee agreed to note the content of the report.
7.1 The HoP highlighted the following key headlines from the report: • The Joint Governance Committee (JGC) of the Wales Pension Partnership (WPP) last met formally on 23 March 2022 and the draft minutes of this meeting were available in Appendix 1 of the report. • Paragraph 7.4 of the report outlined the development of two new investment sub-funds, since the above meeting took place, namely the UK Opportunities decarb implementation and Sustainable Equity funds. • As of December 2021, £2.6bn of the Fund’s investments were via pooled arrangements, which equated to 68% of all investments. The government mandate was for funds to be as close as possible to 100% of all investments. • The Operator Update (in Appendix 2 of the report) provided snapshots of various investment mandates and also a snapshot that compared all eight Welsh funds. • The Fund had been assured that Dye & Durham’s forthcoming acquisition of 100% of the shares in Link Group, as per page 70 of the agenda, would have no impact on the day-to-day relationship that the WPP had with the Operator. • The WPP Business Plan 2022-2025 (in Appendix 3 of the report) had been agreed by the JGC in March 2022 and was now subject to approval via all eight Welsh pension funds prior to its publication. 7.2 The IA explained that the data within pages 64 and 65 of the agenda highlighted the level of influence that the Fund had regarding product development within the WPP’s investment mandates. 7.3 Following questions from the Committee, the HoP made the following points: • No deadline was in place regarding the complete pooling of investments and some funds may never reach 100% due to pursuing long-term investments outside of the pool company; however it was the Fund’s long-term aim. • The function of the UK Opportunities decarb implementation was to reduce the overall carbon exposure of the UK opportunities mandate by up to 25% versus its respective benchmark. 7.4 The Pensions Committee agreed to: (i) Note the content of the report as well as the respective appendices; and (ii) Approve the WPP Business Plan for the period 2022-2025
8.1 The PM highlighted the following key headlines from the report: • Since the report had been published, the Systems Team Leader had confirmed her intention to retire. • Considerably more work had been completed during the current year, compared to the previous year. Work was now in line with pre-COVID-19 pandemic levels. • As part of the Fund’s Annual Cyber Security Plan, the Fund had asked Heywood Pension Technologies to complete a Cyber Security Supplier Questionnaire. • Since the report had been published, the amount of the Fund’s total membership who had signed up to My Pension Online had increased to 17%. The Fund was always looking to further increase this amount. • The deadline for employers to submit their final month return (March) to the Fund for Year End was 30 April 2022. • The Fund had been carrying out a review of its processes to ensure that it complied with the new regulations outlined in paragraph 11 of the report regarding Additional Voluntary Contributions (AVCs). 8.2 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 negative return of -3.51% in the quarter, underperforming the benchmark return of -2.91% by -0.6%. In cash terms this equated to a decrease in Fund value of approximately £137m to £3.761bn. This was the first disappointing quarter for some time; however performance across all investment markets was similarly challenging due to the volatile and uncertain macro backdrop. • It was pleasing to report that long-term performance across all timeframes was ahead of the benchmark. 9.2 The RA provided the following headlines from Appendix 2 of the report: · A perfect storm had been growing in the markets since the beginning of the year, with a steep rise in inflation, supply chain issues, interest rate hikes and then the Russian invasion of the Ukraine which affected oil and other commodities. · As the volatility experienced during quarter one of 2022 was expected to continue during quarter two and beyond, it was important for the Fund to take a long-term view of investments and remain well diversified in terms of its investments. · The path towards net zero needed to transfer to the real economy, as opposed to simply changing the appearance of portfolios. 9.3 The IA confirmed that it was important for members of the Pensions Committee to understand the impact of foreign currencies on investments, as they could really assist the Fund in certain circumstances. 9.4 Following questions from the Committee, the IA and RA made the following points: • The IA explained that although the Fund had no dedicated investments related to cryptocurrency, the impacts could be seen on the margins and could find a way into Alternative investments. The RA added that cryptocurrency created a challenge for custodial businesses in terms of accountability but that they did not anticipate this becoming an investable asset class for the Fund to consider. • The RA acknowledged that the UK’s economic growth was currently the second slowest within the G20; however she explained that this was subject to constant change and the latest situation related to the timings of economies recovering from the COVID-19 pandemic. • With regards to the Fund’s strategic position around investments, the IA believed that more diversification was important and that the portfolio needed to be resilient to inflation. The Fund’s advisors were in agreement that the Fund was on the right direction of travel. • The IA explained that meaningful Environmental, Social and Governance (ESG) data was improving all of the time; however it was not perfect yet. Also, a sluggishness existed regarding availability of investment products related to climate change and biodiversity. • With regards to net zero, the RA explained that measurements were in their infancy and did not currently include customers and supply chains. The IA added that more sophisticated engagement was required in this area, including funds influencing markets from within, rather than simply divesting its investments. 9.5 The Pensions Committee agreed to note the investment performance that had taken place during quarter one of 2022.
10.1 The HoP highlighted the following key headlines from the report: · Members of the Pension Board and the Fund’s advisors played a key role in assisting officers to shape and review the risk register. Members of the Pensions Committee were also encouraged to contribute. · The Fund was very focussed on cyber security and fraud risks, and he praised the work of the PM and other council colleagues in this area. · Issues such as the cost of living and inflation generally sat outside of the Fund’s control; however decisions around the Fund’s investments did play a role in this area. · It was possible that risks around COVID-19 could be removed as standalone items from the risk register in the near future. 10.2 Following a question from the Committee, the HoP agreed that in most circumstances the risk rating should not be higher after control measures were put in place, and with this in mind he would revise an error picked up regarding risk FI21. 10.3 The Pensions Committee agreed to note the updated risk register.
11.1 The PM highlighted the following key headlines from the report: • The Training Policy (in Appendix 1 of the report) helped members of the Pensions Committee and Pension Board understand their roles and responsibilities. • The Annual Training Programme (in Appendix 2 of the report) contained a wide range of training that was available. The PM specifically recommended the Pensions Regulator Online Trustee Toolkit, WPP – Governance and Administration, WPP – Roles and Responsibilities and the LGA Fundamentals Training. • Members of the Pensions Committee were encouraged to keep their own record of all pensions-related training that they undertook and to submit updates to the PM on a quarterly basis. 11.2 The Pensions Committee agreed to note the training policy and Annual Training Programme.
12.1 The next meeting is scheduled to take place on 12 September 2022. 12.2 The meeting ended at 11.35am.
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