Scottish Borders Council

Agenda and minutes

Venue: Council Chamber, Council Headquarters, Newtown St Boswells

Contact: Judith Turnbull Tel No. 01835 826556  Email:  Judith.Turnbull@scotborders.gov.uk

Items
No. Item

1.

Minute pdf icon PDF 89 KB

Minute of Meeting held on 13 September 2018 to be noted and signed by the Chairman. (Copy attached).

Minutes:

There had been circulated copies of the Minute of the Meeting of 13 September 2018.

 

DECISION

NOTED for signature by the Chairman.

 

 

2.

Pension Fund Investment and Performance Sub-Committee pdf icon PDF 63 KB

To note the Minute of the Pension Fund Investment and Performance Sub-Committee held on 29 October 2018. (Copy attached).

Minutes:

There had been circulated copies of the Minute of the Pension Fund Investment and Performance Sub-Committee dated 29 October 2018.

 

DECISION

NOTED the Minute.

 

3.

Review of Additional Voluntary Contribution (AVC) Provision pdf icon PDF 104 KB

Consider report by Chief Financial Officer. (Copy attached).

Additional documents:

Minutes:

There had been circulated copies of a report by the Chief Financial Officer providing members with the outcome of the review undertaken on the Additional Voluntary Contribution (AVC) provision currently provided by the Fund.   The report explained that the Pension Fund, under the Social Security Act 1986, was required to ensure that a person could, if desired, pay additional voluntary contributions to their pension.  The Fund currently has arrangements in place with Standard Life for an AVC Scheme to allow individuals to increase their pensions.  The number of employees currently active in this scheme however, was low. The Business Plan approved on 14 June 2018, had highlighted the need to undertake a full review of the current provision to ensure it met the requirements of the Fund and relevant legislation.  A review was undertaken by KPMG on behalf of the Fund, with the findings contained in Appendix 1, to the report, circulated with the agenda.   The review found Standard Life to be a relatively strong provider in the AVC market but highlighted a number of steps which could improve the current provision.  The main areas of improvement were around communication and promotion of the scheme and also monitoring the performance of the products offered by Standard Life under the AVC scheme.  To address these areas of improvement the report detailed actions which would be undertaken.  These actions would also be included in the 2019/20 – 2022/23 Business Plan.  The Pension and Investment Manager, Mrs Robb, advised that Scottish Borders Council was considering implementing a salary sacrifice scheme for AVCs, managed by AVC Wise; who would be invited to give a presentation to the Pension Fund Committee and Pension Board.

 

DECISION

NOTED

(a)        The outcome of the Review undertaken by KPMG contained in Appendix 1 to          the report; and

(b)       The actions detailed in paragraph 4.3 of the report circulated with the            agenda.

 

4.

Risk Register Update pdf icon PDF 132 KB

Consider report by Chief Financial Officer. (Copy attached).

Additional documents:

Minutes:

With reference to paragraph 4 of the Minute of 13 September 2018, there had been circulated copies of a report by the Chief Financial Officer which formed part of the risk review requirements.  The report provided the Pension Fund Committee and Pension Board with an update on the progress of the actions taken by management to mitigate these risks, a review of any new risks and highlighted changes to any of the risks contained in the risk register.  Identifying and managing risk was a corner stone of effective management and was required under the Council’s Risk Management Policy and process guide and CIPFA’s guidance “Delivering Governance in Local Government Framework 2007”.  It was further reflected and enhanced in the “Local Government Pension Scheme” published by CIPFA.  A full risk review had been undertaken on 1 May 2018 and the revised risk register was approved by the joint Pension Fund Committee and Pension Board on 14 June 2018.  Appendix 1 to the report, detailed the risks within the approved risk register, actions and progress of these actions to date

           

            DECISION

(a)        NOTED

            (i)         The management actions progress as contained in Appendix 1, to the                       report; and

 

            (ii)        That no new quantifiable risks have been identified since the last                               review.

 

(b)       AGREED to a key risk review being undertaking in March 2019 and    reporting of progress on the risk management actions.

 

 

5.

Communication Policy pdf icon PDF 97 KB

Consider report by Chief Financial Officer. (Copy attached).

Additional documents:

Minutes:

There had been circulated copies of a report by the Service Director Human Resources  proposing the implementation of the Communication Policy for the Scottish Borders Council Pension Fund.   The Pension Fund was required by the Local Government Pension Scheme (Scotland) Regulations 2018, to have an up-to-date Communication Policy, detailed at Appendix 1 to the report, circulated with the agenda.  The Communication Policy sets out the vision to make pension issues understandable to all stakeholders and provided access to accurate up to date information in the most effective manner, making use of technologies whenever possible.   In response to a question, Ms Green, HRSS Team Leader, advised that there was no additional financial implications associated with officers attendance at promotional events, the cost being absorbed within the HRSS Team.

 

DECISION

AGREED the Communication Policy as set out in Appendix 1 to the report.

 

6.

Business Plan Performance Update pdf icon PDF 156 KB

Consider report by Chief Financial Officer. (Copy attached).

Minutes:

With reference to paragraph 10 of the Minute of 14 June 2018, there had been circulated copies of a report providing members of the Pension Fund Committee and Pension Board with an update on delivery of the actions within the approved Business Plan.  The 2018/19 – 2020/21 Business Plan for the Pension Fund was approved by the Pension Fund Committee and Pension Board on 14 June 2018.  Included within the plan were key objectives and actions with target dates.  As part of the risk register update approved by the joint meeting on 13 September 2018, it was agreed a mid-year progress report on the business plan actions would be presented to Members at the December 2018 meeting, with a further progress report and update at the June 2019 meeting. The report explained that there were 19 key tasks due for completion during 2018/19.  Of these nine were fully completed, six were on track to be completed by the approved target date, two had missed their original target date but were presented elsewhere on the agenda and two had been superseded and were no longer required.

 

DECISION

(a)        NOTED the progress of the 2018/19 actions within the business plan.

 

(b)       AGREED that a further update be presented at the June 2019 meeting.

 

7.

Budget Monitoring to 30 September 2018 pdf icon PDF 130 KB

Consider report by Chief Financial Officer. (Copy attached).

Minutes:

With reference to paragraph 3 of the Minute of 13 September, there had been circulated copies of a report providing the Pension Fund Committee and Pension Board with an updated position of the Pension Fund budget to 30 September 2018, including projections to 31 March 2019.     The Local Government Pension Scheme (Scotland) Regulation 2014 required Administering Authorities ensured strong governance arrangements and set out the standards they were to be measured against.   To ensure the Fund met the standards a budget was approved on 14 June 2018 following the recommendations within the CIPFA accounting guidelines headings.  The report was the second quarterly monitoring report of the approved budgets.    The total expenditure to 30 September 2018 was £0.347m with a projected total expenditure of £6.389m.  The projected expenditure was in line with budget.

 

DECISION

NOTED:

(a)        the actual expenditure to 30 September 2018; and

 

(b)       the projected expenditure.

 

8.

Review of the Structure of Scottish Local Government Pension Scheme - Consultation Response pdf icon PDF 159 KB

Consider report by Chief Financial Officer. (Copy attached).

Additional documents:

Minutes:

With reference to paragraph 6 of the Minute of 13 September, there had been circulated copies of a report requesting approving of the consultation response from the Pension Fund Committee on the review of the structure of Scottish Local Government Pension Scheme.   The report explained that following a request from Scottish Government the Scheme Advisory Board had launched a consultation process on the future structure of the Scottish Local Government Pension Scheme.  The process had been launched in June 2018 and sought to establish the views of employee and employers’ representatives on four options: (i) To retain the current structure with 11 funds; (ii) To promote cooperation in investing and administration between the 11 funds; (iii) To pool investments between the 11 funds; and, (iv) To merge the 11 funds into one or more funds.  The Pension Fund Committee and Pension Board had received all information available to the Fund and at the joint meeting on 13 September had a full discussion of the options.   A draft response was contained in Appendix 1, to the report which reflected the agreed position of the Committee and the Board.  It had been agreed that a separate response would be submitted by the Pension Board and employers would also be encouraged to submit responses.  It was noted that responses had to be submitted no later than 7 December 2018. 

 

8.2       The Chief Financial Officer, Mr Robertson, discussed the response in detail, highlighting that the objective of the Fund was to build up assets in order to meet all future pension fund liabilities.   The 2017 Triennial Valuation had determined a funding level of 114%, and over the past 10 years the fund had delivered a strong performance, with net assets increasing over that period by 133% to stand at £684m at the end of March 2018.  The Fund was well diversified across a range of asset classes and is now  positioned to better withstand future fluctuations in financial markets and any change could have a detrimental impact on performance and membership.  Mr Robertson advised that one of the drivers for change was to encourage investment in infrastructure.  However, through collaboration with Lothian Pension Fund, the fund already invested in infrastructure.  Mr Robertson concluded that there was no reliable, empirical case to support change and further work was required to evaluate the benefits and risks associated with change before this could be supported as being in the best interests of the fund.   Mr O’Hara added that he had reviewed the document, and considered it a clear response in terms of the views of Pension Fund members. However, it was agreed to delegate responsibility to the Chief Financial Officer, Pension Investment Manager and the Investment Advisor to finalise the response and submit on behalf of the Pension Fund Committee.  In response to questions, Mr O’Hara advised that aggregating  investments between funds could deliver economies of scale and a reduction in asset managers’ fees.  However, this would incur significant set up costs and Scottish funds were already  ...  view the full minutes text for item 8.

9.

Statement of Responsible Investment Policy pdf icon PDF 136 KB

Consider report by Chief Financial Officer. (Copy attached).

Additional documents:

Minutes:

 

With reference to paragraph 9 of the Minute of 13 September 2018, there had been circulated copies of a report requesting approval of the Statement of Responsible Investment Policy for the Pension Fund.  The Pension Fund as part of its fiduciary duties was required to ensure appropriate consideration was given to Environmental, Social and Governance (ESG) issues as part of its investment decisions, whilst acting in the best interest of the scheme beneficiaries.   The Committee and Board, to ensure its fiduciary duties were met and in line with good practice, had agreed to the development of a separate Statement of Responsible Investment.  A draft of this was presented to the Committee and Board in September and Appendix 1 to the report reflected the outcome of the discussion from the meeting.  The Policy sets out the overarching principles the Fund required Managers to act within and how the Fund would monitor the adherence to this policy.  It was noted that the draft Statement had been available on the Scottish Borders Council Pension Fund website for members of the fund to review and comment on.

 

DECISION

AGREED to the Statement of Responsible Investment as contained in Appendix 1, to the report.

 

 

10.

Information Update pdf icon PDF 127 KB

Consider briefing paper by Chief Financial Officer. (Copy attached).

Minutes:

With reference to paragraph 8 of the Minute of 13 September 2018, there had been circulated a briefing paper by the Pension and Investment Manager and HR Shared Services Team Leader providing members with an update on a number of areas which were being monitored and where work was progressing.  Full reports on individual areas would be tabled as decisions and actions were required.    In summary:

           

10.2     Guarantee Minimum Pension (GMP) Reconciliation

            ITM Limited had indicated that due to the delay in receiving responses from HMRC, the project would now be concluded by the first quarter in 2019.  84% of discrepancies had been reconciled with 16% awaiting data from HMRC or further investigation by SBC/ITM.

 

10.3     Pension Regulator Scheme Return – Data Scoring

            The Pension Regulator (TPR) had introduced a Scheme to ensure pension funds adhered to good practice on record keeping.   The scheme had identified issues around postcodes being held in the incorrect field, and also around total contributions.   A full report on the Scheme would be presented to the next meeting. 

 

10.4     Scheme Advisory Board

            The Scheme Advisory Board (SAB) had met on 4 October 2018, the minutes of which were circulated at the meeting. 

           

10.5     Training Opportunities

The date for the Pension and Lifetime Savings Association (PLSA) conference was 6-8 March 2019.  To assist attendance the joint meeting would be held in Edinburgh on the 7th March.  Mrs Robb also advised that Baillie Gifford’s next seminar would be 9-10 October 2019.  The Fund would be allocated six places.   Further details would be circulated when available.

           

DECISION

NOTED the information update.

 

 

11.

Items Likely To Be Taken In Private

Before proceeding with the private business, the following motion should be approved:-

 

“That und Section 50A(4) of the Local Government (Scotland) Act 1973 the public 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 8 of Part 1 of Schedule 7A to the aforementioned Act.”

Minutes:

AGREED under Section 50A(4) of the Local Government (Scotland) Act 1973 to exclude the public from the meeting during consideration of the business contained in the following items on the ground that they involved the likely disclosure of exempt information as defined in paragraphs 6 and 8 of the part 1 of Schedule 7A to the Act.

 

 

12.

Minute

Private Section of Minute of Meeting held on 13 September 2018 to be noted and signed by the Chairman. (Copy attached).

Minutes:

The Committee noted the Private Minute of the meeting of 13 September 2018.

 

13.

Pension Fund Investment and Performance Sub-Committee

To note the private minute of the Pension Fund Investment and Performance Sub-Committee held on 29 October 2018. (Copy attached).

Minutes:

The Committee noted and agreed the Private Minute of the Pension Fund Investment and Performance Sub Committee on 29 October 2018. 

 

14.

Quarter Performance Update to 30 September 2018

Consider report by KPMG. (Copy attached).

Minutes:

The Committee noted a private report by KPMG.

 

15.

Infrastructure Investment Update

Consider report by Chief Financial Officer. (Copy attached).

Minutes:

The Committee noted the infrastructure investment position.

 

16.

Procurment Update - Senior & Junior Infrastructure Debt

Consider report by Chief Financial Officer. (To follow).  

Minutes:

The Committee the noted and approved the Infrastructure Debt Procurement report.

17.

Procurement Update - Actuary

Consider report by Chief Financial Officer. (Copy attached).

Minutes:

The Committee noted the outcome of the procurement process for Actuarial services.

 

 

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Scottish Borders Council

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