Councillors and committees
Agenda and minutes
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Venue: Guildhall, Kingston upon Thames KT1 1EU
Contact: Ann Sweeney 0208 547 4629 Email: firstname.lastname@example.org
To confirm the minutes of the meeting held on 12 February 2019.
The minutes of the meeting held on 12 February were confirmed as a correct record.
Particular points highlighted on the update from February to April were
Team restructure - Recruitment for both the Senior Pensions Officer and Pensions Officer was unsuccessful. The Senior Pensions Officer post has been readvertised and recruiting a further apprentice in the place of the vacant Pensions Officer post is being considered.
Complaints monitoring - A Stage 2 complaint on transfer out of pension rights has been received and the Pensions Ombudsman is considering a case on restrictions on the use of AVC’s to purchase an annuity.
National Fraud Initiative – the latest reports detailed a small number of deaths not notified to the team.
Accounting Valuation Reports - Data was submitted to the actuary and reports produced for those employers who wished for an accounting valuation report as at 31 March 2019.
Guaranteed minimum pension (GMP) reconciliation - the final reports on pensioners data and payments are nearing completion add a report will be submitted to the next meeting there may be some under/over payments. In the case or overpayments national guidance is expected on the approach to be taken on recovery of these which are not the fault of the individual.
Resolved that the update is noted.
Triennial Review 2019 Preparations - Training session
This will be presented by the Actuary – Hymans Robertson
Geoff Nathan of Hyman Robertson gave a comprehensive presentation on the actuarial valuation process. Employer contribution rates are set on the basis of the Fund valuation; whereas employee contributions (linked to payscales) and benefits are set by regulation.
The valuation process considers
the benefits which need to be funded and whether adequate funds are available
the contributions from the various employers within the scheme are at the appropriate levels; that no employer is subsidising another and that employers in the scheme for shorter periods- eg Contractors in the scheme for perhaps 3 -5 years – fund their contributions via more conservative funding vehicles
funding targets and risk levels and the probability of meeting the funding targets
the Funding Strategy Statement and whether it remains relevant to changing demands on the Fund
the level and timescale of contributions to a deficit in the fund
factors affecting the demands on the Fund – eg the effect of CPI increases, numbers of pensioners and longevity.
An additional factor, which is separate from the valuation process, is the management of the cost of contributions. The intention is to discuss contribution rates between Quarters 3 and 4, initially with officers, then with employers ready for 31 March 2020. This may be by way of an Employers Forum. .
Points raised in the discussion concerned deficit fund contributions; issues affecting employer contributions and whether the Funding Strategy Statement (FSS) was likely to change.
On the Funding Strategy Statement (FSS) Geoff Nathan referred to the comments in the GAD S13 report, discussed at the last meeting, which for the Council could mean that the current 18-20 deficit reduction period would be required to reduce. He also referred to – slide 18 - the Government revaluation of the Teacher’s Pension scheme. This had been done in a different way and resulted in significant increases in contributions.
The FSS will be available in Q4.
The Panel thanked Geoff Nathan for the very informative presentation.
Responsible Investment update
This presentation covered:
· The approach to Responsible Investment (RI)
· Where the RBK Fund ranks on this compared to other London Boroughs
· The London Collective Investment Vehicle approach to RI
The Panel aims to increase skills in this area and develop an RI policy. At the September meeting the LCIV will be invited to attend to discuss its approach to RI, incorporating feedback from Boroughs, and future plans.
Resolved that the presentation and the next steps in progressing the development of a Responsble Investment policy is noted.
The value of the Fund's investments at 31 March 2019 was £873.1 m; an increase of £55.5 million (6.8%) from the end of December 2018.
Supplementary reports from each of the fund managers, outlining their investment performance during the quarter to 31 March 2019 were also circulated.
The composition of the Fund at 31 March was
Fall/rise factors Supplementary reports from each of the fund managers, outlining their investment performance during the quarter to 31 March 2019 were also circulated.
Over one year the equity fund managers provided the highest fund returns, Columbia Threadneedle (12.5%), Fidelity (8.2%) and Schroders (5.5%).
All of the fund managers failed to meet their outperformance targets; Columbia Threadneedle and the Janus Henderson All Stocks Credit Fund (ASC) were the only funds to exceed their benchmarks. Against its 6% pa target the Janus Henderson Total Return Bond Fund (TRB) fell short by -6.2%.
Over a rolling 3 years the highest fund returns were from the equity fund managers, Columbia Threadneedle (16.6%), Fidelity (13.3%) and Schroders (12.6%). The lowest return (0.4%) was the Aberdeen Standard Diversified Growth Fund had
All the fund managers missed their outperformance targets, Columbia Threadneedle and Janus Henderson ASC only just failing by -0.2% and -0.1% respectively.
The only funds to exceed their benchmarks were Columbia Threadneedle, Janus Henderson All Stocks Credit Fund (ASC) and Pyrford. Fidelity, Schroders, UBS and Aberdeen Standard all failed to meet both their benchmark returns and outperformance targets.
Multi Asset Credit – LCIV investment - the re-allocation of £32m from the Janus Henderson’s All Stocks Credit fund to the London CIV Multi-Asset Credit fund managed by CQS was completed in the last week of February.
The Kingston fund now has 21% of its assets on the London CIV platform.
Residential Property Investment - no notice has yet been issued from M&G for a subscription.
Developments since the February meeting - At Aberdeen Standard Investments, Guy Stern leader of the team responsible for the Global Absolute Strategies (GARS) portfolio has retired. This role has been taken on by Mr Aymeric Forest, most recently Head of Multi-Asset Investments Europe and Head of Global Income Multi-Asset at Schroders
Resolved that the latest performance information is noted.
Exclusion of the Press and Public
To exclude the public from the meeting under Section 100(A)(4) of the Local Government Act 1972 on the grounds that it is likely that exempt information, as defined in paragraph 3 of Part I of Schedule 12A to the Act, would be disclosed and the public interest in maintaining the exemption outweighs the public interest in disclosing the information.
Appendix C Funding of Group Transfer
Appendix D Funding of Group Transfer
Annex 1 of Appendix E Risk Register
Resolved that the public are excluded from the meeting under Section 100(A)(4) of the Local Government Act 1972 on the grounds that it is likely that exempt information, as defined in paragraph 3 of Part I of Schedule 12A to the Act, would be disclosed and the public interest in maintaining the exemption outweighs the public interest in disclosing the information.
Appendix C Funding of Group Transfer
Appendix D Equity Portfolio Review
Annex 1 of Appendix E Risk Register
Presentation by Fund Manager - UBS
Representatives from UBS will be
Rachel Perini Business Development Director
Jonathan.Hollick, Portfolio Manager Triton Fund
Natalia.Recarte Pacheco Client Services Manager
UBS gave a presentation on the current status of the fund.
Resolved that the report be noted.
The transfer value to the London Pension Fund Authority (LPFA) for former members of Kingston College, following its merger into the South Thames Colleges Group, has been agreed by both actuaries as £43m. This represents approximately 5% of the Fund’s investment assets of £873m at the end of March 2019, a significant impact on the current allocations to existing fund managers.
Options to meet the transfer payment prepared by the Fund’s Investment Advisers, Aon Hewitt, were discussed.
Resolved that the recommendation on the Exempt Annex on page C3 be approved.
Equity Portfolio Review
To be presented by Aon Hewitt
This item was deferred to the 12 September meeting.
The risk register was recently reviewed and updated with a focus on consolidating risk lines, removing risk lines that are no longer applicable or represent day to day administrative tasks related to the fund as opposed to risks that need to be overseen and mitigated.
There are 28 open risks categorised as
? Liabilities (4 risks)
? Funding Strategy (2 risks)
? Investments (5 risks)
? Governance and Administration (14 risks)
? Scheme Employers (3 risks)
They are scored in the same way as the Corporate Risk register - . Likelihood (scored 1 to 5) and Impact (1 to 5) multiplied to give the risk score and then rated red/amber/green (RAG) as follows
There are no red risks. There are 7 amber risks, these and mitigating actions were detailed in paragraphs 10 - 16 of the report.
The nature of some risks - for example those relating to the global economy - –are outside the control of the Council and strategies in place to mitigate the impact of these reflect this.
The Panel will receive half-yearly updates, if any additional amber or red risks are identified these will be reported to the earliest available Panel meeting.
Resolved that the current position on the Pension Fund Risk Register is noted and the actions in place to mitigate the key risks are endorsed.
The proposed Work Programme for September 2019 to February 2020 was presented, this is subject to change in the light of any developments in the LGPS world.
Resolved that the work programme is agreed.