Pension Sub-committee And Pension Board - 05/06/2017

At a JOINT MEETING of the PENSION SUB-COMMITTEE OF THE POLICY AND RESOURCES COMMITTEE AND THE PENSION BOARD held at Dundee on 5th June, 2017.

Present:-

PENSION SUB-COMMITTEE

Bailie Willie SAWERS

COUNCILLORS

PENSION BOARD

Bailie Willie SAWERS, Convener, in the Chair.

I DECLARATION OF INTEREST

There were no declarations of interest.

II TAYSIDE PENSION FUND'S RISK REGISTER

There was submitted Report No 192-2017 by the Executive Director of Corporate Services updating the Risk Register for the Tayside Pension Fund.

The Sub-Committee and Board approved the updated quarterly Risk Register for the Tayside Pension Fund and Tayside Transport Pension Fund and noted the change to the undernoted risk profile from the previous report.

Risk 15 - Lack of expertise on Pension Committee, Pension Board or amongst officers.

This risk had increased following the recent local elections and appointment of new Sub-Committee and Board members who would require training. Sufficient knowledge and expertise remained on both Sub-Committee and Board as well as that of officers to mitigate significant increase in risk.

III ADMINISTERING AUTHORITY DISCRETION - REQUEST TO CEASE ABATEMENT OF PENSION BENEFITS

There was submitted Report No 193-2017 by the Executive Director of Corporate Services reviewing the current policy of Tayside Pension Fund in respect of pension abatement on re-employment in the context of changes to pension regulations, the financial implications in terms of administration, and also the costs to individuals. The report also commented on the policies of the other Scottish LGPS.

The Sub-Committee approved to cease abatement of pension payments in respect of pre-2015 entitlements to be more compatible with modern working practices and in line with nine other Scottish LGPS with effect from 1st April, 2017.

IV APPOINTMENT OF PENSION FUND GLOBAL CUSTODIAN

There was submitted Report No 194-2017 by the Executive Director of Corporate Services seeking approval to appoint a Global Custodian for the Pension Fund for a period of five years commencing 1st July, 2017, with an option to extend for a further two years.

The Sub-Committee and Board agreed that the incumbent custody service provider, Northern Trust be re-appointed as Global Custodian for Tayside Pension Fund. They would be required to supply the following services:

- Safekeeping of assets in a range of global markets

- Trade settlement

- Global Tax reclaims

- Corporate actions, instruction and collection

- Proxy voting facilitation

- Cash management

- Investment accounting

- Online reporting

- Performance measurement

- Compliance monitoring

V ENVIRONMENTAL, SOCIAL AND CORPORATE GOVERNANCE POLICY

There was submitted Report No 195-2017 by the Executive Director of Corporate Services reviewing the Funds current policy on Socially Responsible Investing (Article III of the Minute of Meeting of the Pension Sub-Committee of the Policy and Resources Committee of 6th June, 2016, Report No 213‑2016 refers).

The Sub-Committee and Board approved the Environmental, Social and Corporate Governance Policy for the Tayside Pension Funds, and noted the incorporation of guidance on Fiduciary Duty from the Scheme Advisory Board.

VI PENSION ADMINISTRATION PERFORMANCE

There was submitted Report No 196-2017 by the Executive Director of Corporate Services. This report provided information on the recent quarters operational performance in relation to Pension Administration.

The Sub-Committee and Board noted the content of the report providing information on the recent quarters operational performance in relation to Pension Administration.

VII APPOINTMENT OF 3RD PARTY ADMINISTRATION SERVICE FOR GUARANTEED MINIMUM PENSION (GMP) RECONCILIATION WITHHMRC RECORDS

There was submitted Report No 197-2017 by the Executive Director of Corporate Services seeking approval to appoint a 3rd party administration service to carry out scheme/GMP reconciliation for the Tayside Pension Fund for members with GMP and contracted out service, including active members, with all specified work completed by 31st December, 2018.

The Sub-Committee and Board agreed that Equiniti be appointed as the service provider for Tayside Pension Fund. They would be required to carry out the following to ensure a successful and timely conclusion:

- Stage 1 Initiate exercise, carry out data collection and analysis.

- Stage 2 Initial reconciliation, resolving bulk issues (eg members who are incorrectly included in HMRC records and vice versa).

- Stage 3 Individual reconciliations including identifying any cases that may have been underpaid and overpaid, and ensuring that all records are certified with the correct GMP and contracted out information.

- Stage 4 - Rectification - benefit correction (including drafting individual letters to scheme members with under and overpayments), and carry out final Altair (pensions system) update and production of files for updating ResourceLink (payroll system).

VIII APPOINTMENT OF 3RD PARTY ADMINISTRATION SERVICE FOR A SPECIFIED CASE EXERCISE

There was submitted Report No 198-2017 by the Executive Director of Corporate Services seeking approval to appoint a 3rd party administration service to process a legacy backlog of specified cases, with all work completed by 31st March, 2018.

The Sub-Committee and Board agreed that JLT be appointed as the service provided for Tayside Pension Fund.

IX TAYSIDE PENSION FUND GOVERNANCE COMPLIANCE STATEMENT

There was submitted Report No 199-2017 by the Executive Director of Corporate Services setting out the governance arrangements for Tayside Pension Fund and the extent to which it complied with regulations.

The Sub-Committee and Board noted the content of the report.

X REPATRIATION OF TRANSPORT FUND

There was submitted Report No 200-2017 by the Executive Director of Corporate Services setting out the course of action currently underway in the repatriation of the assets and liabilities of the single employer, Tayside Transport Fund back to the main Fund for exercise completion on 30th June, 2017.

The Sub-Committee and Board noted the content of the report.

XI ANNUAL TREASURY MANAGEMENT ACTIVITY 2016/2017

There was submitted Report No 201-2017 by the Executive Director of Corporate Services reviewing the Treasury Management activities for the period of 1st April, 2016 to 31st March, 2017.

The Sub-Committee and Board noted the information contained within the report.

The Sub-Committee and Board resolved under Section 50(A)(4) of the Local Government (Scotland) Act 1973 that the press and public be excluded from the meeting for the undernoted items of business on the grounds that they involved the likely disclosure of exempt information as defined in paragraphs 4, 6 and 11 of Part I of Schedule 7A of the Act.

XII TAYSIDE PENSION FUNDS

(a) PERFORMANCE SUMMARIES

There was submitted Report No 202-2017 by the Executive Director of Corporate Services relating to Performance Summaries for the quarter 1, 3 and 5 year periods to 31st March, 2017 reviewing the investment performance of the Main Funds seven Fund Managers for the quarter 31st March, 2017. It also considered the performance of the Transport Fund which invested with four of these managers.

The report compared investment performance of the Funds with the Funds specific benchmarks which consisted of various stock and security market indices.

The Sub-Committee and Board noted the information contained therein with regard to the performance of the Tayside Main Fund and Tayside Transport Fund and their Fund Managers.

(b) SUMMARIES OF INVESTMENTS AND TRANSACTIONS

There was submitted Report No 174-2017 by the Executive Director of Corporate Services summarising investments and transactions during the period 1st January to 31st March, 2017.

This report reviewed the investment activities of the Main Funds seven Fund Managers for the quarter to 31st March, 2017. The Transport Fund shared three of these managers and their transactions were included.

The Sub-Committee and Board noted the information contained therein with regard to the activities of the Tayside Pension Fund and Tayside Pension Fund and their Fund Managers.

(c) QUARTERLY FUNDING REPORT

There was submitted Report No 203-2017 by the Executive Director of Corporate Services which considered reviews of the current funding level of the Funds as assessed by the Fund Actuary.

The Sub-Committee and Board noted the report by the Fund Actuary.

XIII SOCIALLY RESPONSIBLE INVESTMENT SIX MONTHLY REPORT

There was submitted Report No 204-2017 by the Executive Director of Corporate Services reviewing the progress by the Fund Managers regarding the positive engagement Policy on Environmental, Social and Corporate Governance approved by the Sub-Committee on 6th June, 2016.

The Sub-Committee and Board noted the information contained within the report with regard to the activities of the Fund Managers during the six month period ended 31st March, 2017.

XIV ALTERNATIVE INVESTMENT OPPORTUNITY - DEVELOPMENT LAND FUND

There was submitted Report No 205-2017 by the Executive Director of Corporate Services providing detail of an investment case which had been successful in meeting the relevant investment criteria required within the Local and Alternative Opportunities Portfolio.

The Sub-Committee and Board noted the content of the report.

XV AMENDMENT TO EXISTING BOND MANDATE - GOLDMAN SACHS ASSET MANAGEMENT

There was submitted Report No 206-2017 by the Executive Director of Corporate Services detailing a proposed amendment to an existing fixed income investment mandate.

The Sub-Committee and Board approved the proposed buy and maintain strategy in respect of the mandate detailed following consultation with investment managers and consultants.

XVI PRESENTATION

James Griffin and David Barber from Fidelity Investment Management gave a short presentation.

A summary of the performance of the Portfolio for quarter 1 was given, noting the key performance drivers and comparison of this to benchmark figures. It was noted that the Portfolio had underperformed its benchmark in 2016, however long-term performance was still adding value. It was also anticipated that the Portfolio would echo its consistent out performance seen in previous years.

A brief question and answer session followed after which the Chair thanked the speakers for their presentation.

Willie SAWERS, Convener.