Agenda item

(A report by Jo Ray, (Pension Fund Manager), in connection with Fund matters over the quarter ending 30 June 2017 and any current issues)

Consideration was given to a report which provided an update to the Committee on Fund matters over the quarter ending 30 June 2017 and any current issues.

The Pension Fund Manager highlighted to Members that they needed to complete the TPR Toolkit and send their certificates through to her to enable the Fund to report that all members had fulfilled the requirement.

TPR Checklist Dashboard

The TPR Checklist Dashboard was considered and the main points raised were that 98% of Annual Benefit Statements had been issued by the deadline.  This area had now been changed to green from amber.

Also, 99.6% of deferred benefit statements had been produced, which met the TPR's requirements.

There was a question regarding H5 – Maintaining Contributions – has an annual benefit statement been provided to all members with Additional Voluntary Contributions (AVCs) within the required timescales.  This service was provided directly by Prudential, with no Pension Fund involvement.  It was explained that Prudential held the majority of LGPS contracts for AVCs.  It was agreed that a representative from Prudential come to a future meeting to brief the Committee on their role within the Fund.

Risk Register

The Committee received its quarterly update on the Risk Register.  Two new risks had been added to the register:

Risk 27 – Failure to meet requirements as a responsible investor across all ESG risks.  This was a low risk and as such was green.

Risk 28 – Failure to be opted up to professional investor status following the implementation of MIFID II.  This had entered the register as a red risk as the consequences would be the potential fire sale of assets and inability to implement the investment strategy.

Risk 22 – LCC Team Workloads and Resources.  This existing risk had been raised to red due to a reduction in staff in the Pension Fund Manager's team.  It was reported that interviews would be taking place shortly to fill one of the vacancies. 

Asset Pooling Update

The Pension Fund Manager announced that the newly appointed CEO of the Border to Coast Pension Partnership (BCPP) was Rachel Elwell who  would join the Partnership from Royal London Asset Management

As there were three LGPS funds who had not yet fully aligned themselves with a pool, the Department for Communities and Local Government had sent a generic letter to all funds (shown at Appendix F to the report) requesting a progress update on their pooling arrangements.  The BCPP pooling arrangements were going well with a view to being fully operable by 6 June 2018.  Lincolnshire County Council had no concerns with the pooling arrangements, and all was going well.

Committee Training

Certain members of the Committee had recently attended a training session in York and spoke highly of it. 

The Committee was reminded that the three-day LGA Fundamentals course was very useful for those new to local government pensions.  The three days were held separately over three months, but did not all have to be taken in one year.  The Council's pension team could arrange a place on this for Members.

Custodian Extension Request

The Fund had entered into a seven year contract with JPMorgan in 2011, which was due to expire on 31 March 2018.  Officers requested the Committee to consider an additional three-year extension to this contract, taking the expiry date to 31 March 2021.

The assets that the Fund trusted to the custodian would reduce dramatically as the transfer to BCPP took place; this made searching for a new custodian a rather difficult task.  Currently JPMorgan held just under £800m for the Fund's segregated assets.

The Committee discussed the recommendations and were widely in agreement to extend the contract for a further three years at the current cost.  The Fund also used the Custodian for preference measuring and accounting.

Options for the future custodian contract would be considered further down the line, once the Fund's requirements post asset pooling were fully understood.

Following a question, Officers confirmed that JPMorgan sent quarterly KPI reports and met annually with officers to ensure they performed well.  This would continue regardless of the amount of assets they took care of. 

RESOLVED

1.    That the request to extend the Custodian's contact to 31 March 2021, to allow for the transition of assets to BCPP, be approved;

2.    That a representative of Prudential be invited to a future meeting to explain their involvement in the Fund;

3.    That the report be noted.