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Contact: Susan Dallison Email: susan.dallison@dorsetcouncil.gov.uk
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Apologies To receive any apologies for absence. Minutes: No apologies for absence were received at the meeting. |
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Declarations of Interest To receive any declarations of interest. Minutes: No declarations of disclosable pecuniary interests were made at the meeting. |
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To confirm the minutes of the meeting held on 10 September 2020. Minutes: The minutes of the meeting held on 10 September 2020 were confirmed. |
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Public Participation To receive questions or statements on the business of the committee from town and parish councils and members of the public. The deadline for submission of the full text of a question or statement is 8.30 am on Monday, 23 November 2020. Details of he Council’s procedure rules can be found at: Public
Participation at Committees. Minutes: No questions were received from members of the public. |
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Elected Member Participation Minutes: Councillor Felicity Rice of BCP Council made a statement to the
Committee. Cllr Rice explained that the changes in the allocation of seats on outside
bodies agreed by BCP Council meant that she was no longer a member of the
Committee. She thanked all Committee
members and looked forward to engaging with them and members of the public in
the future to ensure all was being done to address climate change, and to
increase emphasis on ethical and local investment. Cllr Rice was pleased that she had been replaced on the Committee by
another woman, Cllr Bobbie Dove, and added that it would be great to see more
diversity on pension fund committees throughout the UK. The Chairman thanked Cllr Rice on behalf of the Committee, particularly
for helping to raise the importance of environmental considerations when making
investment decisions. As a measure of
the growing importance of environmental considerations, eight out of Brunel
Pension Partnership’s ten client funds had committed to invest in Brunel’s
newly launched sustainable equities fund. |
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Urgent items To consider any items of business which the Chairman has had
prior notification and considers to be urgent pursuant to section 100B (4) b)
of the Local Government Act 1972. The reason for the urgency shall be recorded
in the minutes. Minutes: There were no urgent items. |
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Pensions Administration PDF 102 KB To consider the quarterly report of the Fund Administrator on pension fund administration. Additional documents:
Minutes: The Committee considered a report from officers on operational and
administration matters relating to the pension fund. Performance as measured by the Key Performance Indicators (KPIs) had
improved overall, with improvements in eight of the twelve areas measured. Performance since the period covered in the
report had continued to improve in challenging circumstances. The procurement of the pensions administration software system had
completed with the contract awarded to Civica, and
project managers had been appointed by both parties. The Vice-Chairman informed the Committee that he and the leader of
Dorset Council had made it very clear to the local MPs that that the current
proposed exit payment cap legislation was misguided and would not achieve what
it is intended to do. The Local Government Association (LGA) Scheme Advisory Board (SAB) had
also raised concerns about the additional burdens on administering authorities
directly with the Ministry of Housing, Communities and Local Government
(MHCLG). The SAB website published the
most current information on this matter including counsel’s opinion. Resolved That the interim
advice to scheme employers regarding the exit payment cap be approved for
publication, subject to approval also by the Local Pension Board. |
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Independent Adviser's Report PDF 215 KB To consider the quarterly report of the independent Adviser on the outlook for the pension fund’s investments. Minutes: The Committee considered a report from Alan Saunders, the pension fund’s
Independent Adviser, that gave his views on the economic background to the
pension fund’s investments, the outlook for different asset classes and the key
risks for markets. The Office for Budget Responsibility (OBR) had forecast a fall in the
UK’s Gross Domestic Product (GDP) of 11% this year, followed by recovery of 5%
to 7% in 2021. A return to 2019 levels
was not expected until mid-2022 which represented a huge loss of output, tax
revenues and employment. No deal on the
future trading arrangements between the UK and the EU would weaken the OBR’s
forecast by about 2% annually. Markets had been resilient despite this economic background largely
because of huge monetary and fiscal support from central banks and
governments. The key distinction with
the response to the 2008/09 financial crisis had been the use of fiscal policy
in addition to intervention by central banks.
There had been extraordinary levels of government borrowing but this
could be funded because interest rates were so low. The market outlook had improved following recent news regarding the
successful development of vaccines for Covid-19. In response UK markets had risen by 10% and
there was a growing sense of optimism that we were coming out of this crisis. Markets had also been boosted by comments
from the US Federal Reserve that they would not be taking
action to slow inflation until it had recovered ‘lost ground’. The switch from UK to global equities allocations agreed at the last
meeting of the Committee had not yet been implemented. This meant the pension fund had benefited
from the market improvements in the UK.
Sterling had recovered quite strongly also which would therefore make it
less expensive to buy US stocks as part of the transition. The government had confirmed that the Retail Price Index (RPI) would be
aligned with the Consumer Price Index Including Housing Costs (CPIH) without
compensation to holders of index linked bonds.
RPI was approximately 0.8% higher than CPIH, with about half of this
difference already discounted in the market.
Investment consultants, Mercer, advised that there was no immediate need
to change the pension fund’s inflation hedging strategy
but it was agreed that there should be training session for the Committee on
the topic in March 2021. The proposed appointment by President Elect Biden of Janet Yellen as the
Treasury Secretary signalled a more consistent and pragmatic approach in the
US. However, it was noted that the
appointment needed to be approved by the Republican controlled Senate. Resolved That a training session covering the
implications of RPI reform for the pension fund’s inflation hedging strategy be
held in March 2021. |
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Pension Fund Administrator's Report PDF 137 KB To consider the quarterly report of the Fund Administrator. This includes an update on the funding position, the value and performance of investments and other topical issues. Additional documents:
Minutes: The Committee considered a report from officers on the pension fund’s
funding position, valuation, performance and asset allocation as at 30
September 2020. The value of the pension fund’s investments had recovered to just over
£3.0 billion at 30 September 2020. Assets were estimated to be 83% of the value needed to pay
expected benefits accrued to 30 September 2020 compared to the funding level of
92% calculated by the actuary following their full assessment as at 31 March
2019. Performance
had been volatile with approximately 13% return over the first half of this
financial year compared to -3% over the last 12 months. Both legacy and Brunel active equity managers
had performed well with outperformance driven by growth stocks, particularly
technology stocks. In recent years the pension fund had underperformed its
combined benchmark in part because of the challenging market conditions for
those investment managers with ‘cash plus’ benchmarks. There would be a review of the suitability of
all benchmarks used. As at 30
September 2020 just under 50% of assets had transferred to Brunel’s management. Implementation of the changes to the investment strategy
agreed by the Committee in September 2020 were expected to increase this
proportion significantly before the end of the financial year. Implementation of the changes to equities allocations
had begun and should be completed before the next meeting in March 2021. The focus to date with the investment pooling project had
been the transition of investments to Brunel’s management. Now that the transitions were nearly
complete, the focus would shift to assurance that expected outcomes were being
delivered by Brunel. Reports needed to
be better structured with a succinct summary of key points supported by the
inclusion of more information regarding the performance of underlying managers. David Vickers has been appointed as Brunel’s Chief
Investment Officer and would be invited to a future meeting of the
Committee. The Brunel governance review
was nearing its final stages. The slides
from the recent Brunel investor days would be distributed shortly. The sessions worked well and would be worth
continuing with when restrictions on face-to-fact contacts are lifted. The approach to environmental, social and governance (ESG)
matters remained a priority, with Brunel recognised as a leader in this field,
although investment performance remained key.
The investment in a low carbon farming business through Brunel’s secured
income portfolio was a good example of good returns with positive environmental
impacts. ESG benefits through investment
pooling were much greater than could have been achieved acting as an individual
pension fund. The balance between divestment from fossil fuels but
supporting those energy companies who are investing heavily in renewables was
discussed. In September the Committee
resolved to take a broader low carbon approach rather than a blanket divestment
from fossil fuels so some investment in oil companies would be retained. Further details about Brunel’s the
investments in hydrogen were also requested. The government’s rationale for investment pooling had been that investment manager fees savings from economies of scale would more than ... view the full minutes text for item 78. |
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Pension Fund Annual Report 2019-20 PDF 60 KB To approve for publication the Pension Fund Annual Report for 2019-20 (including annual accounts). Additional documents: Minutes: LGPS regulations
require all administering authorities to publish an annual report on the
activities of its pension fund. The
report for 2019/20 had taken longer to produce than in previous years because
of the impact of Covid-19. The report of the
independent auditor regarding the financial statements had not been received
but it would be circulated to members of the Committee when received. No major findings were anticipated. The annual report
would be published on the pension fund’s website but
Committee members could also request paper copies. The annual report
should highlight that it had been an exceptional year due to the impact of
Covid-19 as the timing of the downturn in financial markets had coincided with
the pension fund’s year end date and that asset values had subsequently
recovered significantly. Resolved
i. That the
auditor’s report is circulated to all Committee members when received
ii. That the annual
report is published as is, with a delegation to the Chairman and Vice-Chairman
to approve the final version if no substantive matters are raised in the
auditor’s report.
iii. That the annual
report be amended to highlight that it had been an exceptional year due to the
impact of Covid-19 as the timing
of the
downturn in financial
markets had coincided with the pension fund’s year end date and that asset values had subsequently
recovered significantly. |
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Dates of Future Meetings To confirm the dates for the meetings of the committee in 2021: Thursday 11 March 2021 – Microsoft Teams Minutes: Resolved That meetings be held on the following dates: 10am 11 March 2021 MS Teams |
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Exempt Business To move the exclusion of the press and the public for the following item
in view of the likely disclosure of exempt information within the meaning of
paragraph 3 of schedule 12 A to the Local Government Act 1972 (as amended). The public and the press will be asked to leave the meeting whilst the
item of business is considered. Minutes: There was no exempt business. |