Agenda, decisions and minutes

West Yorkshire Pension Fund Pension Board
Wednesday, 8th November, 2017 10.00 am

Venue: West Yorkshire Pension Fund, Aldermanbury House, 4 Godwin Street, Bradford BD1 2ST

Contact: Jane Lythgow 

Items
No. Item

1.

CHAIR'S NOTE

Minutes:

The Chair expressed concern about the consistent non-attendance of the Wakefield Metropolitan District Council  (MDC) representative.

 

The representative had been nominated by Wakefield MDC in October 2016 but had not attended any of the three meetings held, either of two in-house training sessions or, as far as the Board was aware, attended any other pension related training.

 

Members were reminded that in accordance with the Terms of Reference of the Board Members must endeavour to attend all Pension Board meetings during the year.  In the event of consistent non-attendance by any Member then the tenure of the membership should be reviewed.

 

It was agreed that Wakefield MDC be contacted to consider what steps could be taken to ensure that the Wakefield MDC Representative was able to attend future meetings.

2.

DISCLOSURES OF INTEREST

(Members Code of Conduct - Part 4A of the Constitution)

 

To receive disclosures of interests from members and co-opted members on matters to be considered at the meeting. The disclosure must include the nature of the interest.

 

An interest must also be disclosed in the meeting when it becomes apparent to the member during the meeting.

 

Notes:

 

(1)       Members may remain in the meeting and take part fully in discussion and voting unless the interest is a disclosable pecuniary interest or an interest which the Member feels would call into question their compliance with the wider principles set out in the Code of Conduct.  Disclosable pecuniary interests relate to the Member concerned or their spouse/partner.

 

(2)       Members in arrears of Council Tax by more than two months must not vote in decisions on, or which might affect, budget calculations, and must disclose at the meeting that this restriction applies to them.  A failure to comply with these requirements is a criminal offence under section 106 of the Local Government Finance Act 1992. 

 

(3)       Members are also welcome to disclose interests which are not disclosable pecuniary interests but which they consider should be made in the interest of clarity.

 

(4)       Officers must disclose interests in accordance with Council Standing Order 44.

 

Minutes:

All those present who were members or beneficiaries of the West Yorkshire Pension Fund disclosed, in the interests of transparency, an interest in all business under consideration.

 

3.

MINUTES

Recommended –

 

That the minutes of the meeting held on 19 April 2017 be signed as a correct record (previously circulated).

 

(Jane Lythgow – 01274 432270)

Minutes:

That the minutes of the meeting held on 19 April 2017 be signed as a correct record.

4.

INSPECTION OF REPORTS AND BACKGROUND PAPERS

(Access to Information Procedure Rules – Part 3B of the Constitution)

 

Reports and background papers for agenda items may be inspected by contacting the person shown after each agenda item.  Certain reports and background papers may be restricted. 

 

Any request to remove the restriction on a report or background paper should be made to the relevant Strategic Director or Assistant Director whose name is shown on the front page of the report. 

 

If that request is refused, there is a right of appeal to this meeting. 

 

Please contact the officer shown below in advance of the meeting if you wish to appeal. 

 

(Jane Lythgow - 01274 432270)

 

Minutes:

There were no appeals submitted by the public to review decisions to restrict documents.

5.

MINUTES OF THE WYPF JOINT ADVISORY GROUP 27 JULY 2017 pdf icon PDF 15 KB

The report of the Director, West Yorkshire Pension Fund (WYPF),

 Document “A”, reminds Members that the role of the Pension Board, as defined by Sections 5 (1) and (2) of the Public Service Pensions Act 2013 is to assist the Council as Scheme Manager in ensuring the effective and efficient governance and administration of the Local Government Pension Scheme (LGPS) including securing compliance with the LGPS regulations and any other legislation relating to the governance and administration of the LGPS; securing compliance with the requirements imposed in relation to the LGPS by the Pensions Regulator; and any other such matters as the LGPS regulations may specify.

 

The Minutes of the Meeting of the WYPF Joint Advisory Group, 27 July 2017, are submitted to the Pension Board to enable the Board to ensure effective governance and administration of the LGPS.

 

Recommended –

 

Members are requested to review the minutes of the WYPF JAG meeting held on 27 July 2017.

 

(Rodney Barton – 01274 434523)

Additional documents:

Minutes:

The report of the Director, West Yorkshire Pension Fund (WYPF),

 Document “A”, reminded Members that the role of the Pension Board, as defined by Sections 5 (1) and (2) of the Public Service Pensions Act 2013 was to assist the Council as Scheme Manager in ensuring the effective and efficient governance and administration of the Local Government Pension Scheme (LGPS) including securing compliance with the LGPS regulations and any other legislation relating to the governance and administration of the LGPS; securing compliance with the requirements imposed in relation to the LGPS by the Pensions Regulator; and any other such matters as the LGPS regulations may specify.

 

The Minutes of the Meeting of the WYPF Joint Advisory Group, 27 July 2017, were submitted to the Pension Board to enable the Board to ensure effective governance and administration of the LGPS.

 

The Director, WYPF, in response to discussions about Minute 18, confirmed that payments to Greater Manchester Pension Fund in relation to the transfer of pension arrangements for First West Yorkshire would commence in December 2017.  The rationale for that transfer was questioned and it was explained that an employer, First West Yorkshire, had made a decision to transfer their three northern funds into one place and it had been agreed that Greater Manchester was the most appropriate Fund.

 

Resolved –

 

That the minutes of the WYPF JAG meeting held on 27 July 2017 be noted.

 

 

 

6.

WEST YORKSHIRE PENSION FUND AUDITED REPORT AND ACCOUNTS FOR 31 MARCH 2017 pdf icon PDF 64 KB

The report of the Director, West Yorkshire Pension Fund, Document “B provides a summary of West Yorkshire Pension Fund’s financial position for the year ended 31 March 2017.

 

Recommended –

 

That the report be noted.

 

(Ola Ajala – 01274 434534)

Minutes:

The report of the Director, West Yorkshire Pension Fund, Document “B” provided a summary of West Yorkshire Pension Fund’s financial position for the year ended 31 March 2017.

 

The report revealed the value of the fund at 31 March 2017 and that there had been a net increase of 21.59% from 31 March 2016.  Asset values for the last seven years, including 2016/17, were provided.

 

Members were advised that the increase in net assets between 31 March 2016 and 31 March 2017 was the result of strong financial markets in 2016/17. Employer number increases were presented together with the cost per member which revealed a £1 reduction since 2015/16.  It was explained that if all pension funds reported their transaction costs correctly for 2016/17 WYPF would still have the lowest cost per member.

 

It was explained that the full Report and Accounts for the year ended 31 March 2017 were available on the Council’s website.  In the interest of economy they had not been included with the agenda.

 

Members questioned if the increase in net assets was attributed to the drop in the value of sterling and it was explained that it had been because of a combination of the investments in the UK and overseas benefitting from the lower value of sterling.

 

The potential to benchmark WYPF against private funds was raised and it was explained that comparisons of charges between the WYPF and private funds would show the WYPF in a very favourable light.

 

Resolved –

 

That the report be noted.

 

ACTION: Director, West Yorkshire Pension Fund

 

7.

WEST YORKSHIRE PENSION FUND - FIVE YEAR INTERNAL AUDIT PLAN 2017/18 TO 2021/22 pdf icon PDF 34 KB

The Director, West Yorkshire Pension Fund, will submit a report,

(Document “C”) which presents the WYPF five year internal audit plan 2017/18 to 2021/2022. The Plan is reviewed annually between WYPF Finance Team and CBMDC Internal Audit Team by carrying out a detailed assessment of WYPF business risks, pensions and investment regulatory compliance environments and service developments.

 

Recommended –

 

That the report be noted.

 

(Ola Ajala – 01274 434534)

Additional documents:

Minutes:

The Director, West Yorkshire Pension Fund, submitted a report, (Document “C”) which presented the WYPF five year internal audit plan 2017/18 to 2021/2022. The Plan was reviewed annually between WYPF Finance Team and City of Bradford Metropolitan Council (CBMDC) Internal Audit Team by carrying out a detailed assessment of WYPF business risks, pensions and investment regulatory compliance environments and service developments.

 

The latest plan had also taken into account the need for more internal audit resource to cover increased operational activities from shared services and participation in the Northern Pool as a result of the government directives for LGPS pooling of investments.  WYPF was working with CBMDC internal audit to secure additional resources.

 

Appended to the report was a copy of the Five Year Internal Audit Plan 2017/18 to 2021/22.  A list of internal audits completed during 2016/17 was also contained in the report and the status of all Audit Recommendations in reports issued up to 31 March 2017 was contained at Appendix B.

 

It was questioned if the provision of internal audit services had been subject to a tender process and it was explained that because the scheme was administered by CBMDC which has its own Internal Audit service this had not been necessary.  It was believed that cost of audit activity represented very good value for money.

 

In response to questions about the expertise required by the Internal Audit Team it was explained that Bradford had administered the scheme since 1986.  The team had developed and retained specialisms and expertise throughout that time and WYPF ensured that they engaged with them appropriately. 

 

A Member queried why an audit report on UK Fixed and Index Linked Public and Corporate Bonds had not been conducted since 2010 and was assured that the investment was low risk.  As resources were increased the cycle of reviews would be compressed and there would now be a maximum of four years between reviews.

 

A Member questioned if the audit reviews of pooling arrangements would be made available to Members.  It was explained that WYPF would continue to administer its own investments directly. Regular reports on the pooling arrangements would be provided to the WYPF Pension Board.

 

Resolved –

 

That the report be noted.

 

ACTION: Director, West Yorkshire Pension Fund

 

8.

PENSION BOARD LIABILITY INSURANCE pdf icon PDF 17 KB

The report of the Director, West Yorkshire Pension Fund, (Document “D”) provides Members with information surrounding the subject of Pension Board Insurance Liability. 

 

Recommended –

 

That Pension Board Liability Insurance is not required.

 

(Caroline Blackburn – 01274 434523)

Additional documents:

Minutes:

The report of the Director, West Yorkshire Pension Fund (WYPF), Document “D” provided Members with information surrounding the subject of Pension Board Insurance Liability. 

 

The need for Pension Board Liability Insurance had been raised by a number of different Pension Boards and a Member of the WYPF Pension Board.  Different Pension Boards had come to different conclusions as to whether liability insurance was required. 

 

Members were reminded the WYPF Pension Board did not have a decision making role and that its purpose was to scrutinise decisions.  Appended to Document “D” was a copy of the Governance Compliance Statement to confirm where the board’s responsibility lay.  The report revealed that Bradford Metropolitan District Council, as Administering Authority, was responsible for any decisions made by the WYPF and any claims in relation to public liability would, therefore, be made against them and not the Pension Board.

 

A Member who was also a Member of the Institute of Chartered Accountants explained that she may be required to take out personal insurance and it was agreed that the issue would be explored with the Director, West Yorkshire Pension Fund, outside of the meeting.

 

Resolved –

 

That Pension Board Liability Insurance is not required.

 

ACTION: Director, West Yorkshire Pension Fund

 

9.

REGISTER OF BREACHES OF LAW pdf icon PDF 27 KB

The Director, West Yorkshire Pension Fund, will present Document “E” which reports that, in accordance with the Public Service Pensions Act 2013, all Public Service Pension Schemes come under the remit of the Pensions Regulator.

 

Section 70 of the Pensions Act 2004 (the Act) imposes a requirement to report a matter to the Pensions Regulator as soon as is reasonably practicable where that person has reasonable cause to believe that:

 

(a)  a legal duty relating to the administration of the scheme has not been or is not being complied with, and

(b)  the failure to comply is likely to be of material significance to the Pensions Regulator in the exercise of any of its functions.

 

A Register of Breaches of Law is therefore maintained in accordance with the Pensions Regulator’s requirements and WYPF Breaches Procedure.

 

Recommended

 

That the entries on the Register of Breaches of Law be noted.

 

(Caroline Blackburn – 01274 434523)

Additional documents:

Minutes:

The Director, West Yorkshire Pension Fund, presented Document “E” which reported that, in accordance with the Public Service Pensions Act 2013, all Public Service Pension Schemes came under the remit of the Pensions Regulator.

 

Section 70 of the Pensions Act 2004 (the Act) imposed a requirement to report a matter to the Pensions Regulator as soon as it was reasonably practicable where that person had reasonable cause to believe that:

 

(a)  a legal duty relating to the administration of the scheme had not been or was not being complied with, and

(b)  the failure to comply was likely to be of material significance to the Pensions Regulator in the exercise of any of its functions.

 

A Register of Breaches of Law was therefore maintained in accordance with the Pensions Regulator’s requirements and WYPF Breaches Procedure. 

 

Appended to the report were the Register of Breaches of Law 2016/2017 and 2017/2018.  The entries on those registers related to either late payment of employer contributions which were due to be paid to West Yorkshire Pension Fund by the 19th day of the following month or the number of Annual Benefit Statements not issued by 31 August.  The appendices revealed that the action being taken to reduce late payments had been effective and late payments were reducing.  Performance had also improved on the Annual Benefit Statements despatch and it was not felt that either of the breaches would be deemed as of material significance by the Pension Regulator.

 

A Member asked if deposits were secured from those companies who regularly breached the requirement to pay employee contributions by the required date and it was explained that deposits were not required but that all employers had a designated business partner who would make them aware of any late payment.  Subsequent late payments would result in an administration fee and interests charges being applied.  Employers would also be made aware that any further late payments would be reported to the Pensions Regulator.  Assurances were provided that any late payments would not affect Member benefits.

 

 

Resolved -

 

That the entries on the Register of Breaches of Law be noted.

 

ACTION: Director, West Yorkshire Pension Fund

 

10.

UPDATE ON THE GUARANTEED MINIMUM PENSION (GMP) RECONCILIATION EXERCISE pdf icon PDF 25 KB

The report of the Director, West Yorkshire Pension Fund, (Document “F”) advised Members that the Guaranteed Minimum Pension (GMP) Reconciliation Exercise is to wind up the contracted out element link between the Local Government Pension Scheme (LGPS) and the State Earnings Related Pension Scheme (SERP’s) which affected members with service between 6 April 1978 and 5 April 1997.

 

The reconciliation process is designed to allocate all GMP liabilities to the correct Fund before the deadline in 2018, after which, the relevant Fund that holds the record will be liable for pension inflation increases.

 

The amount of the GMP will contribute towards the calculation of the members’ benefits in the New Sate Pension system which began on 6 April 2016.

 

Recommended –

 

That the update in Document “F” be noted and the potential additional workloads anticipated from the exercise be acknowledged.

 

(Grace Kitchen – 01274 434266)

Minutes:

The report of the Director, West Yorkshire Pension Fund, (Document “F”) advised Members that the Guaranteed Minimum Pension (GMP) Reconciliation Exercise was to wind up the contracted out element link between the Local Government Pension Scheme (LGPS) and the State Earnings Related Pension Scheme (SERP’s) which affected members with service between 6 April 1978 and 5 April 1997.

 

The reconciliation process was designed to allocate all GMP liabilities to the correct Fund before the deadline in 2018, after which, the relevant Fund that held the record would be liable for pension inflation increases.

 

The amount of the GMP would contribute towards the calculation of the members’ benefits in the New Sate Pension system which began on 6 April 2016.

 

The report revealed that the work had begun in January 2017 and the duration of the exercise would be determined by the number of records which required attention.  It was explained that 84% of the initial data match was completed; however, 22,000 cases (15.3%) still required attention.  The cases which needed recalculating would be automated and done in bulk where possible and it was expected that the number of cases requiring manual review would be very small.

 

Some cases would need to be queried with HMRC and although the exercise was not yet at that stage it was explained that HMRC were taking over three months to response to queries.  Members were assured that it was felt that there was sufficient time for the work to be completed.

 

Resolved –

 

That the update in Document “F” be noted and the potential additional workloads anticipated from the exercise be acknowledged.

 

ACTION: Director, West Yorkshire Pension Fund

 

11.

GENERAL DATA PROTECTION REGULATIONS pdf icon PDF 15 KB

The report of the Director, West Yorkshire Pension Fund, (Document G”) advises Members that the Pension Schemes hold a large amount of personal data and have legal duties as data controllers and data processors.

 

The General Data Protection Regulation (GDPR) will take effect from 25 May 2018.  The regulation is a major reform that will affect all organisations that hold personal data and pension schemes are no exemption.   

 

Document “G” includes a presentation which highlights the key issues for pension schemes in order to comply with the GDPR.

 

Recommended –

 

That the report and presentation be noted.

 

(Yunus Gajra – 01274 432343)

Additional documents:

Minutes:

The report of the Director, West Yorkshire Pension Fund, (Document G”) advised Members that the Pension Schemes held a large amount of personal data and had legal duties as data controllers and data processors.

 

The General Data Protection Regulation (GDPR) would take effect from 25 May 2018.  The regulation was a major reform that would affect all organisations that held personal data and pension schemes were no exception.  

 

Members received a presentation which highlighted the key issues for pension schemes in order to comply with the GDPR. 

 

The presentation revealed that a company had been appointed to trace members who the Fund had lost contact with.  In response to questions it was explained that a tender exercise had been undertaken to appoint that contractor and that they were paid per case search undertaken rather than one fixed amount.

 

The new regulations provided individuals with the “right to erasure” and it was questioned how those requests could be accommodated.  It was clarified that as the WYPF was not a marketing company and did not share information it would be unlikely that any individual would request their records be deleted.  If such a request should occur the Fund would have to comply but individuals would be required to sign a disclaimer that they could not request information in the future.

 

The affect of the regulations on the Northern Powerhouse were questioned and it was confirmed that as no personal data was kept for investments there should be no implications for the investment pool.

 

Resolved –

 

That the report and presentation be noted.

 

ACTION: Director, West Yorkshire Pension Fund

 

 

12.

INVESTMENT REFORM CRITERIA AND GUIDANCE - INVESTMENT POOLING pdf icon PDF 38 KB

The report of the Director, West Yorkshire Pension Fund, (Document “H”) provides an update on the continued development of pooling arrangements.

 

Recommended –

 

That the continued development of pooling arrangements, subject to Government response, be noted.

 

(Rodney Barton – 01274 432317)

Minutes:

The report of the Director, West Yorkshire Pension Fund, (Document “H”) provided an update on the continued development of pooling arrangements.

 

The report provided the background to the requirement for the pooling arrangements, the pooling criteria; the development of the Northern Pool; progress to date and issues for West Yorkshire Pension Fund.

 

It was questioned if the salary costs for  WYPF  personnel were publicised and it was confirmed that those costs were included in a report to the West Yorkshire Pension Fund Joint Advisory Group in January each year.  The salaries would be reviewed during the pooling arrangements and it was expected that increases would occur. 

 

A Member who had recently been appointed requested more information about the issue and it was agreed that this could be discussed with the Director, West Yorkshire Pension Fund and that she would be provided with copies of previous reports and minutes of the meetings where the issues had previously been discussed.  

 

Resolved –

 

That the continued development of pooling arrangements, subject to Government response, be noted.

 

ACTION: Director, West Yorkshire Pension Fund

 

13.

LOCAL GOVERNMENT PENSION SCHEME pdf icon PDF 32 KB

The Director, West Yorkshire Pension  Fund, will present Document “I” which updates Members on the current issues affecting the Local Government Pension Scheme (LGPS).

 

Recommended –

 

That the report be noted.

 

(Tracy Weaver – 01274 433571)

Minutes:

The Director, West Yorkshire Pension Fund, presented Document “I” which updated Members on the current issues affecting the Local Government Pension Scheme (LGPS).

 

Progress on the Exit Payment Reforms was questioned and it was explained that a further consultation on the Government’s policy on exit payment recovery had been proposed for the autumn.  It was now expected that this would not occur until after Christmas.

 

Resolved –

 

That the report be noted.

 

ACTION: Director, West Yorkshire Pension Fund

 

14.

TRAINING, CONFERENCES AND SEMINARS pdf icon PDF 16 KB

The Director, West Yorkshire Pension Fund, will present a report

(Document “J”) which informs Members that their training to understand the responsibilities and issues which they will be dealing with is a very high priority. 

 

Recommended –

 

That consideration be given to attendance at the training events contained in Document “J”.

 

(Caroline Blackburn – 01274 434523)

Minutes:

The Director, West Yorkshire Pension Fund, presented a report

(Document “J”) which stressed to Members that their training to understand the responsibilities and issues which they would be dealing with was a very high priority. 

 

The report outlined a number of external training events which it was suggested Members may find useful.  Members were advised that specific one to one training could be provided for any Member on request. 

 

It was suggested that the next ‘in house’ training event would be held in February 2018 and details of any specific topics which Members would like to be included should be provided to Caroline Blackburn. 

 

The date of the next WYPF Pension Board meeting was reported as 28 March 2018.

 

Resolved –

 

That the training events and date of the next meeting, contained in Document “J”, be noted.

 

ACTION: Director, West Yorkshire Pension Fund

 

15.

EXCLUSION OF THE PUBLIC

Members are asked to consider if the item relating to the West Yorkshire Pension Fund Investment Advisory Panel should be considered in the absence of the public and, if so, to approve the following recommendation:-

 

Recommended –

 

That the public be excluded from the meeting during consideration of the item relating to minutes of the West Yorkshire Pension Fund Investment Advisory Panel meetings held on 27  April 2017 and 27 July 2017 because information would be disclosed which is considered to be exempt information within paragraph 3 (Financial or Business Affairs) of Schedule 12A of the Local Government Act 1972 (as amended).

 

It is considered that, in all the circumstances, the public interest in maintaining this exemption outweighs the public interest in disclosing this information as it is in the overriding interest of proper administration that Members are made aware of the financial implications of any decision without prejudicing the financial position of the West Yorkshire Pension Fund.

 

 

Minutes:

Members were asked to consider if the item relating to the West Yorkshire Pension Fund Investment Advisory Panel should be considered in the absence of the public.

 

Resolved –

 

That the public be excluded from the meeting during consideration of the item relating to minutes of the West Yorkshire Pension Fund Investment Advisory Panel meetings held on 27 April 2017 and 27 July 2017 because information would be disclosed which was considered to be exempt information within paragraph 3 (Financial or Business Affairs) of Schedule 12A of the Local Government Act 1972 (as amended).

 

It was considered that, in all the circumstances, the public interest in maintaining the exemption outweighed the public interest in disclosing the information as it was in the overriding interest of proper administration that Members were made aware of the financial implications of any decision without prejudicing the financial position of the West Yorkshire Pension Fund.

 

16.

MINUTES OF THE WEST YORKSHIRE PENSION FUND INVESTMENT ADVISORY PANEL HELD ON 27 APRIL AND 27 JULY 2017 pdf icon PDF 15 KB

The report of the Director, West Yorkshire Pension Fund, (Document “K”) reminds Members that the role of the WYPF Pension Board, as defined by sections 5 (1) and (2) of the Public  Service Pensions Act 2013 is to assist the Council as Scheme Manager in ensuring the effective and efficient governance and administration of the Local Government Pension Scheme (LGPS) including securing compliance with the LGPS regulations and any other legislation relating to the governance and administration of the LGPS; securing compliance with the requirements imposed in relation to the LGPS by the Pensions Regulator; and any other such matters as the LGPS regulations may specify.

 

The minutes of the meetings of the WYPF Investment Advisory Panel are submitted to the Pension Board to ensure effective and efficient governance and administration of the LGPS.

 

Members are requested to review the Not for Publication minutes appended to Document “K”.

 

(Rodney Barton – 01274 432317)

Minutes:

The report of the Director, West Yorkshire Pension Fund,

(Document “K”) reminded Members that the role of the WYPF Pension Board, as defined by sections 5 (1) and (2) of the Public  Service Pensions Act 2013 was to assist the Council as Scheme Manager in ensuring the effective and efficient governance and administration of the Local Government Pension Scheme (LGPS) including securing compliance with the LGPS regulations and any other legislation relating to the governance and administration of the LGPS; securing compliance with the requirements imposed in relation to the LGPS by the Pensions Regulator; and any other such matters as the LGPS regulations may specify.

 

The minutes of the meetings of the WYPF Investment Advisory Panel were submitted to the Pension Board to ensure effective and efficient governance and administration of the LGPS.

 

Resolved –

 

That the Not for Publication minutes appended to Document “K” be noted.

 

ACTION: Director, West Yorkshire Pension Fund