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

(Document “O) advises Members that the Ministry of Housing, Communities and Local Government (MHCLG) laid regulations LGPS (Amendment) (No2) Regulations 2020 on employer contributions and exit payment flexibility on 23 September 2020.

As a result WYPF’s current Funding Strategy Statement requires updating to cater for:

·         Regulation 64A: revision of rates and adjustments certificate – Revisions to scheme employer contributions between valuations

·         Regulation 64B : Revision of actuarial certificates – Spreading of exit payments

·         Regulation 64: Special circumstances where revised actuarial valuations and certificates must be obtained – Deferred Debt Arrangements

The Scheme Advisory Board (SAB) and MHCLG have issued draft guidance on the operational and practical assistance to administering authorities and scheme employers in implementing these flexibilities.

Recommended –

That subject to there not being any material changes to the guidance to be issued by the Ministry of Housing, Communities and Local Government (MHCLG) and Scheme Advisory Board (SAB) and the results of the consultation exercise with stakeholders does not indicate any concerns or issues, the changes to the Funding Strategy Statement outlined in Document “O” be approved.

(Caroline Blackburn – 01274 434523)

The report of the Director, West Yorkshire Pension Fund (WYPF) (Document “O) advised Members that the Ministry of Housing, Communities and Local Government (MHCLG) laid regulations LGPS (Amendment) (No2) Regulations 2020 on employer contributions and exit payment flexibility on 23 September 2020.

As a result, WYPF’s current Funding Strategy Statement (FSS) required updating to cater for:

·         Regulation 64A: revision of rates and adjustments certificate – Revisions to scheme employer contributions between valuations

·         Regulation 64B: Revision of actuarial certificates – Spreading of exit payments

·         Regulation 64: Special circumstances where revised actuarial valuations and certificates must be obtained – Deferred Debt Arrangements

The Scheme Advisory Board (SAB) and MHCLG had issued draft guidance on the operational and practical assistance to administering authorities and scheme employers in implementing these flexibilities.

The impact of the regulations and measures for implementation were outlined in Document “O”.  Members were asked to approve the changes to the FSS subject to there not being any material changes to the guidance to be issued by MHCLG and the Scheme Advisory Board (SAB) and the results of the consultation exercise with stakeholders not indicating any concerns or issues.

A Member reported that he was not comfortable with the wording regarding climate change in Section 7.22 of the strategy and suggested amendments to that paragraph and that a bespoke study to map out of fossil fuel investments be commissioned.

Some Members disagreed with those suggestions maintaining that they were being asked to approve amendments to FSS as a result of new regulations and that investment strategy was the remit of the Investment Advisory Panel. 

There was some disagreement to that statement as others believed that the addition of the sentences suggested would strengthen the strategy.  Those Members felt that the FSS was an important communication to others and should be amended as suggested. 

The Member proposing the amendments referred to discussions at the meeting in July 2020 when the FSS had not been approved because of the issues in the same paragraph. He explained that his amendments were in an endeavour to get the strategy approved.  In response some concern was expressed that the amendments were in an attempt to influence the Investment Strategy of the fund.  It was understood that this was beyond the remit of the Joint Advisory Group and that it should not dictate Investment Strategy.  

The Director, WYPF, advised Members that the wording on climate change in the FSS was intentionally limited as those issues were covered in the Investment Strategy Statement.  It was suggested the Members could propose wording to highlight potential risks and liability but it was not for the group to decide that a route map out of particular holdings be developed.

It was reported that a review of the Investment Strategy was currently being conducted. It was expected that there would be significant changes as a result of that review and those amendments would be reflected in that strategy.

Members in opposition to that view believed that the Investment Strategy and FSS were intertwined and amendments to reflect their views on climate change should be incorporated into the FSS.

Resolved –

That subject to there not being any material changes to the guidance to be issued by the Ministry of Housing, Communities and Local Government (MHCLG) and Scheme Advisory Board (SAB) and the results of the consultation exercise with stakeholders does not indicate any concerns or issues, the changes to the Funding Strategy Statement outlined in Document “O” be approved.

ACTION: Director, West Yorkshire Pension Fund