Agenda and minutes

Venue: Committee Suite - County Hall

Contact: Gerry Rufolo 01392 382299  Email: gerry.rufolo@devon.gov.uk

Note: Due to Covid restrictions and social distancing measures, members of the press and public must contact the Clerk to book a place should they wish to attend this meeting in person 

Items
Note No. Item

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1.

Minutes pdf icon PDF 201 KB

Minutes of the meeting held on 26 February 2021, attached

Minutes:

RESOLVED that the Minutes of the Meeting held on 26 February 2020 be signed as a correct record.

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2.

Items Requiring Urgent Attention

Items which in the opinion of the Chairman should be considered at the meeting as matters of urgency.

 

Minutes:

There was no item raised as a matter of urgency.

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3.

Pension Board pdf icon PDF 223 KB

Minutes of the Devon Pension Board meeting held on 26 April 2021, attached

 

Minutes:

The Committee noted the Minutes of the Meeting of the Board held on 26 April 2021.

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4.

Brunel Oversight Board pdf icon PDF 22 KB

Minutes of the Brunel Oversight Board meetings held on 28 January 2021 and 25 March 2021, attached

Additional documents:

Minutes:

The Committee noted the Minutes of the Meetings of the Board held on 28 January 2021 and 25 March 2021.

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5.

Annual Internal Audit Report 2020/21 and Proposed Internal Audit Plan 2021/22 pdf icon PDF 251 KB

Report of the County Treasurer (CT/21/53), attached

Minutes:

The Committee considered the Report of the County Treasurer (CT/21/53) on the Annual Internal Audit Report – 2020/21, the Internal Audit Plan 2021/22 and the Service Level Agreement with the Audit Partnership service.

 

Members noted that overall, and based on work performed during 2020/21, Internal Audit had provided ‘reasonable assurance’ on the adequacy and effectiveness of the

Fund’s internal control environment. This assurance opinion was comparable to the previous year’s assurance rating of “significant assurance”.

 

The proposed Audit Plans for the financial year 2021/22 allowed for up to 40 days of internal audit support for the Pension Fund and 45 days for Peninsula Pensions, which provided 85 days of internal audit provision overall. Details of the Plan were set out in Appendix 1 of the Report. The ongoing situation with Covid-19 and its potential impact on resources within the Devon Pension Fund, Peninsula Pensions and the Devon Audit Partnership was noted.  Audit Officers would liaise with management regarding audit prioritisation and any impacts on the audit timetable as the situation unfolded.

 

Members discussion points with the Head of Audit included:

 

·         a summary of management actions from last year’s audit was included in the Report and there had been no areas where management had not agreed with Audit proposals;

·         remote working over the pandemic had been effective as both the client and Audit had had the necessary IT infrastructure and with robust continuity planning; and in future more in-person contact would be resumed with the continued option for remote working; and

·         re-assurance about the high grade data security within Peninsula Pensions for the protection of fund members and employers.

 

It was MOVED by Councillor J O’Dwyer, and SECONDED by D Healy and

 

RESOLVED

 

(a) that the Annual Internal Audit Report for 2020/21 be noted;

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(b) that the Internal Audit Plan for 2021/22 be approved;

 

(c) that the Assistant County Treasurer (Investments) be authorised to execute the Service Level Agreement relating to the Internal Audit Plan for 2021/22.

 

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6.

Investment Management Report pdf icon PDF 1 MB

Report of the County Treasurer (CT/21/54), attached

Minutes:

(Councillor J Hodgson attended in accordance with Standing Order 25 (2) and spoke to this item and referred to the engagement activity carried out by the Local Authority Pension Fund Forum on behalf of the Committee detailed in Appendix 2 of the Report and requested further more direct action by this Committee in regard to its investments associated with fossil fuels and also referred to the data relating to this)

 

The Committee considered the Report of the County Treasurer (CT/21/54) on the Fund value and asset allocation, performance against the benchmark, funding level, budget forecast 2020/21 and 2021/22, cash management, and engagement activity. The value of the Fund as at 31 March 2021 stood at £5,035m, an increase of around £110 over the last quarter.

 

Members’ discussion points with Officers included:

 

·         reference to the Committee’s active engagement with companies to address climate change issues in accordance with the agreed strategy as adopted by the Brunel Partnership and weighting in fossil fuels largely due to its passive investments and work to address this and misleading data (in regard to the CO2 investments) which did not take account of the relative size of the Devon Fund;

·         the encouraging data relating to Committee’s Investment CO2 footprint which was reducing and ongoing initiatives in this regard to passive investments;

·         the proposal for investment in corporate bonds in-line with the agreed strategy and on which more detailed information relating to areas covered would be provided to the Committee by Brunel in their updates and briefings; and

·         note of the current good total value of the Fund in excess of £5bn (largely due to recovery of equities) following a significant dip as a result of the pandemic. 

 

It was MOVED by Councillor Y Atkinson, SECONDED by Councillor J Pearce and  

 

RESOLVED

 

(a) that the Investment Management Report be noted;

 

(b) that an additional £50 million be invested in the Brunel Sterling Corporate Bonds portfolio, funded by the overweight allocation to Passive Equities;

 

(c) that compliance with the 2020-21 Treasury Management Strategy be noted.

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7.

Climate Change and Carbon Footprint pdf icon PDF 429 KB

Report of the County Treasurer (CT/21/55), attached

Minutes:

(Councillor J Hodgson attended in accordance with Standing Order 25 (2) and

spoke to this item and referred to proposals for infrastructure investments to promote local initiatives in accordance the Devon County Council declaration on a climate emergency).

 

The Committee considered the Report of the County Treasurer (CT/21/55) on climate change policy and the Committee’s commitment  to achieving net zero investment portfolios by 2050, the Fund’s carbon footprint; explanation of the reserves exposure; and Brunel’s launch of sustainable equities portfolio. The full text of the net zero commitment, which had been launched by the Institutional Investors Group on Climate Change (IIGCC) in March, was set out at Appendix 1 to this Report. The full detail of the commitment would require further strengthening of the Fund’s policies on climate change, and this was addressed further in the Report.

 

A key element towards achieving the net zero target entailed continued monitoring of the Fund’s carbon footprint and exposure to extractive industry and potential stranded assets. A full analysis of the Fund’s carbon footprint was being carried out on an annual basis, and this Report also provided details of the assessment as at 31 December 2020.

 

Members’ discussion points with Officers included reference the Committee’s  investment in renewable infrastructure funds via Brunel and the relative exposure of the Committee’s investments in companies associated with fossil fuels and an initiative to address this by the proposed increased investment in sustainable equities.     

 

It was MOVED by R Franceschini and SECONDED by Councillor H Gent and

 

RESOLVED

 

(a) that the revised climate change section of the Investment Strategy Statement set out at Appendix 2 to this Report be approved; 

 

(b) that the allocation of an additional £100 million to the Brunel Sustainable Equities portfolio to be funded from the UK Passive allocation be approved.

 

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8.

Funding Strategy Statement and Supporting Policies pdf icon PDF 577 KB

Report of the County Treasurer (CT/21/56), attached

Minutes:

The Committee considered the Report of the County Treasurer (CT/21/56) on the Funding Strategy Statement (FSS) drafted in consultation with all employers. The purpose of the FSS was to explain the funding objectives of the Fund and how the cost of the benefits provided under the Local Government Pension Scheme were met though the Fund. It also defined the objectives in setting employer contribution rates and the funding strategy that was adopted to meet these objectives.

 

As a result of the new regulations and guidance, revisions were proposed to

the Funding Strategy Statement (revised version was attached at Appendix 1 to the Report). The revised FSS made reference to two new policies, one in relation to contribution reviews and one in relation to Deferred Debt Arrangements (DDAs) and Debt Spreading Agreements (DSAs). These were also attached at Appendices 2 and 3 to the Report.

 

The Report also detailed other changes to the Statement in relation to inflation assumptions, the McCloud/Sargent issue which still remained unresolved and the position in regard to School Multi Academy Trusts (MATs). 

 

It was MOVED by Councillor Y Atkinson, SECONDED by R Franceschini and

 

RESOLVED

 

(a) that the revised Funding Strategy Statement set out at Appendix 1 to the Report be approved; 

 

(b) that the Contributions Review Policy set out at Appendix 2 to the Report be approved;

 

(c)  that the Deferred Debt and Debt Spreading Agreement Policies set out at Appendix 3 to the Report be approved.

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9.

Training Review and 2020/21 Training plan 2021/22 pdf icon PDF 228 KB

Report of the County Treasurer (CT/21/57), attached

Minutes:

(Councillor J Hodgson attended in accordance with Standing Order 25 (2) and spoke to this item and requested that she and other members be offered the training  proposed in this Report)

 

The Committee considered the Report of the County Treasurer (CT/21/57) on  the training undertaken in 2020/21 (subject to update from Members as necessary) and the proposed 2021-22 Training Plan (attached at Appendix 2)  which set out  proposals for training to be provided over the year in order to ensure that both the Members of this Committee and the Pension Board gained the knowledge and skills required in accordance with the CIPFA Code.

 

The training plan had been reviewed to ensure that it reflected current best practice. The training pan had also been considered and endorsed by the Devon Pension Board at their meeting on 26th April 2021.

 

It was MOVED by Councillor P Bullivant, SECONDED by Councillor H Gent and

 

RESOLVED that the Training Plan be approved and adopted for 2021/22.

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10.

Employer Changes

(a)       New admitted bodies

 

The following applications for admitted body status have been approved since the last meeting of the Committee:

 

·         Expedite commenced cleaning contract for ALUMNIS MAT 1 May 2021, closed agreement.

·         Innovate Ltd commenced catering contract for Colyton Grammar School 1 Sept 2020, closed agreement.

·         Mid Devon DC tuped 1 person to 3 Rivers Development Ltd 1 April 2021 closed agreement.

·         Transforming Futures MAT have tuped various groups of staff to DELT 1 May 2021 as a passthrough arrangement.

 

(b)       New academy conversions and changes

 

·           Orchard Manor School joined Thinking Schools Academy Trust 1 February 2021.

·           Queen Elizabeth Academy Trust joined Ted Wragg MAT 1 February 2021.

Minutes:

The following applications for admitted body status; and academy conversions and changes had been approved since the last meeting of the Committee:

 

(a) New Admitted Bodies

 

· Expedite commenced cleaning contract for ALUMNIS MAT 1 May 2021, closed agreement.

· Innovate Ltd commenced catering contract for Colyton Grammar School 1 Sept 2020, closed agreement.

· Mid Devon District Council ‘Tuped’ 1 person to 3 Rivers Development Ltd 1 April 2021 closed agreement.

· Transforming Futures MAT have ‘Tuped’ various groups of staff to DELT 1 May 2021 as a passthrough arrangement.

 

(b) New Academy Conversions and Changes

 

· Orchard Manor School joined Thinking Schools Academy Trust 1 February 2021.

· Queen Elizabeth Academy Trust joined Ted Wragg MAT 1 February 2021.

 

 

 

 

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11.

Dates of Future Meetings

17 July 2021, 26 November 2021; and 25 February 2022 followed by the fund members’ consultation meeting.

Minutes:

17 September 2021, 26 November 2021; and 25 February 2022 followed by the fund members’ consultation meeting.

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12.

Exclusion of the Press and Public

Recommendation: that the press and public be excluded from the meeting for the following items of business under Section 100(A)(4) of the Local Government Act 1972 on the grounds that they involve the likely disclosure of exempt information as defined in Paragraph 3 of Schedule 12A of the Act, information relating to the financial or business affairs of an individual other than the County Council and, in accordance with Section 36 of the Freedom of Information Act 2000, by virtue of the fact that the public interest in maintaining the exemption outweighs the public interest in disclosing the information.

 

Minutes:

RESOLVED that the press and public be excluded from the meeting for the following items of business under Section 100(A)(4) of the Local Government Act 1972 on the grounds that they involve the likely disclosure of exempt information as defined in Paragraph 3 of Schedule 12A of the Act, information relating to the financial or business affairs of an individual other than the County Council and, in accordance with Section 36 of the Freedom of Information Act 2000, by virtue of the fact that the public interest in maintaining the exemption outweighs the public interest in disclosing the information.

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13.

Aviva Infrastructure Fund

Report of the County Treasurer (CT/21/58), attached

Minutes:

(An item taken under Section 100A (4) of the Local Government Act 1972

during which the press and public were excluded)

 

The Committee considered the Report of the County Treasurer (CT/21/58) on 

the Fund’s investment in the Aviva Investors Infrastructure Income Fund.  

 

The Report detailed a number of options that could be considered in relation to the

Devon Fund’s investments in this area.

 

It was MOVED by Councillor P Bullivant, and SECONDED by Y Atkinson and

 

RESOLVED that the County Treasurer be delegated to take action as appropriate as set out in the Report.

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14.

Brunel Update and Reserved Matters Requests

Report of the County Treasurer (CT/21/59), attached

 

 

Minutes:

(An item taken under Section 100A (4) of the Local Government Act 1972 during which the press and public were excluded)

 

The Committee noted the Report of the County Treasurer (CT/21/59) on the appointment of Non-Executive Directors and the agreement of a revised Shareholder Agreement which had been authorised by the County Treasurer under delegated powers.   

 

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15.

Independent Investment Advisor Arrangements

Report of the County Treasurer (CT/21/60), attached

Minutes:

(An item taken under Section 100A (4) of the Local Government Act 1972 during which the press and public were excluded)

 

(The Committee’s Independent Adviser withdrew from the meeting for the duration of the consideration of this item)

 

The Committee considered the Report of the County Treasurer (CT/21/60) on the  specification for the role of the Independent Advisor whose current contract was due to expire in September 2021, and proposed changes to the specification and procurement process.  Members also referred to a performance appraisal process for  the current and future advisor for further consideration, which could be fed-in to the audit arrangements.  

 

It was MOVED by Councillor P Bullivant, SECONDED by Councillor Y Atkinson and

 

RESOLVED

 

(a) that the revised specification for the role of the Independent Investment Advisor to the Committee and the proposed procurement process be approved;

 

(b) that Councillor J O’Dwyer, Councillor Y Atkinson and R Franceschini be  authorised (on behalf of the Committee) to attend the provider presentations; and

 

(c) that should there be a delay in the procurement, the County Treasurer be

authorised to extend the current contract for up to a limit of 6 months.