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Agenda and minutes

Venue: Clinton/Fortescue Committee Room - County Hall

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

Note: Please contact the Clerk if you wish to attend. The meeting will be livestreamed and you may view by copying and pasting the following link into your browser: https://teams.microsoft.com/l/meetup-join/19%3ameeting_NmY2NGJlZGQtZGJjYy00YWE3LWE3NDYtZTY2YWI1NjMyYzY5%40thread.v2/0?context=%7b%22Tid%22%3a%228da13783-cb68-443f-bb4b-997f77fd5bfb%22%2c%22Oid%22%3a%223d9c340a-0429-4b53-a982-1317fcf719c1%22%2c%22IsBroadcastMeeting%22%3atrue%7d&btype=a&role=a 

Items
Note No. Item

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30.

Minutes

Minutes of the meeting held on 17 September 2021 (previously circulated).

Minutes:

RESOLVED that the Minutes of the Meeting held on 17 September 2021 be signed as a correct record

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31.

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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32.

Devon Pension Board pdf icon PDF 210 KB

Minutes of the Devon Pension Board meeting held on 11 October 2021, attached

Minutes:

The Committee noted the Minutes of the Meeting of the Board held on 11 October 2021.

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33.

Brunel Oversight Board pdf icon PDF 131 KB

Minutes of the Brunel Oversight Board meeting held on 23 September 2021, attached

Minutes:

The Committee noted the Minutes of the Meeting of the Board held on 23 September 2021

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34.

Independent Investment Advisor pdf icon PDF 55 KB

Report of the Director of Finance (Designate) (DF/21/16), attached

Minutes:

The Committee noted the Report of the Director of Finance (Designate) (DF/21/16) on the  evaluation process for the contract for provision of independent investment advice to the Committee and the appointment of MJ Hudson. The Committee endorsed the appointment.   

35.

Notice of Motion pdf icon PDF 100 KB

Report of the County Solicitor (CSO/21/16), attached

Minutes:

(Councillor J Hodgson attended in accordance with Standing Order 8 and spoke to this item in support of her Notice of Motion as detailed below)

 

Notice of Motion:

 

Divestment (Fossil Fuels and Local Government Pension Scheme)

 

Devon County Council notes:

·         Devon County Council has around £157 Million invested in fossil fuels via the Local Government Pension Scheme. This is about 3.9% of its total fund and currently the 5th highest of all the Local Government Pension schemes in the UK[1]

·         The United Nations Paris 2015 Agreement commits our governments to keep the global temperature increase to under 2 degrees and aim for 1.5 degrees. Carbon budgets produced by the Intergovernmental Panel on Climate Change, United Nations and the International Energy Agency show that preventing two degrees of warming relies on not burning 60-80% of all proven fossil fuels.

·         With COP26 taking place in Glasgow in November 2021, there is increased emphasis by the UK government on showing global climate leadership, especially in relation to finance. Divesting our pension is a clear and meaningful action that can be taken at a local government level.

·         Fossil fuel investments are financially risky as a result of both the Covid19 pandemic and the global transition to a more sustainable economic and environmental model. They are now being consistently out-performed by renewables.[2]

·         Former Bank of England Governor Mark Carney warned in December 2019 that fossil fuel investments risk becoming “stranded assets” (i.e., worthless) as investors exit the sector. “A question for every company, every financial institution, every asset manager, pension fund or insurer – what’s your plan?”

·         As continued investments in fossil fuels pose material financial risks to portfolios, funds have fiduciary duties to consider the benefits of decarbonising as part of their investment strategies. Fiduciary duty is

·         defined by the Law Commission as ‘ensuring that pensions can be paid, ensuring that this is undertaken at the best possible value’.

·         Pension funds have a legal duty to treat members “fairly as between them”.That means taking seriously the longer-term interests of younger members who may well be affected more by the climate transition.

·         Continued engagement with fossil fuel companies does not stop them polluting and recent court action with Shell (DCC Treasurer’s Investment Management Report to Pension Fund Committee 17.09.21) indicates that company’s resistance to reduce its reliance on fossil fuels in line with the Paris Agreement.

 

This Council commits to:

 

1. Reviewing its Investment Strategy and developing and implementing a

Responsible Investment Policy which rules out new investments in fossil

fuel companies and divests as a matter of urgency from those fossil fuel

companies it is currently invested in.

 

2. Calls on Devon County Council’s Pension Fund to divest from fossil fuels

by requesting its representative(s) on the Pension Fund Committee to call

for the development and adoption of responsible investment policies which:

 

a. Immediately freeze any new investment in the top 200 publicly[1]traded fossil fuel companies.[3]

 

b. Divest from direct ownership and any commingled funds that

include fossil fuel public equities  ...  view the full minutes text for item 35.

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36.

Audit Report on the Pension Fund Statement of Accounts 2020/21 pdf icon PDF 9 MB

Report of the Director of Finance (Designate) (DF/21/17), attached

Minutes:

The Committee considered the Report of the Director of Finance (Designate) (DF/21/17) on the draft Pension Fund Annual Report and Accounts which had been approved at the last meeting subject to the completion of the external audit by Grant Thornton. Their Audit Findings Report was now attached at Appendix 1 to the Report. As a result of the external audit a number of non-material  amendments to the statement of accounts had been made and these were set out in the Director’s Report.

 

Member discussion points with Officers and Grant Thornton included:

 

·         the robustness and reliability of management data/information and security of the systems and safe custody of equities;

·         the independence of the respective audits of the Devon Pension Fund and the Brunel Partnership; and

·         approval of the Audit Report at a recent meeting of the County Council’s Audit Committee on 23 November 2021.     

 

It was MOVED by Councillor P Bullivant, and SECONDED by Councillor J O’Dwyer and

 

RESOLVED that the Audit Findings Report from Grant Thornton, and the amendments made to the previously approved Pension Fund Report and Accounts be noted.

 

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37.

Investment Management Report pdf icon PDF 2 MB

Report of the Director of Finance (Designate) (DF/21/18), attached

Minutes:

(Councillor J Hodgson attended in accordance with Standing Order 25 and spoke to this item in regard to the engagement activity as referred to in the Report). 

 

The Committee considered the Report of the Director of Finance (Designate) (DF/f21/18) on the Fund value and asset allocation, performance against the benchmark, funding level, budget forecast 2021/22, cash management, and voting engagement activity.

 

The value of the Fund as 30 September 2021 stood at £5,371.6 m, an increase of around £57m over the last quarter.

 

Members’ discussed with Officers the current hedging strategy which would form part the future overall strategic review which was being undertaken by Mercer investment consultants for consideration by the Committee at a future meeting.

 

It was MOVED by Councillor P Bullivant, SECONDED by Councillor J O’Dwyer and

 

RESOLVED

 

(a) that the  Investment Management Report be noted;

 

(b) that the following rebalancing action be agreed:

 

(i) £50 million be transferred from the Global High Alpha Equities portfolio to Multi-Asset Credit;

 

(ii) £50 million be transferred from Passive Global Developed Equities to the Diversifying Returns Funds portfolio;

 

(iii) the current policy of funding private market portfolio drawdowns from the Diversifying Returns Funds be suspended, with drawdowns to be funded from Passive Global Developed Equities until the total equity allocation is back to target;

 

(c) that compliance with the 2021-22 Treasury Management Strategy be noted.

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38.

Actuarial Valuation 2022 pdf icon PDF 66 KB

Report of the Director of Finance (Designate) (DF/21/19), attached

Minutes:

The Committee considered the Report of the Director of Finance (Designate) (DF/21/19) on the plan for the 2022 Actuarial Valuation which has been discussed with the scheme actuary, Barnett Waddingham. The valuation (carried out on a three yearly cycle) was due at 31 March 2022.

 

The results of the valuation would be published by 31 March 2023 and would set employer contribution levels for the financial years 2023/24, 2024/25 and 2025/26 (the contribution levels for 2022/23 had been set at the previous valuation in 2019).  The Report also set out a proposed timetable agreed with Barnett Waddingham.

 

Members discussed with Officers the approximate level of early payment and discounts which had been taken up by Employers.

 

It was MOVED by Councillor J Bullivant and SECONDED by Councillor J O’Dwyer and

 

RESOLVED that the planned approach to the 2022 triennial valuation of the Pension Fund as set out in the Report be approved.

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39.

Employer Changes

(a)       New admitted bodies - The following applications for admitted body status have been approved since the last meeting of the Committee:

·  Specialist Fleet Services took over waste and recycling for North Devon District Council from 1st October 2021.

·  Aspen Services LTD have taken over catering services at Barton Hill from 15th February 2021.

·  Churchills have taken over the cleaning contract at Oreston Academy from 1st October 2020

·  Thinking Schools Trust have outsourced the cleaning contract to Churchills from 1st September 2021

·  BIFFA have taken over the recycling services for Plymouth City Council from Viridor (00393) with effect from 31st August 2021.

(b)       New academy conversions and changes.

·  St James CofE School joined Dartmoor MAT- 1st October 2020.

·  Plymouth High School for Girls joined Thinking Schools Trust from 1st February 2021

 

Minutes:

The Committee noted new approved admitted bodies and academy conversions and changes as follows:

 

(a) Admitted Bodies

· Specialist Fleet Services took over waste and recycling for North Devon District Council from 1st October 2021.

 

· Aspen Services LTD have taken over catering services at Barton Hill from 15th February 2021.

 

· Churchills have taken over the cleaning contract at Oreston Academy from 1st October 2020

 

· Thinking Schools Trust have outsourced the cleaning contract to Churchills from 1st September 2021

 

· BIFFA have taken over the recycling services for Plymouth City Council from Viridor (00393) with effect from 31st August 2021. (b) New academy conversions and changes.

 

(b) Academy Conversions

 

· St James CofE School joined Dartmoor MAT- 1st October 2020.

 

· Plymouth High School for Girls joined Thinking Schools Trust from 1st February 2021

 

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40.

Dates of Future Meetings

25 February 2022,  17 June, 19 September, 25 November and 24 February 2023

 

Confirmation of dates on the Council’s website:

 

Browse meetings - Investment and Pension Fund Committee - Democracy in Devon

Minutes:

25 February 2022, 17 June, 19 September, 25 November and 24 February 2023

 

Confirmation of dates on the Council’s website:

 

Browse meetings - Investment and Pension Fund Committee - Democracy in Devon

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41.

Exclusion of the Press and Public

Recommendation: that the press and public be excluded from the meeting for the following item of business under Section 100(A)(4) of the Local Government Act 1972 on the grounds that it involves 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 it involves 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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42.

Brunel Pension Partnership - Review of Savings and Budget

Report of the Director of Finance (Designate) (DF/21/20), 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 Director of Finance (Designate) on a review of fee savings as a result of the Brunel partnership in regard to the portfolios that the Devon Fund had invested in, and how that compared with the original business case. The report also discussed the Brunel budget for 2022/23.

 

Members’ discussion points with the Officers included the general consensus that the level of discretionary and non-discretional increases in elements of the budget (as detailed in the report)  were broadly acceptable, given the commitment towards ESG and related issues, the savings already achieved and expected in the future and also subject to good future returns.

 

The above views would be reported by Officers to Brunel and the Brunel Oversight Board in regard to discussions about the proposed Brunel Budget for 2022/23.

 


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