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Agenda item

Report of the County Treasurer (CT/16/105), attached.

Minutes:

The Committee considered the Report of the County Treasurer (CT/16/105) outlining the process of preparation and content of the full Business Case - and seeking approval thereto -  to establish a company called Brunel Pension Partnership Ltd (Brunel company or BPP Ltd), regulated by the Financial Conduct Authority (FCA), incorporating governance arrangements for client side joint shareholder oversight and joint contract management. 

 

The Business Case had been developed as detailed below and set out more fully in the County Treasurer’s Report and had been subject to review by the Finance (s151) and Monitoring Officers of each of the 10 constituent administering authorities, throughout the process. It had subsequently been endorsed by the current Shadow Oversight Board, comprising the Chairmen of the 10 funds. It [the business case] had been prepared by Officers of the 10 administering authorities, supported by professional expertise from PwC (operational and financial support), Osborne Clark (legal support), Alpha (FCA expertise), JLT (project support) and Bfinance (investment advice).

 

The Committee were reminded that, following the Government’s announcement in the July 2015 budget statement that it intended to work with Local Government Pension Scheme (LGPS) administering authorities to ensure that they pooled investments to significantly reduce costs, a considerable amount of work had been undertaken to set up the Brunel Pension Partnership comprising the 10 LGPS Funds.

 

Members acknowledged that regular reports had been brought to the Committee at all stages of the process with additional engagement events held to afford the opportunity for the Committee to provide input to the proposals. Briefings had also been provided for other Members of the County Council.  As had been required, an initial joint submission from the 10 Brunel funds had been approved by the Committee in February and a further more detailed response had been approved by the Committee in June (and by the other 9 administering authorities) and subsequently submitted to Government, in July. Members noted that following that ‘submission’ - which had in effect been an outline business case - work had continued on preparing a full business case for the Brunel Pension Partnership. That was now complete (as now submitted) and would have to be approved by each of the 10 administering authorities to allow the establishment of the Local Authority Company to progress.

 

The final business case was set out at Appendix A to the County Treasurer’s Report and detailed, inter alia, the individual costs and benefits for each of the 10 participating funds, copies of which had also been made available to Members of the Devon Pension Board.

 

The regulatory framework for pooling was clearly set out in the Local Government Pension Scheme (Management & Investment Funds) Regulations 2016 which made pooling mandatory for all LGPS Funds in England and Wales.

 

Members expressed their support of representations previously made to the Department for Communities & Local Government to waive or suspend stamp duty during the establishment of the new pooling arrangements and/or for any new pooling arrangements to be treated in an equitable manner to collective unit trusts which, it was understood, had been recently exempted from stamp duty.

 

The Committee acknowledged and endorsed the principle of representations made about the importance of scheme members’ involvement in governance of any future arrangements, acknowledging also the Chairman’s assurances that there was common cause on that issue within the County Council in that respect. Members were advised that the Partnership was currently investigating how that might be implemented through, for example, observer roles on the Oversight Board.  Members also noted that the Local Government Association was looking at this issue and its guidance was awaited which could then be considered alongside the advice already sought from the Partnerships Advisers. The Partnership would then subsequently be in a position to consider formally the representation of fund members and the outcome of those deliberations would be made know to Unions and Scheme Members, in line with the Partnerships approach to transparency.

 

It was then MOVED by Councillor Edgell, SECONDED by Councillor Channon, and

 

RESOLVED that the press and public be now excluded from the meeting during subsequent discussion on this matter under Section 100(A)(4) of the Local Government Act 1972 on the grounds that it involved the likely disclosure of exempt information as defined in Paragraph 3 of Schedule 12A of the Act namely, information about the financial and business affairs of the County Council and its partners in the Brunel Pension Partnership and of the proposed joint local authority owned company and potential provider of goods or services to the 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.

 

[NB: The following part of the Committee’s proceedings on this matter took place, as summarised below, in accordance with the Local Authorities (Executive Arrangements) (Meetings and Access to Information) (England) Regulations 2012 during which the press and public were excluded; no representations having been received to such consideration under Regulation 5(5) of the aforementioned Regulations].

 

The Committee then considered the full, detailed, Business Case for the establishment of Brunel Pension Partnership Ltd (Brunel company or BPP Ltd) (a company regulated by the Financial Conduct Authority), together with all relevant background papers, to be approved by all 10 Brunel Pension partners/constituent administering authorities. 

 

Following discussion of the business case and having had regard to the information therein, the Committee was of the view that the press and public need no longer be excluded from the meeting during its final determination of the matter and:

 

It was then MOVED by Councillor Gilbert SECONDED by Councillor Channon, and

 

RESOLVED that the press and public be now readmitted to the meeting.

 

Following further comment and discussion and the matter having been fully debated and the options and/or alternatives and other relevant factors set out in the Head of Service’s Report and/or referred to above having been considered, and balancing all of those factors and comments made at the meeting:

 

It was then MOVED by Councillor Gilbert, SECONDED by Councillor Hannon, and nem com:

 

RESOLVED

 

(a) that, in its capacity as the Administering Authority for the Devon Pension Fund and having received and reviewed the recommendation of the Investment & Pension Fund Committee and the Business Case submitted to it, the County Council be recommended to resolve to enter into investment pooling as part of the Brunel Project with respect to the Devon Pension Fund’s investments;

 

(b) that such resolution be made on and subject to the following terms and conditions:

 

(i) that the Brunel Pension Partnership investment pool be developed, funded and implemented substantially in accordance with the terms and provisions described in the Business Case considered by the Investment & Pension Fund Committee, and more particularly that:

 

(ii) that a Financial Conduct Authority (FCA) regulated company to be named Brunel Pension Partnership Limited be established and operated with all necessary and appropriate arrangements as to its ownership, structure, governance and services capability;

 

(iii) that a new supervisory body comprising representatives of the Council and all other participants in the Brunel Pension Partnership be established to ensure oversight of Devon Pension Fund investments and participation in the Brunel Pension Partnership;

 

(c) that the Investment & Pension Fund Committee be authorised and granted delegated powers to undertake such tasks as it thinks appropriate to progress implementation of investment pooling and to take such decisions and do all other things deemed necessary in order to promote the interests of the Council with respect to pooling: which without limitation shall include agreeing and authorising any documentation, contracts, terms of reference, financial expenditure or investment that may be required consequential upon the Fund's participation in the Brunel Pension Partnership;

 

(d) that the County Treasurer and the County Solicitor be similarly authorised and granted delegated powers to undertake such tasks as they think appropriate to progress implementation of investment pooling and to take such decisions and do all things deemed necessary in order to support the Investment & Pension Fund Committee and to promote the interests of the Council with respect to pooling: which without limitation shall include informing and advising the Investment & Pension Fund Committee on the continued viability and suitability of investment pooling in the light of any developments, financial or otherwise, in the period up to the establishment of the Brunel Pension Partnership;

 

(e) that subject to the above, all such matters be carried out with the aim of achieving a target date for beginning investment pooling of 1 April 2018, and otherwise subject to such intermediate steps and timescales as may be considered appropriate and necessary by the Investment & Pension Fund Committee;

 

(f) that, additionally, the County Council be asked to note the continuing discussions around the principle of scheme member involvement in formal oversight arrangements referred to above which the Committee was supportive of and felt should be regarded favourably.

Supporting documents:


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