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ELECT CHAIR To elect Chair for
2021 / 22 Decision: To re-elect Councillor Peredur Jenkins as Chair
for this Committee 2021/22 Minutes: Resolved to re-elect Councillor Peredur
Jenkins as Chair of the Committee for 2021/22. |
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ELECT VICE CHAIR To elect Vice chair
for 2021 / 22 Decision: To re-elect Councillor Stephen Churchman as Vice chair for
this Committee for 2021/22 Minutes: Resolved to re-elect Councillor Stephen
Churchman as Vice-chair of the Committee for 2021/22. |
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APOLOGIES I dderbyn unrhyw ymddiheuriadau am absenoldeb |
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DECLARATION OF PERSONAL INTEREST To receive any declaration of personal interest Minutes: None to note |
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URGENT MATTERS Nodi unrhyw eitemau sy’n fater
brys ym marn
y cadeirydd fel y gellir eu hystyried. |
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The Chairman shall propose that the minutes of the meeting
of this committee held on 25th March 2021, to be
signed as a true record Minutes: The Chair accepted the minutes of the meeting held on 25 March 2021 as a
true record |
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To consider the report, comment on the contents and adopt the new arrangements Decision: To accept · The external auditor’s work plan on Gwynedd Pension Fund’s Accounts. · The Gwynedd Pension Fund’s Statement of Accounts, following certification by the Head of Finance, but subject to audit, and an opportunity to challenge its content. · The external auditor’s annual report on Gwynedd Pension Fund’s Statement of Accounts. · The final post-audit version of Gwynedd Pension Fund’s Statement of Accounts (before the end of November in 2021), and an opportunity to challenge the content of the external auditor’s relevant report, i.e. Audit Wales Minutes: It was
explained, as a matter of course, that the Audit and Governance
Committee was responsible for considering and adopting the Operational
Arrangements to
reflect the statutory requirements on local authorities, at its first meeting
of the new council after an election. (The current version
was adopted by the Audit and Governance Committee on 06/06/2017). Following
a period of reviewing the financial governance arrangements of the Pension
Fund, modifications were introduced to the Arrangements which are necessary for
dealing with the 2020/21 accounts of the Gwynedd Pension Fund. It was
highlighted that the Audit and Governance Committee had been receiving and
approving the accounts of Gwynedd Council and the Gwynedd Pension Fund, as part
of its role as "those charged with governance". Having
considered the latest guidance and regulations, and reviewing the governance
arrangements,
it appeared to be increasingly clear that the Pensions
Committee, and not the Audit and Governance Committee, was the appropriate body
to receive and approve the Gwynedd Pension Fund statements of accounts. Not
only was the legal requirement for them to be included with the Council's
accounts abolished, but also the national board which advised
Local Government Pension Schemes also recommended that the Pensions
Committee should consider the accounts. Attention was drawn to
the relevant regulations and the new draft operational arrangements
which remain consistent with the requirements of the Local Government
Measure and the Statutory Guidelines. It was reported that there was no
inconsistency with Section 81 of the 2011 Measure, as the financial matters of
the Pension Fund were not a part of Gwynedd Council's financial matters - the
money of both entities were completely separate. It was highlighted that
an equivalent report had been submitted to the Audit and Governance Committee
on 27 May 2021, where modifications to the operational arrangements were
approved, in order to allow for the Pensions Committee
to accept and approve the pension fund's statements of accounts, as well as the
relevant report of the external auditor. It was reiterated at the Committee
that arrangements and decisions relating to pensions were
managed by the Pensions Committee, which in turn were scrutinised in detail by
the Pension Board. As a result, it was considered
that the modification was sensible. Gratitude
was expressed for the report. In response to a
question regarding the decision of the Audit and Governance Committee, it was confirmed that a decision had already been made
(27/5/21). RESOLVED: To accept, ·
The external auditor's work plan on the Gwynedd Pension Fund Accounts. ·
The Gwynedd Pension
Fund's Statement of Accounts, after they are certified by the Head of Finance,
but subject to audit, and an opportunity to challenge their content ·
The annual report of the financial auditor on the Gwynedd Pension
Fund's Statement of Accounts ·
The final post-audit version of the Gwynedd Pension Fund Statements of
Accounts (by the end of November 2021), and an opportunity to challenge the contents of the relevant
report of the external auditor, namely Audit Wales |
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GWYNEDD PENSION FUND AUDIT PLAN 2021 PDF 6 KB To consider the
report Additional documents: Decision: To accept the
plan Minutes: Yvonne Thomas and
Garmon Williams were welcomed to the meeting. The Audit Wales plan for 2021 was submitted, noting the work intended to be completed
during the year, in line with the statutory responsibility they held as
external auditors. Reference was made to the need to
audit the pension fund's accounts, with the aim of identifying relevant misstatements,
as well as the risks associated with the financial audit, such as the impact of
Covid-19. Reference was made to the
content of the performance auditing programme,
offering an overview of the work to be done, the fees and the proposed
timetable. Gratitude was expressed for the report and a willingness to
collaborate was expressed. Appreciation was expressed that the Audit Wales Team were all fluent
Welsh speakers and this was to be welcomed. In response to a
question regarding whether Audit Wales had considered cyber security protocols,
suggesting that security issues could arise for staff who worked from home as
the information was 'possibly available', it was noted that further enquiries
needed to be made to identify a thorough response and Audit Wales would respond
directly to Councillor Churchman. RESOLVED: To accept the plan |
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GWYNEDD PENSION FUND'S DRAFT STATEMENT OF ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2021 PDF 196 KB To consider the report, receive and note the draft Statement of Accounts
Additional documents: Decision: To accept and note the Pension Fund
Statement of Accounts (subject to audit) for 2020/21. Minutes: Submitted, for
information, the report of the Investment Manager to provide details of the
financial activities of the Pension Fund during the year ending on 31 March
2021. It was highlighted that the
accounts (draft) were subject to audit and the audit would be
undertaken by Audit Wales. It was reported that the accounts were following the statutory
CIPFA format, with the guidance interpreting what was submitted in the
accounts. Members were reminded that
last year's accounts, had been signed with an emphasis
of matter paragraph because of the uncertainty with property prices. It was
highlighted that the 4 Property Managers had stated
that there was no uncertainty this year. Attention was drawn
to the Fund's Account, which noted a normal year for contributions and
benefits, without any substantial change. Nevertheless, a substantial change was reported in management costs and reference was made to
note 12a, which explained that an increase in Private Equity (Partners)
performance fees was responsible for the change, with strong performance in
three funds specifically. (A full explanation was received
from the Managers when their fees were challenged). Reference was made
to the increase in the Investment Income (note 13) as a
result of income from Equity investments as the Wales Pension
Partnership started to pay income gained since establishing all of the
Partnership's sub-funds that the fund had invested in them. Reference was also made to the figure of £565.5 million, namely the
increase in the value of the assets on the market following a very prosperous
year (note 14a). In the context of
the net asset statement, attention was drawn to the change in the investment
assets (Note 14a), which had now reached £2.5 billion, with a substantial
increase in the Wales Pension Partnership after a proportion of Fidelity and
Insight transferred to fixed income funds during the year. The Head of
Finance Department took the opportunity to thank the Investment Team for their
commitment to ensure that the Statement of Accounts (draft) was
completed within the timetable. He noted that he had already certified
the draft accounts and that it would be good practice to share the accounts
with Members to give them an opportunity to question / make observations. Gratitude was expressed for the report. In response to a
question as to whether financial outgoings will appear consistent within two
years (i.e. fees reflecting the number of outgoings), it was noted that as
there were a number of buying and selling combinations, it would be difficult
to compare year v year, but consistency was expected in the long-term. In response to a substantial net increase of 0.6 billion, it was asked whether the strategy could be reviewed to consider attractive packages / benefits for staff, e.g. early retirement. The Head of Finance noted that the Fund or Employer were not entitled to amend the benefits as they were set in line with salaries and the number of working years. It was reiterated, in April 2022, that work would commence on ... view the full minutes text for item 9. |
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TREASURY MANAGEMENT 2020/21 PDF 258 KB To consider the
report Decision: To receive the report for information Minutes: Submitted - a
report by the Investment Manager noting that an annual decision had been made
to permit the surplus funds of the Pension Fund to be pooled and co-invested
with the Council's overall cash-flow. It was highlighted that the report compared actual performance
against the strategy for the 2020/21 financial year, and fulfilled the
Council's legal obligation under the Local Government Act 2003 to have regard
to both the CIPFA Code and the Welsh Government's Investment Guidance. It was reported that during the 2020/21 financial year, the
Council's borrowing activity had remained within the limits originally set, and
it had received £442,000 of interest on investments, which was above the
budgeted level of £400,000. It was reiterated that no
organisation that the Council had invested money with them had defaulted. In the context of
the compliance report and indicators, it was reported
that full compliance had taken place separately to the interest rate
disclosure. It was highlighted that this disclosure showed a one-year revenue
impact of a 1% increase in interest rates, highlighting the serious impact the
pandemic has had on investment returns compared to what had been projected at
the beginning of March 2020 when the restricted level was set -
pre-Covid-19. It was
reiterated that returns on pooled funds had recovered the interest
decline. Gratitude was expressed for the report. RESOLVED to accept the report for
information. |
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RESPONSIBLE INVESTING PDF 199 KB To consider the
report Additional documents: Decision: To approve the statement
and for the Chair to sign the declaration. Minutes: The Head of Finance Department highlighted that electors in Anglesey,
Conwy and Gwynedd had submitted questions to the Committee relating to
responsible investment. Appreciation was expressed for
receiving the questions beforehand, and the presence of the electors at the
meeting was appreciated. Resolved to respond to the questions before discussing
the report. 1.
What evidence does
the Gwynedd Pension Fund have that its engagement policy has genuinely changed
the behaviour of the companies in which they are shareholders? It was explained that, as a Fund, regular meetings were held
with fund managers and progress reports were received on their engagement
activities. It was noted that the fund's managers were
very active and that the recent progress had been very satisfactory, with open
discussions being held regarding the climate strategy of some funds. It was highlighted that the Wales Pension Partnership (WPP) had
a Voting and Engagement Provider who assisted with the engagement process. Reference was made to the following examples of considerate adaptations
by companies within the Partnership's portfolios. a)
Archer Daniels Midland (ADM). Shortcomings had been seen in ADM's policies, which contributed to
continuous deforestation and a failure to protect native vegetation. It was noted that Robeco (Voting and
Engagement Provider) had held discussions with ADM since 2020 and had
introduced a proposal on behalf of the shareholders regarding their
contribution towards deforestation and the clearing of native vegetation in
South America. In March 2021, the proposal was withdrawn as the company had
committed to: ·
set obligations and a deadline for the abolishment
of deforestation by 2030 ·
trace the soy supply chain in full by 2022 ·
include native vegetation in their No Deforestation
Policy ·
publish a protocol for engaging with suppliers b)
Enel Spa. It was reported that Enel Spa (an
international energy company from Italy), was active in the electricity
production and distribution sectors. By leading on cooperative engagement under
the Climate Action 100+ initiative, it was noted that Robeco had engaged on a number of occasions with the
company's executive and non-executive managers, who had led on developing an
ambitious strategy to develop renewable energy and digitalise distribution
networks. As part of the efforts to strengthen the governance of companies on
climate matters, Robeco succeeded to nominate the
former Chief Executive Officer of Wind Power at DONG Energy to the Enel Board,
along with a group of institutional investors. The next steps in their
engagement discussions will seek to address the company's intention to achieve
the target of net-zero by 2050, and set a long-term target for the Emissions of
Scope 3 c) It was reported that ING Bank (financial services provider in the Netherlands), placed a strong focus on digital services for standard banking services. It was noted, in 2018, that ING had announced a fine settlement of 775 million Euros due to their failure to discover money laundering matters between 2012 and 2016, and earlier in the year, the oversight board abolished its proposal to increase their executive pay levels following social pressures. It ... view the full minutes text for item 11. |
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WALES PENSION PARTNERSHIP UPDATE PDF 150 KB To consider the
report Decision: To receive the report for information Minutes: The Investment Manager submitted a report updating
Members on the Partnership's work, the performance of the Fund, and ongoing
developments since its establishment in 2017. By 31 March 2021, it was reported that 81% of the Gwynedd fund had been pooled
with the Wales Pension Partnership - 54% through the main funds and 27% through
passive investments. It was reported that regular
meetings via Teams allowed matters to be discussed in a timely manner, and this
appeared to be effective, with matters progressing more quickly. It was reported that the easy transfers had been implemented,
and work was now being undertaken on matters that seemed more challenging, such
as Private Markets. It was emphasised that Hymans supported the work of
combining assets in this category, with continuous business discussions
arranged to discuss the appropriate structure and mechanisms for investment. Attention was drawn to the
discussion around the Member representative appointment process for the Joint
Governance Committee. It was highlighted that the recommendation put forward in
a report to the Joint Committee (24 March 2021) was that each local Pension
Board should nominate one scheme member representative who would meet the
requirements of the job description. The appointment process
would be undertaken by a sub-group who would recommend a nomination for
approval by the Joint Governance Committee. The Head of Finance
expressed that he would support Osian Richards (Chair of Gwynedd Pensions
Board) to become a member of the Joint Committee. It was noted that the
appointment process would take up to six to twelve months, as Full Council
approval was needed from each constituent authority. Gratitude was expressed for
the report. The Chair noted that establishing the Wales Pension Partnership had
been very successful, with the returns element and good collaboration gaining
benefits for the Fund. He expressed pride in being a part of the Fund. RESOLVED to
accept the report for information. |
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AMENDMENTS TO THE FUNDING STRATEGY STATEMENT PDF 121 KB To consider the report, approve
amendments to the Funding Strategy Statement following changes to the 2013 LGPS
Regulations and update from the Goodwin Court Case Additional documents: Decision:
Minutes: Submitted - the
report of the Investment Manager highlighting the need for the Committee to
approve modifications to the Funding Strategy Statement following changes to
the LGPS Regulations 2013 and an update on the Goodwin court case. The
recommendation came from the Fund's actuary, namely Hymans Robertson, which had
suggested the changes. It was highlighted that changes had been made in three
parts of the statement -
Reviewing the contribution - the modification allowed the Fund to re-calculate
contributions outside the formal valuation under the following circumstances:
if changes had been made to the employers' liabilities, if changes had been
made to the employers' guarantee; or at the request of the employer -
Exit arrangements - the modifications allowed for more
flexibility when an employer wanted to leave the fund. If an employer is in
arrears, the options have been formalised, e.g. spread the payment over a
number of years or commit to a Deferred Debt Agreement. -
Goodwin Court Case - where members
or survivors were subject to discrimination because of their sexual
orientation. It is expected for the impact of the Goodwin Case to be very small
on the Fund's liabilities and an administrative matter to a great degree.
Nevertheless, note the modification in the strategy for clarity. Gratitude was expressed for the report and
for Hymans Robertson's guidance in a very technical field. It was accepted that
the response was also technical and possibly beyond the comprehension of some
of the Members, but with an expectation that the officers acted correctly. It was also noted that the use of colours in the report was a very
effective way of highlighting the changes. RESOLVED • To approve the modifications
to the Funding Strategy Statement following changes to the LGPS Regulations
2013 and for them to be updated following the Goodwin Court Case • To adopt the Modified Funding Strategy Statement |