Agenda and draft minutes

To elect chair for 2019 - 20

RESOLVED to elect Osian Richards as chair of the Pension Board for 2019 - 2020

To elect vice chair for 2019 - 20

RESOLVED to elect Councillor Aled Evans as Vice-chair of the Pension Board for 2019 - 2020

To receive any apologies for absence

An apology was received from Huw Trainor

It was noted that a seat for an employers' representative would be advertised before the next meeting.

To receive any declaration of personal interest

None to note

To note any items which are urgent business in the opinion of the Chairman so that they may be considered

Representation of Board Members at Conferences

Local Authority Pension Fund Forum (LAPFF) Annual Conference

4-6 December 2019, The Hilton, Bournemouth

Osian Richards

LGPS Governance Conference,

23 - 24 January 2020, The Principal Hotel, York

Sharon Warnes

The Chairman shall propose that the minutes of the meeting of this committee held on 17 May 2019 be signed as a true record.

The Chair signed the minutes of the previous meeting, held on 17 May 2019, as a true record.

To submit, for information, minutes of the Pensions Committee meeting held on the 29 July 19 and consider any matters arising

The minutes of the Pensions Committee held on 29 July 2019, were accepted for information.

The contents of the Statement of Accounts 2019-20 and the external auditor's ISA260 report were suggested for the Board's agenda for September 2020.

The members had no further observations arising from the minutes.

To consider the  Pensions Manager Report

Meirion Jones was welcomed to the meeting in his new role as Pensions Manager. It was noted that Meirion was to succeed Nic Hopkins, the former Pensions Manager, who was on a period of flexible retirement. Delyth Jones-Thomas was also welcomed to the meeting. It was explained that Delyth was to succeed Caroline Roberts, the former Investments Manager, who was also on a period of flexible retirement.

Meirion and Delyth were congratulated on their appointments. Nic and Caroline were thanked for their service over the years, and best wishes were expressed for a happy retirement for both.

A comprehensive report was submitted by the Pensions Manager, providing a general overview of pensions administration over the past six months, along with information about the work completed over the period, an update on various projects along with a list of the challenges faced by the Administration Unit on a daily basis.

During the discussion, the members made the following observations:

·         The staff were thanked for encouraging and engaging in discussions with employers to strive for the accurate and timely submission of information.

·         The employers were congratulated for ensuring clean and timely data

·         There was a need to set a definite timetable for those employers who needed to transfer to the i-connect system.

·         It was suggested that a trial period should be held for the trialling of the self-service website

RESOLVED to accept the information.

To consider the Head of Finance’s Report

A report was submitted by the Head of Finance Department providing general information and an overview of the current valuation process for conducting a triennial actuarial valuation, along with a proposed timetable.

It was explained that the valuation data had been presented to the actuary on 16 July and that work had already commenced on the response to further enquiries from Hymans. It was expected that an improvement will be seen on the result of the 2016 result, namely a funding rate of 92%.

It was noted that it was the employer's responsibility to submit accurate and timely information to officers at the Pensions Unit. It was reported that the quality of the data this year was acceptable at first glance, and that every employer had met the time requirements.

In response to a question regarding employers' risk profiles, the Head of Finance Department noted that the employers had stability and that new employers / companies to the fund now had guarantees.

Gratitude was expressed for the information and it was observed, considering the timetable, that the valuation process was evidently a year's worth of work

RESOLVED to accept the information.

To consider the Head of Finance’s Report

The Head of Finance Department submitted a report explaining and scrutinising projections. It was noted that the Pensions Committee had considered and approved projections in the Executive Summary in order to set funding targets for the Fund's current triennial valuation as on 31 March 2019. The full details of the projections were referred to in a report received from the Fund's Actuary, and included as an appendix to the report.

It was reported that only one substantial change was made to the projections, namely that to salary increases. Following advice from Hymans, it was decided to amend the figure to CPI +0.3% that would respond to higher short term salary increase expectations, thus reflecting recent trends. It was reiterated that the projections would be noted in the review for the valuation and that there would be discussions and professional advice sought before amending any future projections.

A formal consultation would be held with the employer on the projections along with other amendments to the Funding Strategy Statement of the 2019 valuation later on in the year.

An observation was made to the effect that longevity had now reached a stable level and that there could be a need to review the methodology.

RESOLVED to accept the information.

To consider the Head of Finance’s Report

The Head of Finance Department submitted a report outlining the Committee's

decision (29 July 2019) to confirm low carbon investment. It was decided to invest 12% of the pension fund's total in the BlackRock Global Low Carbon equity fund. As BlackRock funds were part of the 2016 passive equity procurement process held by the Wales Pension Funds, it was explained that a formal procurement process would be unnecessary.

It was explained that Gwynedd Pension Fund had chosen to invest in a fund managed by BlackRock to track the MSCI Low Carbon Target Index.  This fund would reduce exposure to companies who emitted carbon by tracking the MSCI Global Index, reducing carbon exposure by up to 80%, rather than dis-investing randomly. It was noted that the MSCI Low Carbon Index was a benchmark for investors who wished to manage possible risks associated with the transformation towards a low carbon economy.  The index aimed at a tracking error target of 0.3% (30 basis points) in reducing the carbon exposure.  In placing a greater emphasis on companies that had low carbon emissions (compared to sales) and companies that had the potential for low carbon emissions (per dollar of capital on the stock market), the index reflected lower carbon exposure than those of the wider market.

It was reiterated that this investment was responsible and responded to the Council's requirements and the investment principles of the Pensions Committee.

In response to a question regarding the cost of transfer fees, the Head of Finance Department noted that there would be some transitional costs, but that this would not be a substantial sum in the context of the value of the investment; and that the costs would level out as the investment was one for the long term.

The Board noted that they were supportive of the Pensions Committee's decision to invest in low carbon equity. With daily attention given by the media to the consideration of climate and environmental matters by World Governments, it was noted that this was both a wise and timely decision. It was added that economic, social and governance elements were also making gradual progress, and that suitable investment vehicles to be considered for these elements in the future would be welcomed.

RESOLVED to accept the information.

To receive a verbal update from the Head of Finance on recent developments

The Head of Finance Department gave an update and displayed the Wales Pensions Partnership's new website. It was reported that the website had been launched in September 2019 and that it included initial information on the Partnership's work.

It was explained that, by the start of 2020, around 82% of Gwynedd's fund would be transferred to Wales Pensions Partnership funds, which signified encouraging progress in comparison with many English pools. He added that there was good collaboration amongst Partnership members.

Attention was drawn to a wish to have representation of the Pension Board on the Partnership's Joint Committee. The Head of Finance Department suggested that there was already an appropriate number of Members and officers on the Joint Committee, and that engagement meetings were held for Pension Board Chairs. It was suggested that this arrangement was for the time being sufficient to ensure that the Pension Boards and scheme members had the opportunity to contribute and present their opinions.

A request was made for the details of the website to be shared with Members.

Gratitude was expressed for the information.