Agenda item

To note the 2026/27 financial year budget for the Pensions Administration and Investment sections.

Submitted – the report of the Investment Manager. It was noted that the budget of the Pensions Administration Unit and the Investment Unit for the financial year 2026-2027 had been approved by the Pensions Committee (the morning of 09-02-26) and that the information was being shared with the Board as an opportunity for them to provide an overview of the situation.

Reference was made to the Pensions Administration Unit’s budget, which employed 25 members of staff, together with systems, printing, and central reimbursement costs. Attention was drawn to supplies and services, highlighting that the budget had to be increased to £185,500, mainly due to increases in postage costs, and software costs – costs that were unfortunately unavoidable. 

In the context of the Investment Unit's budget, it was noted that the majority of their duties consisted of Pension Fund work but that they were also responsible for Cyngor Gwynedd's Treasury Management. Additionally, the costs of the Wales Pension Partnership (WPP), investment managers and advisers were the responsibility of the Investment Manager; these costs varied and depended on the performance of investments and the work required to be carried out by the advisers and the Partnership. When transferring and investing with the WPP IM Co it would be necessary to keep a close eye on the costs over the next period, and it was therefore considered that there was no purpose in setting a budget for this year and would be addressed in the next financial year.

Another element that could not be included in the budget were the changes required as part of 'Fit for the Future' regulations where there would be a statutory requirement to appoint a Chief Officer for the Fund, an individual who was independent of the Committee, along with the costs of additional governance and training requirements. It was noted that more information on these elements would be shared with the Board as they became available.

Thanks were expressed for the report

In response to a question by Mr Eifion Jones, who had observed a meeting of the Pensions Committee on the morning of 09-02-26, at which the response to the regulations was discussed, and the need to appoint a Chief Officer for the Fund, and an individual who was independent of the Committee by 1 October 2026, and the risk involved in appointing a suitable person who met the specific requirements, it was noted that risks encompassing 'Fit for the Future' implications had been added to the risk register. It was reiterated that there would also be specific qualifications for the role of the Independent Officer therefore this appointment was also challenging, with a risk attached. Work on setting up the job descriptions would begin as soon as possible.

In response to a question about adjustments to the Committee's duties and whether there would be an impact on the Board's duties, it was noted that there were changes to the Committee because they were doing a lot of work with the investment element, but the Board's duties would remain the same.

In the context of a 60% increase in service provision costs and why this was so high, it was identified that this was mainly an increase in software development and licensing costs, e.g. the Dashboard, creating a video for the Hunanwasanaeth self-service system, and an increase in postage costs.

In response to a supplementary question about the costs of software and why it was not a capital expenditure given the impact that the increase in costs was having on the budget, it was noted that these were mostly one-off expenditures and were funded by the Fund.  Because of that, it made more sense from an accounting point of view to treat it as revenue expenditure within one year rather than capitalising it, which would have long-term implications for the accounts, with no real advantage to that.

In response to a comment regarding staff numbers and whether it would be correct to note that there were four members of staff out of 23 on temporary contracts, it was noted that temporary staff had been appointed for additional work, such as the McCloud Project, but with the work on the horizon for the Unit, more would need to be appointed. It was reiterated that the intention was to look again at the structure in light of the increased requirements and challenges that the Unit would face in the future.

The information was accepted