Agenda item

To consider the report and note the information. 

The Investment Manager highlighted that the report was for information, setting out developments within the Wales Pension Partnership (WPP). Whilst feedback from Pension Board Chairpersons' Engagement meetings, which are held every six months, was shared with the Board, due to the number of recent developments it was considered that it would be appropriate and important for Members to receive a regular update.

Members were reminded that, as a result of the 'Fit for the Future' Westminster Legislation, WPP had had to proceed with the formation of a new investment company now known as 'WPP Investment Management Company' (WPP IMCo). It was reported that there had been a delay in the approval of the Legislation and as a result the company had not been launched – it now appeared that the launch would take place after the election.

Reference was made to the investment company's new arrangements, summarising that it would be responsible for the implementation of all aspects and advice on the Investment Strategy of the eight Constituent Authorities. In the context of the Governance of the Partnership, attention was drawn to the governance structure of the Partnership once the investment company would be operational as well as how the Pensions Committee, the individual Constituent Authorities, and the Pension Board would contribute to the structure. Reference was made to a) the shareholder structure (namely the officers and the Elected Members) with the Board of Shareholders being created to protect the rights of the Constituent Authorities – the Board would consist of either a Section 151 Officer or a Senior LGPS Officer from each of the Constituent Authorities; and b) the structure of the new company with the WPP IMCo Board accountable to the Board of Shareholders.

The WPP IMCo Initial Business Plan was submitted, which had already been approved by the Joint Governance Committee and the Pensions Committee of the Gwynedd Pension Fund. It was noted that the Plan detailed how the company was going to achieve eight strategic objectives and set out a plan to achieve specific goals such as governance and oversight, financial summary, approach to investment management, operations and staffing, risk management and compliance and responsible investment. 

The members thanked the officer for the report.

Observations arising from the ensuing discussion:

·        Staffing costs seemed enormously high

·        It was welcomed that the Board of Shareholders had the power to challenge the performance of WPP IMCo

·        There was a need to ensure that the Pensions Committee and the Pension Board scrutinised effectively and pre-emptively identified problems – the role within the structure needed to be strengthened to become active and operational.

In response to a question as to whether the key functions had been filled, it was noted that a number had now been appointed and the Senior Investment Officer had started in the new role and was already building weekly contacts with the officers of the Constituent Authorities. In response to a supplementary question about whether the costs of the structure would offer value for money, it was noted that the situation was a unique one – that an entirely new company was being created and therefore time would tell what the outcomes would be. It was reiterated that the Pension Fund officers had not had input into the new structure.

In response to a question, given that there was a delay in the establishment of the company, and therefore who would pay staff salaries, it was noted that in such circumstances there was an arrangement in place for the Host Council to pay over the short-term and to invoice the Constituent Authorities for a reimbursement. It was reiterated that the expenditure also had to be approved by the Financial Conduct Authority (FCA) to move forward to establish an agreed procedure.

In the context of the Board of Shareholders and when nominations would be submitted, it was noted that names had been forwarded to the FCA which would be responsible for the formal interview process and for approving the nominations.

In response to a question regarding the responsibilities of the Committee and the Pension Board to the Members of the Gwynedd Pension Fund and the need to monitor the WPP IMCo business plan and the significant increase in costs, it was noted that the Board's role remained the same, prioritising support for the officers to administer the Gwynedd Pension Fund. While accepting that the costs were high, the pay scales were equivalent to salaries within the sector and therefore WPP IMCo officers would be expected to do a good job and get the best for the Fund's members. It was reiterated that governance arrangements were in place and that every attempt was made to report transparently and openly on the situation.

It was noted that the new arrangement had been forced by the UK Government through a legal procedure and therefore there was no choice but to spend. It was suggested that the expenditure already existed within fees and that the new procedure would be more transparent.

The report was accepted and the information noted.