Cambridgeshire Pension Fund Governance Update

Jo Walton

Cambridgeshire Pension FundCurrent Governance Arrangements• Pension Fund Board• Investment Sub-Committee• What the Boards do

and finally…

Future Governance Arrangements• Local Pension Boards• Scheme Advisory Board• The Pensions Regulator

Cambridgeshire Pension Fund Board

To set the Pension Fund objectives and determine and maintain appropriate strategies, policies and procedures with ongoing

monitoring.

Terms of appointment As prescribed in the County Council’s Constitution

Frequency of meeting 4 per annum + 1 Annual General Meeting

Voting Rights All Board Members have equal rights

Training All Board Members have access to relevant and regular training to ensure their knowledge facilitates effective decision making

Board Representatives

Representatives of: Number of seats:

Position held by:

Cambridgeshire County Council Members

6 Cllr Steve Count (Chairman)Cllr Roger Hickford (Vice-Chairman)Cllr Maurice Leeke Cllr John ReynoldsCllr Peter AshcroftCllr Michael Shellens

All other local authorities, police and fire

2 Cllr David SeatonVacant – recruitment in progress

All other employers 1 Tim Woods

Active scheme members 1 Matthew Pink

Deferred and pensioner scheme members

1 John Walker

Board Substitute RepresentativesSubstitute Representatives Representation Group

Cllr Simon Bywater Cambridgeshire County Council

Cllr Peter Downes Cambridgeshire County Council

Cllr Lucy Nethsingha Cambridgeshire County Council

Cllr John Bullen Cambridgeshire County Council

Cllr John Clark Cambridgeshire County Council

Cllr Peter Reeve Cambridgeshire County Council

Cllr Barry Chapman Cambridgeshire County Council

Cllr Mac McGuire Cambridgeshire County Council

Cllr Michael Rouse Cambridgeshire County Council

Vacant – recruitment process nearing completion.

All other Local Authorities, Police and Fire

Gareth Deeble All other Employers

Lee Hurley Scheme Member Representative

Role of the Pension Fund BoardStrategy/Policy/Procedure

Detail

Funding Strategy Evaluate Employer Risk• Monitoring and management of liabilities. • Funding plans for all employers.

Triennial and interim valuations

Determining employer contribution rates with the actuary.

Investment Strategy

Determine investment objectives.Set and review long term high level investment strategies to ensure alignment with the Fund’s liability profile and risk appetite.

Administration Strategy

Collecting income, calculating and paying benefits, gathering from and providing information from scheme members and employers.

Communications Strategy

Determining the methods of communications with stakeholders, including scheme members and employers.

Discretions Determining the operations of administering authority discretions.

Governance Key governance arrangements, including representation.

Risk Management Strategy

Regular monitoring of key risks and agreeing how they are managed and/or mitigated.

Role of the Investment Sub-Committee

To provide operational governance of investments

Terms of appointment As prescribed in the County Council’s Constitution

Frequency of meeting 4 per annum

Voting Rights All Board Members have equal rights

Training All Board Members have access to relevant and regular training to ensure their knowledge facilitates effective decision making

Cambridgeshire Pension Fund Investment Sub-Committee

Representatives of: Number of seats:

Position held by:

Cambridgeshire County Council Members

4 Cllr Steve Count (Chairman)Cllr Maurice Leeke (Vice-Chairman)Cllr Roger HickfordCllr Peter Ashcroft

All other local authorities, police and fire and;All other employers

2 Cllr David SeatonTim Woods

Scheme members 1 John Walker

Role of the Investment Sub-CommitteeDelegated Authority to:

Implement the Fund’s Investment Strategy

Review and maintain the detailed asset allocation of the Fund

Appoint and terminate Investment Managers

Monitor performance of Investment Managers

Appoint , monitor and where necessary terminate external advisors – Custodian and Independent Investment Advisers, Consultants and Managers

Set benchmarks and targets for the Fund’s Investment Managers

Monitor risks inherent to the Fund’s Investment Strategy

Monitor and review: • Legislative, financial and economic changes relating to investments and their potential impact; • Investment management fees;• Transaction costs incurred by the Fund across its investment mandates;• The Investment Managers’ adoption of socially responsible investment considerations annually.

Independent Public Service Pensions Commission• 2010 – Lord Hutton commissioned to chair the IPSPC review of public

service pension provision.

• 2011 - Final report issued – 27 recommendations

• 2/27 recommendations affecting the governance arrangements of all public service pension schemes regardless of existing established arrangements

• Recommendation 17 – More independent oversight

• Recommendation 19 – Much stronger governance of ALL public service pension schemes

IPSPC – Recommendation 17Every public service pension scheme should have a board that:

• is properly constituted;

• is represented by trained and competent individuals;

• consisting of employee nominees;

• is responsible for meeting good standards of governance including effective and efficient administration.

There should be a pensions policy group for each scheme at national level for considering major changes to scheme rules.

This led to the creation of Local Pension Boards and LGPS Scheme Advisory Board via the Public Services Pensions Act 2013.

Local Pension BoardsPublic Services Pensions Act 2013 (section 5)

IPSPC – Recommendation 17

Assist the scheme manager (the administering authority) in securing compliance with the scheme regulations and other legislation relating to the governance and administration of the scheme in the areas of:

• managing risks and ensuring there are adequate internal controls;

• keeping records and ensuring the quality of member data;

• ensuring the correct contributions are paid to the scheme;

• managing conflicts of interest;

• publishing information about the board;

• communicating information to members;

• resolving disputes and reporting certain breaches of the law.

Local Pension BoardsRequirements to create and operate the new Local Pension Boards:• to be established in the County Council’s Constitution by 1.4.15;

• to consist of equal numbers of employer and member representatives;

• representatives must be fully competent and knowledgeable upon appointment;

• knowledge cannot be collective;

• the board may contain independent experts;

• board members must act in accordance with scheme regulations and other governing documents;

• the board must meet a minimum of twice per year;

• members of the Pension Fund Board and Investment Sub-Committee cannot sit on the Local Pension Board.

Pending final LGPS regulations and subsequent guidance.

The Public Services Pensions Act 2013 (section 7)IPSPC – Recommendation 17

Pensions Policy Group for each Public Service Pension Scheme

• Consider major changes to scheme rules

• LGPS Scheme Advisory Board (National)

LGPS Scheme Advisory Board

• Currently in shadow form

• Encourage best practice

• Increase transparency

• Co-ordinate technical and standards issues

• Consider items passed from DCLG, SAB sub-committees and other stakeholders

• Liaison role with the Pensions Regulator

• Formulate guidance and standards for administering authorities and pension boards.

The LGPS Scheme Advisory Board will remain in shadow form pending its formalisation within the LGPS Regulations during 2014-15.

Scheme Advisory Board

IPSPC – Recommendation 19

Improvement of governance, availability, and transparency of information relating to public service pension schemes by

establishing a framework that ensures independent oversight of the governance, administration and data transparency of

public service pension schemes.

Resulted in the regulatory powers of the Pensions

Regulator being extended.

The Pensions RegulatorIPSPC – Recommendation 19

Only certain aspects of the public service pension schemes will be covered by the tPR: • knowledge and understanding of board members;

• record keeping/quality of data;

• communications – accuracy, timeliness and clarity.

Powers of the Pensions Regulator:

• Risk based prioritisation;

• Education and enablement;

• Enforcement.

Questions?

Pension Fund Board Agendas and Reports

http://www2.cambridgeshire.gov.uk/CommitteeMinutes/Committees/Committee.aspx?committeeID=60

Investment Sub-Committee Reports

http://www2.cambridgeshire.gov.uk/CommitteeMinutes/Committees/Committee.aspx?committeeID=62

Pension Fund Strategies

http://pensions.cambridgeshire.gov.uk/index.php/governance2/key-documents/

Shadow Scheme Advisory Board

http://www.lgpsboard.org/

The Pensions Regulator – Public Service Pension Schemes

http://www.thepensionsregulator.gov.uk/public-service-schemes.aspx

Additional Information