Northamptonshire Pension Fund Governance Update

Jo Walton

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

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

Existing Governance Arrangements

Northamptonshire Pension Fund BoardTo set the Pension Fund objectives and determine and maintain

appropriate strategies, policies and procedures with ongoing monitoring.

+Investment Sub-Committee

To provide operational governance of investments.

Activities of the Pension Fund Board

Strategy/Policy/Procedure

Detail

Funding Strategy Clear and transparent fund-specific strategy that identifies how employers’ pension liabilities are best met going forward.

Investment Strategy

Determines 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

Policy on the administration of the Scheme and performance standards for both LGSS Pensions Service and employers.

Communications Strategy

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

Discretions Determines the operation of administering authority discretions.

Activities of the Investment Sub-Committee

Delegated Authority to:

Implement the Investment Strategy

Review and maintain the asset allocation of the Fund

Appoint, monitor and terminate Investment Managers

Appoint, monitor and terminate external advisers – Custodian and Independent Investment Advisers, Consultants and Managers

Set benchmarks and targets for Investment Managers

Monitor and review: • Legislative, financial and economic changes relating to investments and their potential impact; • Investment management fees and transaction costs;•Investment Managers’ adoption of socially responsible investment considerations.

Northamptonshire Pension Fund Board and Investment Committee• Represented by

– County Councillors– Employer Representatives– Member Representatives

• Pension Fund Board meetings - 4 per annum + 1 AGM• Investment Sub-Committee meetings – 4 per annum• All meetings held in public*• All Board Members have equal voting rights• All Board Members have access to relevant and regular training to ensure

their knowledge facilitates effective decision making• Minutes, reports and agendas available for viewing before the meeting

and after.

Board RepresentativesRepresentatives of: Number

of seats:Position held by:

Northamptonshire County Council Elected Members

7 Cllr Graham Lawman (Chairman)Cllr James Hakewill (Deputy-Chairman)Cllr Michael BrownCllr Malcolm LongleyCllr Dennis MeredithCllr Bob ScottCllr Russell Roberts

All other local authorities, police and fire

2 Cllr Malcolm WardCllr Martin Wilson

All other employers 2 Roger MorrisAlicia Bruce

Active scheme members 1 Peter Borley-Cox

Deferred and pensioner scheme members

1 Josie Mason

Board Substitute RepresentativesSubstitute Representatives

Representation Group

Cllr Mick Scrimshaw Northamptonshire County Council Elected Member

Cllr John McGhee Northamptonshire County Council Elected Member

Cllr Bill Parker Northamptonshire County Council Elected Member

Cllr Richard Lewis All other local authorities, police and fire

Robert Austin All other employersAndy Langford Scheme member representative

Northamptonshire Pension Fund Investment Sub-Committee

Representatives of: Number of seats:

Position held by:

Northamptonshire County Council Elected Members

4 Cllr Graham Lawman (Chairman)Cllr James Hakewill (Deputy Chairman)Cllr Bob ScottCllr Russell Roberts

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

2 Cllr Malcolm WardRoger Morris

Scheme members 1 John Walker

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 17

“Every public service pension scheme should have a board that:

• is properly constituted;

• is represented by trained and competent individuals;

• consisting of employee/scheme member representatives;

• 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.”

Effectively – oversight of the Pension Fund Board & Investment Sub-Committee but without decision making powers.

• managing risks and ensuring adequate internal controls;

• keeping records and ensuring the quality of member data;

• ensuring 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 number of employer and employee/scheme 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 (SAB)

LGPS Scheme Advisory Board (Shadow)

• 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 Regulator

Only certain areas will be of the Regulator’s interest;

• 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://cmis.northamptonshire.gov.uk/cmis5live/DecisionMakingCommittees/tabid/110/ctl/ViewCMIS_CommitteeDetails/mid/558/id/412/Default.aspx

Investment Sub-Committee Reports

http://cmis.northamptonshire.gov.uk/cmis5live/DecisionMakingCommittees/tabid/110/ctl/ViewCMIS_CommitteeDetails/mid/558/id/439/Default.aspx

Pension Fund Strategies

http://pensions.northamptonshire.gov.uk/index.php/governance2/key-documents-for-the-northamptonshire-fund/

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