Agendas, reports and minutes

Minutes of Meeting of the Pensions Committee and Pension Board held in the Council Chamber, Council Headquarters, Glenurquhart Road, Inverness on Thursday 24 September 2015 at 2.00 pm.

Present:

Pensions Committee    Pension Board

Mr D Fallows                  Mrs C Caddick, Highland Council
Mr J Ford                       Mr T MacLennan, Highland Council
Mr M Green                    Ms L MacKay, Unison
Mr R Laird                      Mr D Macdonald, Unison
Mr B Lobban                  Mr E Macniven, GMB
Mr K MacLeod                Mr A Wemyss, Unite
Mr N Donald
Mr B Thompson

Also present:

Mr S Fraser, Joint Secretary (Employers Side)
Mr J Gibson, Joint Secretary (Trade Unions Side)

Officials in attendance:

Mr D Yule, Director of Finance
Mr C MacCallum, Payroll & Pensions Manager, Finance Service
Mrs M Grigor, Finance Manager (Corporate Budgeting, Treasury and Taxation)
Ms D Sutherland, Audit and Risk Manager, Treasurer’s Office
Mr S Boyle, Assistant Director, Audit Scotland
Ms M Bruce, Senior Audit Manager, Audit Scotland
Mrs L Dunn, Principal Administrator, Corporate Development Service
Mr A MacInnes, Administrative Assistant, Corporate Development Service

Mr D Fallows in the Chair

An asterisk in the margin denotes a recommendation to the Council.  All decisions with no marking in the margin are delegated to the Committee.

1. Apologies for Absence
    Leisgeulan

Apologies for absence were intimated on behalf of Dr D Alston and Mr A MacKinnon of the Pensions Committee and Mr A Campbell and Ms L Leonard of the Pension Board.

2. Declarations of Interest
    Foillseachaidhean Com-pàirt

There were no declarations of interest.

3. Recess Powers
    Cumhachdan Fosaidh

The Committee/Board NOTED that the Recess Powers granted by the Council at its meeting on 25 June 2015 had not been used in respect of this Committee.

4. Statement on Internal Control 2014/15 and Internal Audit Plan 2015/16
    Aithris air In-Ùghdarras 2014/15 agus Plana In-Sgrùdaidh 2015/16

There was circulated Report No. PC/04/15 by the Head of Audit & Risk Management which included an assessment of the adequacy, reliability and effectiveness of the Council’s system of internal control and provided information for the Pension Fund’s Annual Governance Statement contained within the 2014/15 Statement of Accounts.

In addition, details were provided of the audits being undertaken as part of the 2015/16 Audit Plan which Members were asked to approve.

It was explained that on the basis of the work undertaken during the year, it was considered that the key systems operate in a sound manner and that there had been no fundamental breakdown in control resulting in material discrepancy.  However as no system of control could provide absolute assurance against material loss, nor could Internal Audit give that assurance, it was the audit opinion that reasonable assurance could be placed upon the adequacy and effectiveness of the Pension Fund’s internal control systems for the year to 31 March 2015.

The Committee/Board:-

i.   NOTED the content of the report and the audit opinion provided;

ii.  NOTED the status of this year’s planned audits; and

iii. APPROVED the 2015/16 Audit Plan.

5. Internal Audit Reports – Matters arising from the Statement of Internal Control 2014/15 and Pension   Fund Investments
Aithisgean In-Sgrùdaidh – Gnothaichean ag Èirigh bhon Aithris air In-Ùghdarras 2014/15 agus Tasgaidhean Maoin Peinnsein

There was circulated Report No. PC/05/15 by the Head of Audit & Risk Management which referred to the audit work undertaken since the last report to the Board on 14 November 2014 in relation to matters arising from the Statement of Internal Control 2014/15 and pension fund investments.

The Committee/Board NOTED the content of the reports and the audit opinions provided.

6a Annual Audit Report to Members of the Pensions Committee and the Controller of Audit
     Aithisg In-sgrùdaidh Bhliadhnail do Bhuill de Chomataidh nam Peinnsean agus Rianadair an Sgrùdaidh

There was circulated Report No. PC/06/15 comprising covering memo and the draft Annual Report on the 2014/15 Audit, by the Assistant Director, Audit Scotland, which identified significant findings from the financial statements audit.

The report advised that subject to the satisfactory conclusion of any outstanding matters and receipt of a revised set of financial statements for final review, Audit Scotland anticipated being able to issue an unqualified auditor’s report on 24 September 2015.

The Assistant Director thanked the Director of Finance and the Pension’s team for the support they had provided to Audit Scotland during the course of the audit, particularly in light of the challenging timescales to be met.

It was noted that the 2014/15 investment returns were below the benchmark for that period, although over the longer term the pension fund’s investment performance was strong.  It was advised that investment performance and the Investment Manager’s performance was monitored by the Investment Sub-Committee and performance was satisfactory.

It was noted that the 2014 triennial actuarial valuation concluded that the Pension Fund was 96.2% funded and a comment was made that this was very impressive.  It was also noted that an annual budget was not prepared for the Pension Fund’s administration costs or management fees, and therefore only limited financial information was available to members.   In this respect, it was requested that a report with a breakdown of the management costs of the Pension Fund’s Investment Portfolio be submitted to the next meeting of the Committee.

In terms of the movement between triennial valuations it was noted that while pension fund assets had increased substantially, so had pension fund liabilities.  It was queried if there was any indication of these liabilities increasing over the next three years.  It was advised that it was a challenge for pension funds in that people were living longer and therefore liabilities were increasing.  It would be an ongoing challenge for pension funds to ensure that assets matched liabilities.

The Chair on behalf of the Committee thanked Audit Scotland for a very good report and acknowledged the hard work of the Audit Scotland team and the Finance Service in the audit process.

The Committee/Board:-

i  NOTED the report; and

ii AGREED that a report with a breakdown of the management costs of the Pension Fund’s Investment Portfolio be submitted to the next   meeting of the Committee.

6b Audited Accounts 2014/15
     Cunntasan Sgrùdaichte 2014/15

There had been circulated audited accounts by the Director of Finance.

The Committee/Board APPROVED the audited accounts.

7. Pension Fund Risk Management Policy and Strategy
    Poileasaidh agus Ro-innleachd Rianachd Cunnairt Maoin Peinnsein

There was circulated Report No. PC/07/15 by the Director of Finance which provided a copy of the Highland Council Pensions Fund Risk Management Policy and Strategy for approval and an update on the Fund’s risk register.

Following consideration, the Committee/Board APPROVED the risk management policy and strategy and NOTED the updated risk register.

8. Pension Fund Administration
    Rianachd Maoin Peinnsein

There was circulated Report No. PC/08/15 by the Director of Finance which updated Members on matters relating to the administration of the Highland Council Pension Fund.

In particular it was advised that in terms of a termination deficit for Highland and Islands Structural Partnership as a result of the company winding up, an outstanding balance of £119,000 had been formally requested from the Scottish Government, the guarantors for the Partnership.   It was reported that this money had now been received.

With reference to the training seminar for Pensions Committee and Pension Board Members, it was highlighted that the date of which was 9 October 2015 and not 4 October 2015 as incorrectly stated in the report.

It was noted that performance in relation to retirements to be paid by date of entitlement had decreased in the last year, and it was explained that this was due to delays in receiving all the necessary information in order to process payments.  However, once this information was received, payments were all processed on time.

The Chair welcomed the overall good returns on performance indicators for Pension Fund Administration.

The Committee/Board NOTED the details of the report.

9. Highland Council Pension Fund: Monitoring of Retirements
    Maoin Peinnsein Chomhairle na Gàidhealtachd: Sgrùdadh Cluaineis

There was circulated Report No. PC/09/15 by the Director of Finance which provided information relating to retirements from The Highland Council Pension Fund for the year ended 31 March 2015.

Members attention was drawn to the increasing popularity of Flexible Retirements, which supported the Council’s Policy of Flexible Working.

The Committee NOTED the report.

10. Training
      Trèanadh

It was reported that The Scottish Investment Governance Group (IGG) would hold a training seminar in Edinburgh on 9 October 2015 for The Local Government Pension Scheme (LGPS).  The subjects covered would be Fiduciary Duties; Responsible Investment; Investments – Bonds, Equites and Alternatives; and Role of Actuary.

This event was open to members of the Pensions Committee and Pension Board and was available by video conference in Committee Room 3, Council Headquarters, Inverness and Members were invited to attend. 

The Chair encouraged Members to attend the Seminar by Video Conference in order to reduce costs, although it was open to Members to travel to Edinburgh to attend if they wished.

The Committee/Board NOTED the training seminar scheduled for 9 October 2015.

11. Investment Sub Committee: Minutes of Meeting
      Fo-chomataidh Tasgaidh: Geàrr-chunntas na Coinneimh

The Minutes of meeting of the Investment Sub-Committee held on 19 February 2015, 29 May 2015 and 21 August 2015 were circulated, the terms of which were APPROVED.

The meeting closed at 2.35 p.m.