Transcript

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Well, good afternoon, everyone. Good afternoon, board members and officers, and welcome to this multi-locational meeting of the Dubbit Pension Fund, Pension Board Meeting. Firstly, there are no fire alarms today, but if anyone is joining remotely from a council building, should the alarm sound, it will not be a test and you should follow the appropriate fire exit signs. Now, before proceeding today, I have to remind everyone present that the proceedings of today's meeting are being filmed live and maybe kept on the council's internet site as an archive record of the meeting. The images and sound recording may also be used for training purposes within the council. All members should have already checked their headphones, microphones, and IT kit before the meeting commenced. Members of the public watching the meeting by the English language webcast will receive Welsh to English simultaneous translation automatically, and members and guests requiring simultaneous translation from Welsh to English in the meeting itself should choose English from the interpreter button on their screen. I must remind all members and officers that you should only activate your microphone after I've invited you to speak on an item. Please remember to mute your microphones when you finish speaking. This will allow the proceedings to be broadcast seamlessly. If you lose connection during the live meeting, please make every attempt to reconnect so that we acquire it. Before I commence the meeting, I just need to confirm the members in attendance today. My name is John Jones, and I'm the chair of the David Pension Fund Pension Board. And my fellow board members in attendance today, some of whom are joining remotely, and I'll take them in turn as Mr. Tommy Bowler, who should introduce yourself. Please, yeah. I'm Tom Bowler, I'm here to introduce yourself. Thank you, thanks, Tommy. Councillor Lenny. Councillor ALLAN LENNY. Councillor ALLAN LENNY, representing employers. Thank you. Good afternoon, my name is Mike Evans, and I'm a member of the representative. And Richard Edwards. There's Richard. You're mute. He's on mute. Are you there, Richard? Can you just unmute and introduce yourself, please? Sorry about that. Richard Edwards, a member representative from British Accounting Council. Thank you. We also have Councillor Elwin Williams, the chair of the David Pension Fund Committee and attendance and as observer today, together with Mr Adrian Brown, the fund's independent investment advisor, who is also joining remotely. There are a number of officers present in the meeting today, and I would ask you to please introduce yourself before you speak. We will now move on to the agenda for today's meeting. Number one, apologies for absence. We have apologies from Councillor WIN-Thomas and also Mike Rogers. We can record that, please. Item two, declaration of personal interests. We all have a responsibility under the Code of Conduct to verbally declare any personal interests that we may have in relation to any item appearing on the agenda today. Please ensure you have clearly indicated which agenda item you have a personal interest in and the specific nature of the interest to be declared, and whether or not you'll be withdrawing from the meeting during consideration of that item. If an interest has not been declared at the start but becomes known during discussions, it will need to be declared when that interest becomes apparent. You will need to repeat your declaration of personal interest at the beginning of the relevant item on the agenda, as well as indicating whether or not you will be leaving the meeting during consideration of that item. And you will also need to indicate whether you've been granted a dispensation by the Standards Committee or the monitoring officer to speak, although both in respect of any item on the agenda. Will members now please make their declarations by clicking on the raise your hand function on the toolbar or raising your hand in the air? I've not been given notice of any declarations. Sorry, Richard. Richard, please hand that. Did you? Did anything to declare, Richard? No, it was just testing. OK, all right, OK, so we've got no declarations of interest. So moving on then to item three, which are the minutes of the last meeting of the board. I'll take these page by page. And if anybody has got any comments or amendments, then please say so. So page one of the minutes is page five, page six, page seven, page eight, page nine, page ten, and page eleven. Can I have a proposal and a seconder that I signed the minutes of the meeting on the 22nd of January, please? Thank you, Mike. The seconder? Yeah, thanks, Tommy. So those are agreed. Moving on to item four, which is in the PAC, which is the papers from the last pension fund committee on the 27th of March. And the first item is item 4.1, which is actually is the report that I wrote for following the last meeting of the board back in January and went to the committee at its meeting, and this is part of some of the new arrangements that we've introduced in order to improve and build up the role of the board in relation to the committee. Has anyone got any comments or points on that paper that I wrote? Hand-- yeah, Richard, can see your hand up. Yeah, just to find it really useful to get those papers, thank you, John. Right, OK, well, thanks for that. Appreciate the comment, and the practice will be going forward is to prepare something from each board meeting to go to the committee. And obviously, I'll write something else following our discussions today. So item 4.2 of our agenda, the budget monitoring report, April to end of December 2023. Anthony, do you want to highlight the issues for us here, please? Thank you, Chair. My name's Anthony Parnell. I'm the president pension of estimates manager. This is the budget monitoring position as of 31st of December 2023, which is post-21 of your park. And the spent compared to budget of 1.8 million. On the expenditure side, expenses projected to be overspent by 2.8 million. 3 part is lump sum of time benefits and transfers out of Sumner 15K and more than budgeted. As are, manage expenses 310K. Offset in these overspent, is benefits pensions payable and the spent by 1.1 million, and lump sum death benefits focused on the spent by 1 million. In relation to pensions payable, a budget set in for 202324, an increase of 2.2% was included to estimate the additional pensions paid on new pension members for the year. To date, the actual increase in pension membership has been closer to 1%. Lumps of retirement benefits transfers out of the scheme. A lump sum death benefits depend on the number of retirement's levers and deaths throughout the year, which are difficult to anticipate at budget setting stage. On the income side, income is forecast to be exceeded in budget by 4.6 million, which is positive. Contributions are forecast to be 4.6 million more than budget, which is mostly due to employee pension repay, to be more than anticipated a budget set in due to a higher pay award. Furthermore, augmentation income received from employers has also been higher than was anticipated a budget set in. Transfers in the forecast to exceed budget by 1.8 million, and investment income is forecast to be below budget by 1.8. Overall, then, the total expenditures estimate at 125.6 million, and total income estimate between 120.7.4 million, which results in up positive variance, as I mentioned earlier, of 1.8 million pounds. The report itself is later on on the pages. And then, I'd like to take any questions, Chair, on the actual report or the summary I gave, thank you.

• Right, thank you, thank you for that. Find this very helpful paper, personally. Can I open it up for questions? Any points anybody wants to raise? At all, Tommy, hand up, yeah.
• Can you ask him to put microphone on? (silence) (silence)
• Any other comments or questions? Any other comments or questions?
• I had one, Anthony, and I think you partly covered this, which was the commutation and lump sum retirement benefit line where, obviously, the out turn, it was 17.8 odd million, was quite a lot higher than the budget, but I know you picked that up in the budget going forward. Is there any particular reason for that change?
• Again, Chair, when we draft the budget in John, we're February time, we don't know what the, we're times are gonna be the following year, we have an idea, and that's where we put a forecast in, but until the actual entire year, we don't know what the figures are gonna be, so it's the best estimate you got at that time, we're trying this course we can.
• Okay, thank you for that. Any more questions? Not seeing any hands go up anywhere, so on that basis, can we agree this report? Oh, Elwin, are you signaling there?
• Yes, I can hear you playing, I can hear Anthony playing, I do not hear any Mr. Bowler's question. Was, how did you, I did a mic on? Just...
• Did you have your mic on? Tommy, when he was speaking, I didn't even hear you.
• Elwin, can you hear us? 'Cause we couldn't hear you very clearly here.
• You couldn't hear me?
• Yes.
• I can hear you were sharing a clear Anthony playing, but I didn't hear any Mr. Bowler's question.
• Tommy, can you repeat your question, please, but for Elwin, thank you.
• Yeah, sorry about that. I didn't know what a microphone button is. I have been shown now. I'm duly educated.
• Okay, that's the same.
• Right, I think we're all okay on this. Can we agree this report, then, please? And can I have a signal that everyone boards happy to agree this paper? Yeah, hands going up, Ryan. Yeah, thank you. Oh, Richard, you've said this.
• That was under to agree, sorry.
• Your hands up, is it a hands up to ask a question or hands up to agree?
• Sorry, sorry, sorry.
• Okay, thank you. All right, good. All this technology is causing us problems today, isn't it? Right. Moving on then to item 4.3, which is the pension fund budget for the current 2425. Anthony, do you just want to take us through this, please?
• Yes, thank you, Chair. So this is page 25 of the pack. So this is the budget for 2425. The expenditure budget is under 33.6 million, and the income budget is the same. This results in a net budget of zero. This provides the fund a flexibility to utilize investment income based on budget requirements. On expenditure side, Benfis-Pale was estimated $118 million. Again, I stress the fact is estimate, which includes 6.7% pension increase based on September, 2023 CPI, and 1.5% increase in pension and deferred members. An increase in budget has also been allocated to some retirement benefits and payments to an account of levers. Mountain June expenses is estimated at $1.9 million, of which $9.4 is budgeted for the investment manager fees. On the income side, contributions estimated $104.5 million, of which employers sent to 6.1 and employees 28.4. Contribution rates for employers have been amended to reflect the results of the 2022 trend of valuation. An additional 4% is factored in for pay awards for the coming year. The investment income is estimated at 25.7 million to maintain a net budget of zero, so the fund is not holding surplus cash. And the port itself then can be seen on a couple of pages later. I'll be taking questions, Chair.
• Thank you, Anthony. I thought this was very clear and helpful presentation. Any questions, Fransany, on the budget? Yeah, I've got two hands popped. I think Mike Evans was first, so Mike.
• Yes, on page 25, I'm just wondering what the impact has been and will be on the transfer of funds to the WPP on the budget for investment and manager fees.
• So, you'll be aware that the debit pension fund is increasing its investments in the WPP partnership. It has equities and fixed income already there. We are now going into alternative investments, private markets such as infrastructure and private credit. Basically, the WPP partnership fees have increased, as you can see on the budget side, there's £6 million forecast for next year, but those are fees on £1.7 billion of assets. So that calculation has been taken, what we've already got invested in WPP, what we expect to invest in 24, 25, which brings us to basically 50% of the debit pension for now is invested in the US pension partnership. And if you do a calculation of that, it averages out to about more .35 basis points on fees and when you look at that figure, as opposed to the actual £6 million, you look at the £0.35. That's really competitive against other fees from the investment managers. And that's basically, and as we move forward, you'll see this management fees increasing for WPP and BlackRock, Shoulders and Partners Group potentially decreasing. However, another variable we've got to remember is that because the assets increase or reducing value during the next year, due to market movements, it's obviously an estimate at this point in time. I don't know if it's going to happen to markets in the near future, but that's the current position with it.
• Okay, Mike, thank you. Richard, your hands up. So over to you. Can you hear me, Richard? (mumbles) No, I think he's frozen, isn't he?
• Yeah, looks like it. (mumbles)
• I think it was because Richard wanted to ask something. (clears throat) (mumbles)
• I think what we'll do is move on and then Richard's point, if he wants to ask something, Anthony, we'll pick that up outside the meeting rather than he's obviously got connection problems. Okay, so on that basis, can we, is everyone happy to agree this report, if you could signal your content? Thank you, thank you very much, everyone. So moving on to item 4.4, which is the cash resistance conciliation statement. Anthony, is there anything you want to highlight for us here?
• Just to say, Chair, that the cash elbow commandment show was 15.4 million as at the end of December. As I've said previous meetings, this is immediate cash requirements to pay pensions, lump sums, investment margin costs. But I have got some figures now for end of March and that figures are on about six million Powermark and that's the figure we like to keep between four and seven million at the end of the financial year to minimize the amount of cash held, but to me it was to pay expenditure in April before contributions come in. So happy to get any questions in our chair.
• Just for clarity, Anthony, any interest on those cash balances? He cruised to the fund, doesn't it?
• Yes, as a separate cash show analysis we do, an interest is calculated daily, and of course the pension fund, yeah.
• Right, thank you. Any further questions for Anthony? Can we agree this then, please, if you could signal, board members could signal that you're happy? Thank you. So moving on then to item five, which is the admin, 4.5, which is the pensions admin report, which I think Kevin will take us through.
• Thank you.
• Good afternoon, I'm Kev Jarad, I'm the pensions manager. I've run through the regulatory updates. Point A is the McLeod exercise. You're all familiar with the work we're undertaking for the remedy period between the 1st of April 2014 and the 31st of March 22. The main focus of the last few months has been on reconciling and validating the data received from Pembrokeshia and Kamalbenshire, and we've also been undertaking query resolutions for those two authorities. Point B refers to the actual regulations and guidance, which was partially issued. We've also had some queries with the statutory guidance, in respect of interest, taxation, and in the intervening period, there's also been another consultation issued which we've responded to. In order to alleviate any ski member concerns about the McLeod exercise, what we've done is, providing update in the newsletter issued to our ski members, there's also information and FAQs, videos on our website. Just reassuring ski members they don't have to do anything and will automatically reassess the benefits for them. (clears throat) Part D then, there was a judicial review held in February regarding the impact of the McLeod judgment on the cost management process. This was brought by the BMA and the FBO. My understanding is that this appeal has been rejected, so therefore the costs of McLeod will now fall as a ski member cost whereas the FBO and the BMA were trying to allocate it to an employer cost. So that's a mind-standing of the outcome of the case. The last meeting also raised about pensions dashboards, so statute of requirement that we, underneath the pension scheme act, that we enable ski members to have access to the pension information in one place online. We will need to increase resources to do it. We presented a delegate also report to Chris Moore. He's approved it. We've gone out to advert the closing data today. Interviews will be held on the 31st of May. The initial project worked when taken by that individual would be focusing on data matching, calculation of value data which would be the data which have to be updated to the dashboard underneath legislation and also the provision of ABC data. If I move on to the Bridges Register, that's the normal update in respect of refunds which have not been paid within the five-year period. This is due to ski members not responding to our request. I connect, I've run through this at each meeting just to make you aware, it's not a legislative requirement for employers to update their monthly basis with their scheme data. So what we do is we are giving courage and support employers who want to upload data to a monthly basis. So in respect of Colle Caritigo and Colle Cigar, they're still working on another extra two forward to us. Pembroture College are liaising with their payroll provided, provided another extract. And David Post police have moved their implementation data from April this year to September. And that was due to their internal resources. What I want to try and do is put in perspectives. I know I always have questions about this and I know you're focusing on the few but I think what you need to also look at is compare us to other funds nationally on how many employers they have given monthly updates. We've got over 90% of our fund given our active membership data coming in monthly. So when you look at the numbers, although there's a number of employers, when you look at Pembroture College, that's roughly about 1.9% of our scheme membership base. Colle Caritigo on is 0.4%. So it's very small numbers. Yes, there are four, five employers left but we're talking less than 10% of the scheme membership. If it is within our remit to enforce employers to provide us with monthly updates, we would proceed along those lines. But unfortunately, it isn't in legislation. So like I said at the outset, what we do is actively encourage employers to move this way 'cause it will be easier for them and support them in every way we can. And we want the next item, which is the GMP reconciliation. Again, this is something which beyond the end to the very last member with a GMP retires because HMRC said they will only resource the queries when the individual member reaches state pension age. We've also undertaken business continuity planning where we've undertaken a successful DR test and what we do is we log in separately and we run the DR test up to the creation of a box file and the only difference between that and non-run is we literally don't send the live box file. Moving on to the workflow, I don't propose to go through every single item but I'm happy to take questions on any of the workflow like things or anything else I've gone through.
• Well, thanks for the update, Kevin. Can I open it up for any questions? Any board members got any points they want to raise? I got one actually, Kevin. It was helpful to have the update on the dashboard. I noticed that the regulator will be responsible for ensuring compliance and enforce this. Do we have any, or have they given any indication of how they'll do this and what their timescales will be?
• Yeah, it's in the report. So we've got a one-year leading period and that was starting September of this year and three months prior to that, we'll have a stronger nudge letter from the pensions regulator requesting information from us to see how prepared we are. So until I get that letter, I want to tell you what's in it but as soon as I do receive it, I bring it back to committee and obviously then board.
• Okay, thanks for that. Right, any questions at all? No? In that case. Can we agree with this report then please? If you could signal, yeah. Thanks very much, Kevin. The update and we'll obviously have this again at the next meetings. Thank you. So moving onwards to item 4.60, we see the breach's report. Anybody want to say anything about this? I notice there's no red ones this time which is good. Is there any questions from anybody? Can we agree with this then please? If you could signal, thank you.
• Right, thanks Richard. 4.7, I think we're on 4.7, aren't we? 4.7, the risk register. Firstly, I think this is a really helpful presentation, the new presentation that you advised us last time. Anthony, do you want to just highlight any issues for us please?
• Excuse me, Jack.
• Good.
• Okay, Stephanie.
• Right.
• Okay, so moving as a system can come in. We undertake significant work on the rest of the register to make it slightly more user-friendly and also at the same time, we've reviewed every single rest that's out there and also their scoreings. And then we've also assessed whether because the board previously fed back to us, can we review them to see if any can be taken off or added? And to that effect, I'd like to go through some of the changes that we've made to this. Okay, if you'd like to look at G8, which is on page 53, is a brand new risk on environment and social and governance risk. Okay, so it's highlighting how important the, sorry, it's highlighting, it's it, we've put the risk in place to identify the, sorry, I'm having a bit of a bit. (laughing) To identify the impact of us not complying with the regulations and therefore, and the controls that we put in place then for this. Okay, the next change is actually to, it's on page 56, it's regarding interests. Okay, there's not been any change the actual risk itself, but because of the changes in the economy, that actually has happened. And what we've noticed is that previously it was, the impact was, we had it was substantial, we've downgraded that because when it actually happened, it was only a sort of significant risk, not necessarily a substantial. We've amended the probability from unlikely to possible because it's more, because it has happened now. Okay, which means the overall risk or has changed from a medium of eight to a medium of nine. Okay. Other than that, we have then categorized the, the new risk register is split into three categories now. There is governance and regulatory, where there's eight risk associated there. Then there's funding and investment where there's 13 risks, and then there's operational with 16. The idea is that today we present the whole risk register to you, but going forward, as you can see, if you look at the other secretary summary, we are planning for the next three meetings to specifically focus on one area at a time so that yourselves can feed back a minute and we can review in a lot more detail rather than dealing with all of the risks on there. I'm happy to take any questions on this. Thank you for that. Can I open up for questions, risk register? Any points anybody wants to raise hand up, I've got various hands up. I think, who was first? Tommy, you go for it, I think you were just first. So, over to you. It's probably the same question as everyone else. I was just going to ask him, going forward, if it would be possible to have a cover sheet for this, don't just highlight any changes or alterations that we've been done. To pick up on the point, on the executive summary, there is details of any changes that we make and we'll put on there, is that OK with Tommy? OK, Tommy, yeah, thank you. And Richard, hands up. Hi, hopefully you can hear me this time. Sorry about that drop off last time. The new format looks really, really good and very helpful to have it split between the uncontrolled and the controlled risk. My only question was some of the controlled risks look a little higher than they did previously, or am I just misreading that? Just wanted to clarify if there'd been any movements in the risk. Just some of them, we looked to see more medium risk, sort of controlled risks now than we did previously. The only risk that actually changed was the one I mentioned about the interest rate risk, all the others had stayed the same, apart from the new one that had been added as well. Everything was exactly the same as last time. The over five officers had reviewed this and assessed to see if they were still relevant, the score ends. And so, as far as we said, it may be because it's in a slightly different format. It may not be in the same order you saw at last time, which may have affected the scoring. Now, that's fine then, thank you. All right, thank you for that. Any further questions? No? Your hand's still up, Richard, by the way, yes, Conda. Right, OK. Well, I think this is a very helpful new format, and we welcome it. And I think the idea of looking at each section in depth during the year is something we should welcome. However, I do think that if there are any adverse movements in any risk, which is not going to be examined in detail at the meeting, it's very important to signal that. Obviously, we don't want to be looking at governance and regulator in finding we've got a problem in operation, or so it's very important that those issues are brought forward. So, but on that basis, I think it's a good move forward this. So, thank you. Can we agree this, then, please? Based on what I've said, hands up? Yeah, lovely. Thanks very much, everyone. Thank you. So, moving on to item-- that was item 4.8 now, which is the governance policy and compliance statement. So, it's like you're entering. Yeah, some good share. So, we've done a review of the governance policy and compliance statement that the policy itself starts on page 65 of the APOC. And just to remind you, the governance policy sets up the governance arrangements of the fund in terms of items such as terms of reference to the pension committee and delegation arrangements. There haven't been any major changes to documents. However, on page 93 and the terms of reference to the pension committee, some additional items have been included to highlight the work pension committee does in monitoring the delivery of the responsible investment policy and considering ESG factors. The other change is on page 95, where a section on trade-- sorry, I'll do that again. I've got the page numbers there, sorry. There'll be major changes, but in the terms of reference the pension committee, some additional items are said. The other change is on training and has been included as this is a new area of importance of the fund in ensuring committee members and officers haven't maintained the knowledge skills required. Also including the document is the compliance statement. The sets of the funds compliance are best practice. As you will note, the fund is not fully compliant in all areas of section A or section B, although the fund is compliant with other areas which are applicable to the fund. This is a complier explained report, so other funds are in similar position to us there. The compliance statement has been reformatted, so the fund can measure its compliance against each area within the heading as opposed to being either fully compliant or knocked with each head in. There's also important as highlights areas which are not applicable to the fund. So basically, there have been some change of policy to give their own page numbers there. There have been some change which I mentioned. There has been reformatted. And what we've done from page 74 is we've added some additional explanatory notes and what was in the previous compliance statement to explain fully why we're not fully compliant in some of the areas. Happy to take any questions.
• All right, thank you, Anthony. Can I open this up for questions from anyone? I was gonna ask about the non-compliance, but you've covered that partly. Anyway, Richard, over to you.
• Yeah, thank you, just again on the non-compliance. It was, I noted it was because there were members who, it was all commodities to members rather than wider than that. Was that something that you were comfortable with or did you need more input from members such as Pembroke and Cara De Guillen?
• Thanks, Richard. We have come through it, how we said that. We will look to review this at some point. We are aware that some of the funds to have other employers on the committee, however, because we do have employers on the pension board such as this. We feel it's appropriate the moment, but we are gonna consider that in the coming year as well to see how we potentially reveal the structure if we need to.
• Thank you.
• Thank you for the response. Any further questions, don't? In that case, can we agree the report please? Signal, thank you very much. So moving on now to item 4.9, which is the investment strategy statement. Obviously, that's a very important document. Enter me, do you want to take us through this, please?
• Yes, thank you, Chair. So as the Chair says, this is the investment strategy statement. As noted in Executive Summary, the statement is an important governance document for the fund. It sets out the current investment strategy of the fund, provides transparency in relation to how the funds investments are managed, acts as a high-level risk register, and has been designed to be informative for all stakeholders. So you will see from the Executive Summary, which is on page 81 of your park, we've set out the Strategic Asset Allocation Review that was undertaken and approved by the pension committee and you received last year. So we've set out there each of the asset classes, the previous strategic asset allocation and the revised one and the change. As you can see, there's been a minimal change whereby some equities are going to be reinvested in private credit, which is, as I mentioned earlier, an additional investment through the Wales Pension Partnership. There's been inclusion of additional risk and operational risks. This covers the area of stock lending, high risk of a possible default, and loss of economic and voting rights of fund assets. The fund is relatively new to stock lending, so this wouldn't have been a risk when we produced this document previously. Another area is the highlighted current approach to pooling. The fund is around 50%, as I said earlier, of fund assets in the pooled and 30% of the pooled management and 20% held outside the pool. For the assets not yet pooled, justifications are provided as to why these haven't been pooled. For BlackRock Active, Japanese equities, for example, these are performed really strongly. There's a case to retain these. BlackRock Safe was procured prior to pooling, and with real estate, there was no opportunity to invest in this asset type at that time. The structure and governance arrangements of the WPP have been included. We felt there was an important illustration to put in there to remind board and committee of a structural waste pension partnership and all the third party providers that we utilise as part of the governance structure. The stewardship section has been updated twilight at WPP as a signatory to the UK stewardship court. And also the strategic asset allocation has been updated, as I said earlier, to affect the 5% between equities and private credit. Happy to take any questions, Chair.
• Thank you, Anthony.
• Thanks, very clear, comprehensive paper. Are there any questions from the board members? Mike Evans?
• Yes, thank you, Chair. I'm looking at page 85 under item two, investment objectives and beliefs. On the second paragraph, where it mentions on the reduced reliance on employer contribution over time, I'm just wondering if there are targets set for that objective.
• There are no targets set, it's very challenging to set the targets. However, if you look at the paragraph underneath, where it says what maximise returns, subject to acceptable level of risk and whilst increasing certainty for cost to employers and minimise long-term costs, it's very difficult to put an actual target on that, but obviously it is monitored regularly, quarterly basis by the committee.
• I guess just the other thing to say that, you know, if you look at the trend in our membership figures, over a period of years, we have got that gradual maturing of the fund where we've got a slight shift away from active members towards an increasing proportion of pensioners and deferreds. And this strategy therefore aligns with that trend. So it's about managing that risk.
• Thank you.
• Thank you. Any further questions on this paper? Not the singularly hands got. Okay, thank you, Anthony. If we can agree this, please. And if you could signal, as usual, thank you very much. So moving on then to item 4.10, which is the business fund, business plan for the fund management program. So we're going to talk a little bit more about it.
• Thank you.
• Thank you.
• Thank you.
• Thank you. So this is the business fund business plan for the current financial year, Anthony. Would you like to introduce this before us?
• Yes. So this is page 99 of the PAC. The purpose of the business plan is to provide information about the fund, how it is run, explain the background and governance structure of the fund, outline the principal responsibilities, introduce the funds key documents, highlight the funds investment strategy, including strategic asset allocation, provide key statistics for the fund, outline the financial budget, and outline priorities and business objectives for the year. So as you can imagine, this business plan doesn't change substantially from year to year, the figures obviously change, because the majority of these now are as are 30 for the March 2023, and explains how the fund is run. So just to highlight the fact that on the pension committee, the chair is to a councilor William Williams, the committee members, councilor Dick Thomas, councilor Neil Lewis, we have got a new committee member, councilor Peter Cooper, who is on the committee now, and councilor Cooper will be attending various training sessions and seminars and conferences during the next financial year. The government structure hasn't changed. And basically chair, the main area to focus on is the priorities going forward. So if you look, we do the ongoing topics, which are the regular issues each year, and then we go into developments and new topics, so you can see they're both member training, whether it's on the committee or pension board, the cloud, pensions dashboards, data quality, and actual evaluation. That's all I need to say. Chair, I'd be happy to take any questions on the business plan. Thank you for the introduction. Any questions for Anthony on this document? As he says, it does follow the format from previous years. I'm pleased to see the emphasis on training, though I would point that out. I think that's very, very important for committee members. Any questions from anyone? No, I'm not seeing any hands go. In that case, can we agree this please if you could signal? Thank you. So then moving on to 4.11, which is just a report of members and officers training for the last year and planned for going forward. I'm sorry if you want to say anything about this. No, I think it's self-explanatory. Obviously next year's training plan, these are what we expect. The attendees to be circumstances may arise. We attend these may change, but that's the current position as it stands. Any questions on this? I'm not seeing any hands. In that case, can we agree this please? Thank you. And moving on to 4.12, which is the WPP business plan. Yes, thank you, Chair. So I'll go through this business plan in a bit more detail, because obviously, because it covers all the eight considered authorities and Wales, it is more detailed. So you can see the executive summary page 17 of your PAC. So again, the purpose of this business plan is to explain the background of government structure of the WPP. I've been the priorities and objectives of the WPP of the next three years. Introduce the WPP's policies and plans. I've been the financial budget for the arriving business plan period and summarised the WPP's investments and forms of objectives. As I said, it's pretty clear documents. I'll pick up the salient points. So things like the introduction and explanation about the WPP and the governance and the structure, as I said earlier, that's as it has been. You can see on the bottom page 123 of your PAC, the amount of engagement and frequency it occurs for WPP, obviously, because of the pool, which is £23 billion of assets held by the eight firms and Wales. We need plenty of engagement with funds themselves. We need engagement to all the third party providers and the governance structure. And we need engagement to joint governance committee with a decision-making body. The risk management, obviously, any substantial changes there. We amend it. It hasn't been any objectives. There are as are the beliefs on the policies, but as policies. We are continually reviewing the policies of the Wales Pension Partnership. And you'll see there that there is what I will highlight. In fact, there's an additional policy there, which is the governance piece on page 127, which is the breach as narrow as policy. So that's been approved by joint governance committee as well. The work plan on page 128, you'll see there's various here. We expect that to enter different areas again, which starts off with governance. For example, some of the areas we do annually, but one area, which I can focus you on, is oversight advisor procurement process. That's going to be done in 24/25. That's currently high months as your oversight advisor. That's going to be procured. We're also going to be procured a vote and engagement provider, which is Robica in the coming financial year. And then next year, which is 25/26, will be the legal services provider, which is currently Burgess Salmon with procurement for that. So it's important to remember that because the WPP is still a public body, it's not body in its own right, but oversees public funds that we do do a full public procurement process for any third-party providers we appoint. Then there's some annual work that we do regularly, such as the risk register, for example. If I move on to investments in reporting, as you can imagine, the majority of this, if not all of them, are done on an annual basis. We are continuing to review and reporting the way it's pension partnership as we go into more private markets, as I mentioned earlier, such as infrastructure, private credit, private equity, and upcoming real estate, the reporting needs to be more broad, if you like. So we cover every single asset class. So what we're going to be doing in 24/25 is reviewing the report to see how we can encompass the private markets pieces as well. As the chair just said, training is important. So you can see there on page 29, communication and training. We have substantial training events, as you will know, from attending online, on a quarterly basis, the way it's pension partnership. We feel this is an addition to the pension committees themselves providing training. And you can see in the next year, financial year, we're going to be doing on trading and product knowledge and cybersecurity policies, response from investment, and market understanding regulatory requirements. Then, we've got the budget down on page 31 of the park. And then, I think it's important that, you know, we set out transparently with sub funds. We have set out already in the way it's pension partnerships, or the start of page 132. You can see that the sub fund, the performance benchmark, the participating funds. So you'll be aware that the double pension fund, for example, is investing in the global growth equity fund, and the sustainable equity fund as well, on the equity side. And you can see the underlying investment managers there on that page as well. Then, the fixed income side. Double it is investing in the global credit fund, which is the top sub fund there in the middle of page 133. And you can see the underlying managers there on the other sub funds. And then, we've included the private markets, pieces. As I said earlier, I won't repeat them, but they're in this business plan as well. It's also important to remember that the underlying investment managers are the managers that were set out at that time, but Russell Investments as the investment management solutions provider. They are continually reviewing the underlying managers. And when they need to make any changes, that's supported to the officer working group, which then goes for the joint governance committee for information. Russell Investments have the remit to change managers, but on a consultative basis, they just inform GDC of the managers that are changing, and they're the reason for changing them. But I'll be taking a question as chair. Thank you for that. Any questions for Anthony on this paper? Well, you're just thinking about that. It's probably worth pointing out that the WPP do engage with pension board chairs every six months, and I will attend the meetings, and that's something that other pools don't do that I'm aware of. And I think also that the training that the WPP put on, which is open to all board members and committee members across Wales, I think is a very good thing as well, which other pools don't do. So there is a lot more engagement, I feel, from the Wales pool than compared to some other pools that exist in the LGPS. So I think they should be complemented for that. Other than that, I think it's a clear document. So on that basis, and there's no questions, can we agree this please and signal your agreement? Thank you. Item 413 is the pack of papers through the joint governance committee update. Again, Anthony, I think, over to you. Thank you, Chair. We commence this report to our pension committee during 23-24. We found it helpful. It's not the committee did enough to listen to the webcast in detail and go through papers in detail. We could give an update on overview to our pension committee and therefore to yourselves on the work of the last joint governance committee, which is on the 30th of March, 2024. So there was a WPP business plan, Q3 reveal. And taken, this is patients with 35 year pack, by the way. And it provided details in the governance and other areas of the business plan, as I mentioned earlier. The training plan was set out, as I've said. And then the operator reports are to remind board members, the operators waste stone, and they provide a report to each of the joint governance committees. They provide report on the assets and the management. Snapshot the equities in fixing fund launches and changes. The markets and the corporate update and engagement. So on page 137, your pack just highlights the host authority update. As you know, command is host authority for the way of pension partnership. So one of the areas, the services that the command does is run the procurement exercise. And we are grateful to our procurement department for the work they put in, because these access are pretty substantial. So the real estate procurement is the most recent one we're doing. The invitation to tender for that was issued in the 90th of January. Responses have been received and have been evaluated now. We still on target to provide a recommendation report to the July 2024 joint governance committee for approval with a conduct due to be awarded in August 2024. The, as I said, the training plan for 24/25 was presented, which I just mentioned, the business plan, then the business plan, the risk register. So it might be worth mentioning because we've spoken with the risk register for the debit pension fund. The officer working group is responsible for maintaining the WPP risk register. And they report any changes as we do as a committee for our report. There's a dedicated risk subgroup, which is made up of officers from each of the eight constituent authorities and Wales. They meet online regularly to go through the risk with the assistance of Hyman's Robertson. During the first quarter of 2024, reveals undertaken are the risks within the governance and regulation, sexual risk register, and risks G7, G1 to G7, and G12 to G15. You can see all this information on the commands come to comes the website under Wales pension partnership. So you can see the detailed agenda and minutes for that report. The policy reviews, there's two policy rules undertaken. The governance matrix and communications policy. You can see the data around that. And in the middle of page 139, we've got the operator update, the performance reports, and the private markets update on infrastructure. So G7 Groven represented the joint governance committee as a first presentation as infrastructure provider. And I think the joint governance committee felt it worthwhile having one of the private markets managers presenting and each of the joint governance committee, so it'd be a different asset class next time. There were some exempt items then, such as their BECO engagement report, the sponsor of estimate climate risk reports, the doctor procurement recommendation report, and securities lending chair. So, as you can see, and then the business plan review was on the following pages. There's a lot of information, a lot of papers that go to the joint governance committee on behalf of the Wales pension partnership. A diverse range of papers on governance investments and regulatory changes. So I hope you find this brief update sort of gives you an overview without going into the detail of the joint governance committee. And I think it's a valuable paper to take forward, but happy to get any questions, Chair. Right, thank you for that. It's quite a lot of information here. Is there any questions anybody wants to raise at the moment with Anthony? I'm not seeing any hands pop up. The one point I was going to make is if you look at pages sort of 165 onwards, you'll see that the excess returns are reported gross, and one of the points being made at the last pension boards meeting, Chair's meeting was that they should be shown net as well as gross. So to give a sort of clear indication of added value and performance, and I think that Russell are going to take that on board. But that's all I wanted to say. So, not seeing, I don't think anybody's got any questions that they want to raise. No. Richard is shaking his head, nothing in the room. In that case, can we agree this, please? If you could signal, you have to approve it. Thank you. Item 414, which is responsible investment update. Again, Anthony, I think this is for you. Yes, thanks, Chair. So, this is Pierce underneath the three of your pack. As the Chair mentioned, this is the RA update as of December 2023. So, Hymen's Robertson are the oversight advisor said earlier. They provide responsible investment services to us. The quarterly WPPR update sets out recent R activity and information following sub funds, which the other pension fund is invested in. So, as we know, we've got the global growth, the sustainable equity and the global credit sub funds, and then there's updates on the stewardship summary and the appendices as well. So, as you, as you, there's a lot of information here again, Chair, but I'm not going to go through it in detail because it's quite self-explanatory. The information is all there. I think it's important you consider one area which is stewardship themes. So, this is in the middle of page 185. So, Rubikor, the voting engagement provider, and the themes that WPPR put forward to Rubikor ocean by diversity, responsible application of generative, artificial intelligence, and both of the pay and the shortlist. So, we provide ideas to Rubikor, as I say, the West Pension Prize ideas. It's up to Rubikor if they take those themes on board. And we'd like to say that they did take those two themes on board from the West Pension Partnership. And then, another shortlisted theme, which is hazardous chemicals, that could be mentioned as what they call a runner-up, if you like, on top of those, a few themes as well. So, we have good engaged Rubikor. We are obviously one of their major clients as a pool, and it's pleasing to note that they put the themes down into their reports. There's also an escalation principles piece we're going to put in the stewardship report as well. We are well aware as WPP that engagement is an important aspect of whether we're the investment managers and stocks. If engagement doesn't work, what happens? So, there's an escalation principles we've put within the stewardship policy now, which will be revealed and what happens when engagement doesn't work. So, that will be in the next duration stewardship policy. Then, there's climate and the history risk reports presented for the UK opportunities and emerging market sub-friends. There's a stewardship summary then, which you can read. There's a lot of facts and figures there. But I think you'll be grateful for the fact that the response from investment now for WPP is one of the main priorities, but encompasses so many different areas that we have to focus on certain themes. And that's why we can't cover every single theme or every meeting, but I think you'll agree that the majority of things we are covering are the ones which are the priorities at the moment. And you can see a lot of detail around that chair, which I'm happy to consider taking any questions on. I'm not the expert, but if I can answer some, I will do. If not, I can refer them then to Hymn's orbits in Oruvico. Thank you, Chair. Well, thank you for that. Comprehensive very introduction. Any questions or issues to raise with Anthony? While you're thinking, I've just got one point, Anthony, which is there's obviously a lot of activity going on with responsible investment. You know, the community at large is an issue that they're always quite interested in. Is this reporting annually in some summary format by the pool? And also, will it be picked up in the funds report as well? When we do our unreport for the Dubber pension fund, we will include aspects of this which refer to our particular fund, but they're also going to be the unreport for the Wales pension partnership, which also includes some misinformation as well and summarise format. That's reassuring to hear. I always feel that the LGPS isn't particularly good at publicising good news, and I think it's really important that you get these sort of messages out. So that the public at large, you have more informed discussions than we perhaps had in the past. OK. Well, if there's no points of detail, yeah, Randall, yeah. Chair, just from my perspective, I just want to kind of share with the Board. I mean, I think, you know, with ESG constantly rising up the agenda in terms of relevance, importance and interest for members and other stakeholders, I think there's always a constant kind of dialogue, isn't there, between engagement versus divestment, what the right thing to do is, and I guess what this really sets out for me in a really transparent way is exactly what we've done with ownership of those assets, what that engagement piece looks like, and we've been able to kind of set that out, I think, probably, for me, for the first time in a really open, transparent way as to what that WPP ownership means, and therefore helps inform that discussion. Both for you as the Board, and I guess for individual members, definitely as well as well as a partnership. Right, yes, agreed. Thank you. Any further comments, yeah, Alan? Yes, thank you for following on from what's been said. It's interesting to note on page 188, Microsoft, that shareholders have requested a report that considers the company's human rights due diligence, including any mitigating actions and tracking of outcomes with an example of that Saudi government may have access to data enabling unchecked state surveillance as a result, and that that impacts on human rights. So it's obvious that such awareness now is becoming more mainstream, even in these huge companies like Microsoft, the Manchids shareholders, which is a good thing in my little view. Thank you. Thank you. Any further comments? No? In that case, can we agree this report, please? If you could signal for your happy, thank you, everyone. Moving on then to where are we item 415, which is the minutes of the pension fund committee of the 27th of March. I'll just take these page by page, and if anyone's got any questions if you could just put your hands up and we'll take them from there. So page 205, 206, 207, 208, 209, 210, 211, 212, 213, 214. Are there any questions or issues? Not seeing any hands go up. Can we just note these or agree these, please? Thank you. So that takes us on to, what's track of where I am? It's item five, I think, isn't it? Which is the pension fund board's monitoring report. Is there anything you want to say about this? This is the budget monitoring to the 31st of March, 2024, with the actual expenditure of £21,200. And with a forecast variance of £3,000 under spent. And the reason for that is mainly because of the hybrid nature of events and conferences at the moment, which is reduced to cost then, because there's less travel costs and there's also tends to be, because there are online events that tend to be cost less. Thank you. Any questions or comments? No, not seeing any hands. If we can agree with this, then please. Thank you. Item six is the work plan for the year ahead. I don't know any changes to this, Anthony, or is there anything that we've added? I don't think there is, is there? If I can pick that up, please chat. Sorry? The only thing would be in the current meeting we have in now, there is actually going to be two will be going to engagement events. One of them was scheduled in for the July meeting. That's the only change from the schedule we saw in the previous meeting. Thank you. Any observations, comments from the board? No? In that case, we can agree that, please, if you can signal. Thank you. I'm going to item seven, which is an issue. Councillor LENNY has written to me about this investment, and I've decided that we should take it at this board meeting. So what I'll do, I'll ask Alan to introduce the paper, and then there'll be an opportunity for officers and board members to comment as appropriate, and we can take it forward from there. So, Alan, the floor is yours. Thank you, Chair. Thank you for allowing this to go on the agenda. I, as you will see, it has to do with the, with built investments as it impacts on the WPP, the other, David, pension fund, and indeed, on Camar Vincher, which is why I've got it up. A bit about built to begin with, built energy development holdings limited was incorporated in 2021. This part of the built group of companies, which it seems a founding in 2018, with links to Grayling Capital, an Edinburgh-based private investment group with a track record of real asset investment and management. The built group has a clean energy investment strategy, focusing on onshore wind development with co-location of solar PV. Wales, this scene has been appropriate for investment, consistent with the Welsh Government's future Wales National Plan 2040, which indicates a presumption in favour of large-scale wind energy in pre-assessed areas, and which provides a favourable planning framework for additional sites. Built energy development holdings limited is the holding company for a number of subsidiary companies then. One for each of us proposed 16 onshore wind projects in Wales. Now, built needed to raise capital to finance the formal planning applications, and in April 2022, Copenhagen Infrastructure Partners, CIP, a large financial investor with extensive experience in the renewable energy field, agreed to provide built to the development loan. After completion or consensus expected, the projects will be sold with proceeds being able to repay the development loan, which brings us to the Wales Pension Partnership involvement chair. In 2022, the WPP agreed to invest in green energy, by taking a 35% participation in the existing built development loan, a sum which amounted to about £68 million. This agreement was signed in December 2022. Subsequently, Bigg made known that electricity from one who has proposed energy parks, Nant Mythil, wind farm site in south province, just a stone's throw from the English border, would be carried on steelpile and the distance of some 50 miles to substation near Camarlin. The Towyusk proposal, as it's called, only became known to us when none known as the Towy Valley received letters in January 2023, from Green John Comrie, a subsidiary of built energy development holdings, formed to connect electricity generated with the built developments to the national grid. And I'll turn to the language of heaven for the next bit, if you'd like to grab your headphones. The revelation caused quite an uproar chair, with hundreds of people attending public meetings in a number of towns and villages. At the moment, the Comanche County Council is investing £17 million, mainly levelling up fund money on a 16-mile traffic-free path for cyclists and pedestrians through the Towy Valley, which is one of the most scenic areas in Wales, with several ancient castles, mansions and gardens. It would attract visitors from all over the UK and beyond, with potential to generate around £4.5 million a year for the local economy. The council considers that a line of steel pylons down the valley would cause significant damage to the landscape and impact on scheduled monuments and listed buildings, and therefore seriously conflicting with our investment as an authority. So for this reason, also as owners of council farms in the proposed path of the pylons, and consistent with the public outcry, the council has declared that it supports residents and local businesses concerns regarding the proposal to erect pylons to link Nant Mythill Energy Park to the National Grid and Comarvenshire, and believes that boot energy should work with landowners to place cables underground. Since then, the Towy Tavy Plan was announced to link a wind farm near Lampeter with the substation near Comarven, again via steel pylons crossing our county, and which is causing public outcry again. To underground the cables would remove objections overnight. This has been the... that's what's been happening since 2018, with the 132 kilovolt connections in Denmark, where CIP has its HQ. The country for the board today has Green Gen's second non-statutory consultation on Towyusk has just closed. Following the first consultation for the Towyusk Seam, in the early part of 2023, and following the... there was a reasonable expectation that Green generation or boot would obtain the up-to-date and relevant information required in order to be able to reveal and evaluate its proposals. However, arising from the second consultation, a number of concerns have been expressed as to the approach and attitude of Green Gen or boot, which should be explored, in case reputational damage could result with a negative impact on the WPP and the David Pension Fund. I believe it's valid that questions are asked on an issue which affects the WPP investment, such as did the company address, or has the company failed to address, crucial issues like the comparative costs and impacts of undergrounding with cable plowing, compared with conventional overhead lines via pylons. Has it already committed to a predetermined position without fully considering the evidence? I would be grateful, finally, if the board would support a resolution which asks the David Pension Fund Committee to explore, discuss, and consider whether there is cause or opportunity for the David Pension Fund or the WPP separately or in conjunction with its funding partners or associates to obtain a release from any arrangement or funding of one or more of the companies within the build group, and to explore whether any such release could entail a recovery of any some advanced to date, or of any part, or could entail the withholding of funds, indeed. To explore, then, whether in the context of any funding or relationship which exists, the David Pension Fund and any of its funding partners or associates are able to engage with Jenn Cumbry, or built towards ensuring appropriate and expedient direction, such as full and proper evaluation of undergrounding cables by way of cable plowing. Request law firm Burgess Salmon, LLP, and the build group to clarify whether Burgess Salmon has, at any time, assisted one or more of the companies within the build group, and finally, to initiate a discussion with each of the funding partners or associates, and with a build group, an off-gen relevant to issues to be explored pursuant to this resolution. Thank you for your patience, and thank you for listening. Right, thank you, Alan. Perhaps open this up for questions and discussion, but Anthony, is there anything you'd like to say first before the board comment? Yes, thank you, Chair. Adjok, Councillor and Lenny. The opportunity to rise when Kupla did our mix with the investment manager for this project approached the Wales Pension Partnership to see if they're interested in investing in this project. As Councillor Lenny's just said, the CIP Copenhagen group were already invested and provided development law. So this was an opportunity for Wales Pension Partnership to invest in the development of the wind farms themselves in the project. Nothing more, just a development. So each of the considered authorities and Wales all eight considered the investment opportunity. The majority of them, seven of the eight, decided to make the investment at a maximum of 10 million pound each, towards a six-circus 68, 70 million pounds. And this was found as a perfect investment opportunity for the development of the wind farm. Couple of thermics we invested in were not invested directly in built. And not as a proposal was put forward to considering authorities, which they accepted. So that's all mentioned, Chair. At the moment it was the opportunity to do investment of development, which we took forward. Right, thank you. Any questions or comments from anybody in the board? Not seeing any hands go up. It's probably worth saying that the motion or the resolution that Alan's described is slightly different, isn't it, from the one that was in the papers. So it might be useful if I just read through that again, just so we're clear if you're comfortable with that. So the resolution is that the David Pension Fund Board agrees to ask the David Pension Fund Committee. So we're being asked to refer this on to the committee to consider, which would be the sensible way forward, given that the committee are the body responsible for investments. First, to explore discuss and consider whether there's a case or opportunity for the David Pension Fund or the WPP separately or in conjunction with its funding partners or associate to obtain a release from any arrangement for funding that won on more of the companies within the view group and to explore whether any such release could entail a recovery of any some advance to date or of any part could entail the withholding of funds. So we'd ask to explore, discuss and consider. And the second one is to explore whether in the context of any funding relationship which exists, the David Pension Fund and any of its funding partners or associates are able to engage with the GG and C/Bute towards ensuring appropriate and expedient directions such as a full proper evaluation of the undergrounding of cables by the way of cable plowing. And then the next one requests that the law firm Burgess Salmon and the Butte Group clarify whether Burgess Salmon has at any time assisted while on more of the companies within the Butte Group. And finally initiate a discussion with each of the funding partners and associates and with the Butte Group and off-gen relevant to issues to be explored pursuant to this resolution. So we're being asked to refer this to the committee for the committee to explore and take forward these issues. I don't have any difficulty with that. Is there anything you want to say Anthony about that before we refer it on? Has anyone got any questions? I'm not seeing any hands go up. Are you comfortable to agree this? If we can agree this, can we signal that? I think yes. Seeing hands go up. Thank you very much everyone. So that's agreed Alan. And we'll refer this on to the committee and the committee meet in 19th June I think isn't it? Later in the next month sometime when they'll look at this in detail. I'll have no doubt this will pick this up when we have a further meeting. So thanks for that. Thank you for everyone for that item. So moving on then again. So item eight exclusion of the public. So I'll just read this. The reports relating to the following items are not for publication as they contain exempt information. As defined in paragraph 14 of part four of schedule 12A to the local government in 1972 as amended. If following the application of the public interest test, the committee resolves pursuant to the act to consider these items in private. The public will be excluded from the meeting during such consideration. So I'll be happy to agree that. And if so, can you signal please? Thank you very much. So we're now in private. Yeah. [BLANK_AUDIO]

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