Venue: Oberhausen Room
Contact: Susan Lightwing
Welcome and Evacuation Procedure
The Chair welcomed all present and read out the Building Evacuation Procedure.
Declarations of Interest
any declarations of interest.
The minutes of the meeting of the Teesside Pension Board held on 18 July 2022 were taken as read and approved as a correct record.
Copies of the minutes of the meetings of the Teesside Pension Fund Committee held on 29 June and 27 July 2022 were submitted for information.
Teesside Pension Fund Committee - 21 October 2022
The Head of Pensions Governance
and Investments provided a verbal update on agenda items considered at a
meeting of the Teesside Pension Fund Committee held on 21 October 2022.
The Investment Advisers had
discussed future strategy for investments including the potential for buying
Bonds which had been advised against for a number of years. In line with current strategy the Fund had
reduced its equity holdings.
The Fund Actuary had given a
presentation on the actuarial valuation and further information was provided at
agenda item 13.
The Committee had considered a
local investment proposal and agreed that Officers should carry out due
diligence and provide an evaluation for consideration.
A Board member asked whether
there were any concerns in relation to the companies currently invested in,
given the current economic climate and likelihood of recession. It was confirmed that through Border to Coast
the Fund invested in quality companies that would hopefully survive the
recession and also the risk was spread across multiple companies.
It was noted that with regard to
Employer Contributions, Employers had enjoyed lower contribution rates due to
the Fund’s performance but there was now potential for rates to increase. It was acknowledged that increasing
contribution rates from Employers would be difficult – particularly in the
current climate for local government which was both challenging and
uncertain. However if rates were
increased this would be in a gradual and controlled way.
Clarification was also provided
regarding the cost of redundancies. In
terms of cost to the Fund this was not an issue as the additional costs of
redundancy had to be met by Employers.
AGREED that the information provided was received and noted.
A report of the Director of Finance was presented to the Board on items scheduled in the work plan for consideration at the current meeting.
Annual Review of Board
In March 2021, the Pension Fund Committee agreed to a training programme following the participation in the National Knowledge Assessment. This was set out in Appendix B to the submitted report.
Some areas of the plan had been covered previously, including Environment Social and Governance (ESG) issues and McCloud. Other areas remained to be addressed – in particular the role of pension administration. This could be picked up through working with colleagues in XPS Administration. There had been significant changes of membership at the Board and consequently some issues and training areas might need to be revisited, either through the induction training for new members or through ongoing training.
Since 1 June 2022 Pension Fund Committee and Teesside Pension Board members have been able to access Hymans Robertson’s Local Government Pension Scheme (LGPS) Online Learning Academy which was intended to cover all of the ‘knowledge and understanding’ requirements that Board members were legally required to obtain (and Pension Fund Committee members were strongly encouraged to obtain). A lot of topics covered within the Learning Academy and it was recommended that Members set aside some time each week to work through them at their own pace. It was intended that the Learning Academy would form a key aspect of training delivery for the Board and the Pension Fund Committee. As with all training, participation and feedback would be key to ensuring it was useful effective and relevant.
Regulator Code of Practice Gap Analysis
In July 2018 the Fund commissioned AON to carry out a comprehensive assessment on compliance against Code of Practice 14. The outcome was reported to the 23 July 2018 Board meeting. Overall compliance was assessed as good, although several areas for development or further consideration were identified. These were listed in the table at paragraph 6.4 of the submitted report alongside comments on progress since that assessment was made.
The Pensions Regulator consulted last year on significant changes to the content and format of its various codes of practice. An interim consultation response was issued on 24 August 2021, however, the final version of the ‘single code’ had not been published.
Based on the initial consultation and the response to this, it looked likely that pension schemes would have the following additional requirements under the single code of practice:
• Establish an “effective system of governance” (ESOG).
• Carry out an “Own Risk Assessment” (ORA).
• Have a written remuneration policy.
• Write a policy on the appointment of advisors and service providers.
• Consider climate change in their governance systems.
• Build robust cyber security systems.
In addition to the imminent changes expected to the Pensions Regulator’s Code of Practice, the government had also recently indicated that it would be implementing the LGPS Scheme Advisory Board’s ‘Good Governance’ recommendations.
In the light of the proposed changes expected ... view the full minutes text for item 22/19
A report of the Director of
Finance was presented to provide Members of the Teesside Pension Board with an
update regarding the long-standing discrimination built into the Local
Government Pension Scheme (LGPS) regulations regarding the payment of survivor
benefits, and as yet unexecuted proposals to remove some of this
The Government carried out a
Review of Survivor Benefits in Occupational Pension Schemes (published in June
2014) as it was required to do so under the Marriage (Same Sex Couples) Act
2013 in order to consider the differences in survivor benefits between
different groups and the costs and other effects of eliminating those
differences. The Review estimated the
capitalised cost (eight years ago) of removing differences in survivor benefits
between opposite sex surviving couples, same sex surviving spouses and
surviving civil partners in all public service pension schemes at around £2.9
billion. Only some of the amount related
to the LGPS but nevertheless the cost to the LGPS would represent a noticeable
sum. No attempt was made to equalise
historic benefits following this Review.
The Goodwin Employment Tribunal
case was brought in 2020 against the Secretary of State for Education in
relation to survivor benefits in the Teachers’ Pension Scheme. The Goodwin case identified male survivors of
opposite-sex marriages and civil partnerships in the Teachers’ Pension Scheme
were treated less favourably than survivors in same-sex marriages and civil
The same position applied in the
LGPS and other public service pension schemes.
To date, no legislative changes had been consulted upon to make the
necessary changes to the LGPS regulations. Even when implemented the changes
would only apply to pensioners who had died since 2005 (as this was when
same-sex dependants could first get a pension in the LGPS and other public
service pension schemes). Also, the
changes would only mean pensionable service was calculated from 1988, not from date
of joining if that was earlier. This
meant the changes required to remove the discrimination identified by the
Goodwin ruling would reduce but not eliminate discrimination in the provision
of survivor benefits in the LGPS.
The Board would be kept up to
date with any future developments in relation to changes to the LGPS
regulations as a consequence of the Goodwin case. It was suggested that a letter was sent to
the National Scheme Advisory Board requesting further information in relation
to the timescale for implementing the legislative changes required to make the necessary
changes to the LGPS as a result of the Goodwin Employment Tribunal.
AGREED as follows that:
1. the information provided was received and noted.
2. on behalf of the Board, the Head of Pensions Governance and Investments would write to the National Scheme Advisory Board requesting information on the timescale for legislative changes following the outcome of the Goodwin Employment Tribunal.
A report of the Director of
Finance was presented to provide Members of the Board with details of an
ongoing consultation exercise on managing and reporting climate-related risks
in the Local Government Pension Scheme (LGPS), and to advise that a consultation
response would be provided.
On 1 September 2022 the
Government issued a long-anticipated consultation document on managing and
reporting climate-related risks in the Local Government Pension Scheme
(LGPS). The proposals in the
consultation were mainly aimed at Administering Authorities (AAs) of LGPS Funds
and were summarised in the submitted report.
A copy of the consultation document was attached at Appendix A to the
submitted report. The following points
The proposed requirements were
similar to those that already applied to trustees of larger private sector
pension schemes – those with ‘relevant assets’ of £5 billion or more had been
in scope of similar requirements since 1 October 2021 and those with assets of
£1 billion or more since 1 October 2022.
There was no proposed phasing in introducing these requirements to the
LGPS, they would come in force from the year starting 1 April 2023 with the
first report due to be published by 1 December 2024.
The consultation made explicit
reference to not wanting to encourage schemes to divest from energy companies,
but instead to encourage a (more gradual) transition to cleaner energy: “The UK
Energy Security Strategy was published in April 2022 and emphasises the
importance of investment in energy by the private sector to improve energy
security and support the transition to clean energy. The LGPS has an important
role to play as a major investor with a commitment to stewardship and
engagement. These proposals seek to support that approach to addressing high
carbon emissions and discourage any pursuit of lower emissions through
withdrawing investment from energy companies.”
This pragmatic approach was unlikely to placate pressure groups.
There was acknowledgement in the
document that data quality would be an issue, and administering authorities
would be required to report on their assessment of the quality of the data
available to them. The methods for analysing the data were also less than
perfect, and the document acknowledged this, for example stating: “We would
expect AAs to aim to do the best scenario analysis that they can, and to aim to
improve their scenario analysis over time”.
The document considered the increasingly important role the LGPS pool companies would play in providing data and analysis in relation to climate risks and recommended close working between funds and pools to ensure consistency: “Pool operators are required to report on climate risks in relation to pooled assets by the Financial Conduct Authority. If AAs’ strategies significantly differ it will be resource intensive for their pool to produce analysis for them. We expect to see this issue reduce in importance over time as more assets transition into the pools. AAs could also minimise this issue by aligning their strategies and targets within their pool and ensuring as shareholders that the pool’s ... view the full minutes text for item 22/21
A report was presented to provide
an overview of administration services provided to the Teesside Pension Fund by
The report provided information on the following:
• Member Self
• Pension Regulator
Cases by Month.
The overview covered the recent
regulations and guidance issued, much of which had already been covered in the
meeting. XPS were represented at the
National LGPS Technical Group regionally and kept updated on changes and
actions required from a regional and nation perspective on the Fund.
Membership movement was
consistent – the number of actives had slightly reduced and deferreds
and pensioners had increased. There had
been a slight reduction in widows and dependents.
With regard to Member Self
Service XPS was keen to move forward with online membership as this would free
up the team to deal with other enquiries.
The Pension Regulator Data Scores
were similar to the previous report.
Work had been undertaken on mortality and address screening to try and
find deferred members in particular.
Once the Pensions Dashboard was operational it would be easier for
people to view all their pension information in one place and potentially get
in touch if their LGPS pension was missing.
In relation to Scheme Specific
Data, XPS was building tests to accurately score the data held. This would enable XPS to target individual
data cleansing exercises.
There had been less views on the
website during October although mobile and tablet usage had increased
slightly. The top search item currently
was people looking at opting out, which was a concern. XPS were preparing a communication in
relation to the cost of living crisis to promote the many benefits of the
pension scheme. The 50/50 scheme would
also been promoted as part of this exercise.
XPS had engaged with Employers
making late payments and established the reasons for this. Action had been undertaken by Employers to
correct the situation.
XPS had recorded 100% compliance
on all Key Performance Indicators (KPIs) in the last recording period.
There had been one complaint which had been resolved.
A request was made as to whether
seasonal workers could be signposted to join the Scheme. It was confirmed that XPS had contacted
Employers in the last year about this issue.
A contract of three months or more was required for people to join the
scheme. If they left before two years’
service, their contributions would be returned.
It was confirmed that agency staff could not join the scheme as the
Employer needed to be a scheme member.
AGREED that the information provided was received and noted.
Any other urgent items which in the opinion of the Chair, may be considered
Exclusion of Press and Public
To consider passing a Resolution Pursuant to
Section 100A (4) Part 1 of the Local Government Act 1972 excluding the press
and public from the meeting during consideration of the following items on the
grounds that if present there would be disclosure to them of exempt information
falling within paragraph 3, of Part 1 of Schedule 12A of the Act and the public
interest in maintaining the exemption outweighs the public interest in
disclosing the information.
ORDERED that the press and public be excluded from the meeting for
the following items on the grounds that, if present, there would be disclosure
to them of exempt information as defined in Paragraph 3, of Part 1 of Schedule 12A
of the Local Government Act 1972 and that the public interest in maintaining
the exemption outweighed the public interest in disclosing the information.
Actuarial Valuation Update
An update was provided on the Actuarial Valuation as at 31
AGREED that the information provided was received and noted.