Cambridgeshire Pension Fund Governance Update Jo Walton

Cambridgeshire Pension Fund Current Governance Arrangements Pension Fund Board Investment Sub-Committee What the Boards do and finally… Future Governance Arrangements Local Pension Boards Scheme Advisory Board The Pensions Regulator

Cambridgeshire Pension Fund Board To set the Pension Fund objectives and determine and maintain appropriate strategies, policies and procedures with ongoing monitoring. Terms of appointmentAs prescribed in the County Council’s Constitution Frequency of meeting4 per annum + 1 Annual General Meeting Voting RightsAll Board Members have equal rights TrainingAll Board Members have access to relevant and regular training to ensure their knowledge facilitates effective decision making

Board Representatives Representatives of:Number of seats: Position held by: Cambridgeshire County Council Members 6Cllr Steve Count (Chairman) Cllr Roger Hickford (Vice-Chairman) Cllr Maurice Leeke Cllr John Reynolds Cllr Peter Ashcroft Cllr Michael Shellens All other local authorities, police and fire 2Cllr David Seaton Vacant – recruitment in progress All other employers1Tim Woods Active scheme members1Matthew Pink Deferred and pensioner scheme members 1John Walker

Board Substitute Representatives Substitute RepresentativesRepresentation Group Cllr Simon BywaterCambridgeshire County Council Cllr Peter DownesCambridgeshire County Council Cllr Lucy NethsinghaCambridgeshire County Council Cllr John BullenCambridgeshire County Council Cllr John ClarkCambridgeshire County Council Cllr Peter ReeveCambridgeshire County Council Cllr Barry ChapmanCambridgeshire County Council Cllr Mac McGuireCambridgeshire County Council Cllr Michael RouseCambridgeshire County Council Vacant – recruitment process nearing completion. All other Local Authorities, Police and Fire Gareth DeebleAll other Employers Lee HurleyScheme Member Representative

Role of the Pension Fund Board Strategy/Policy/ Procedure Detail Funding StrategyEvaluate Employer Risk Monitoring and management of liabilities. Funding plans for all employers. Triennial and interim valuations Determining employer contribution rates with the actuary. Investment Strategy Determine investment objectives. Set and review long term high level investment strategies to ensure alignment with the Fund’s liability profile and risk appetite. Administration Strategy Collecting income, calculating and paying benefits, gathering from and providing information from scheme members and employers. Communications Strategy Determining the methods of communications with stakeholders, including scheme members and employers. DiscretionsDetermining the operations of administering authority discretions. GovernanceKey governance arrangements, including representation. Risk Management Strategy Regular monitoring of key risks and agreeing how they are managed and/or mitigated.

Role of the Investment Sub-Committee To provide operational governance of investments Terms of appointmentAs prescribed in the County Council’s Constitution Frequency of meeting4 per annum Voting RightsAll Board Members have equal rights TrainingAll Board Members have access to relevant and regular training to ensure their knowledge facilitates effective decision making

Cambridgeshire Pension Fund Investment Sub-Committee Representatives of:Number of seats: Position held by: Cambridgeshire County Council Members 4Cllr Steve Count (Chairman) Cllr Maurice Leeke (Vice-Chairman) Cllr Roger Hickford Cllr Peter Ashcroft All other local authorities, police and fire and; All other employers 2Cllr David Seaton Tim Woods Scheme members1 John Walker

Role of the Investment Sub-Committee Delegated Authority to: Implement the Fund’s Investment Strategy Review and maintain the detailed asset allocation of the Fund Appoint and terminate Investment Managers Monitor performance of Investment Managers Appoint, monitor and where necessary terminate external advisors – Custodian and Independent Investment Advisers, Consultants and Managers Set benchmarks and targets for the Fund’s Investment Managers Monitor risks inherent to the Fund’s Investment Strategy Monitor and review: Legislative, financial and economic changes relating to investments and their potential impact; Investment management fees; Transaction costs incurred by the Fund across its investment mandates; The Investment Managers’ adoption of socially responsible investment considerations annually.

Independent Public Service Pensions Commission 2010 – Lord Hutton commissioned to chair the IPSPC review of public service pension provision 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 nominees; is responsible for meeting good standards of governance including effective and efficient administration. There should be a pensions policy group for each scheme at national level for considering major changes to scheme rules. This led to the creation of Local Pension Boards and LGPS Scheme Advisory Board via the Public Services Pensions Act 2013.

Local Pension Boards Public Services Pensions Act 2013 (section 5) IPSPC – Recommendation 17 Assist the scheme manager (the administering authority) in securing compliance with the scheme regulations and other legislation relating to the governance and administration of the scheme in the areas of: managing risks and ensuring there are adequate internal controls; keeping records and ensuring the quality of member data; ensuring the correct contributions are paid to the scheme; managing conflicts of interest; publishing information about the board; communicating information to members; resolving disputes and reporting certain breaches of the law.

Local Pension Boards Requirements to create and operate the new Local Pension Boards: to be established in the County Council’s Constitution by ; to consist of equal numbers of employer and member representatives; representatives must be fully competent and knowledgeable upon appointment; knowledge cannot be collective; the board may contain independent experts; board members must act in accordance with scheme regulations and other governing documents; the board must meet a minimum of twice per year; members of the Pension Fund Board and Investment Sub-Committee cannot sit on the Local Pension Board. Pending final LGPS regulations and subsequent guidance.

The Public Services Pensions Act 2013 (section 7) IPSPC – Recommendation 17 Pensions Policy Group for each Public Service Pension Scheme Consider major changes to scheme rules LGPS Scheme Advisory Board (National) LGPS Scheme Advisory Board Currently in shadow form Encourage best practice Increase transparency Co-ordinate technical and standards issues Consider items passed from DCLG, SAB sub-committees and other stakeholders Liaison role with the Pensions Regulator Formulate guidance and standards for administering authorities and pension boards. The LGPS Scheme Advisory Board will remain in shadow form pending its formalisation within the LGPS Regulations during 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 IPSPC – Recommendation 19 Only certain aspects of the public service pension schemes will be covered by the tPR: knowledge and understanding of board members; record keeping/quality of data; communications – accuracy, timeliness and clarity. Powers of the Pensions Regulator: Risk based prioritisation; Education and enablement; Enforcement.

Questions?

Pension Fund Board Agendas and Reports teeID=60 Investment Sub-Committee Reports teeID=62 Pension Fund Strategies Shadow Scheme Advisory Board The Pensions Regulator – Public Service Pension Schemes Additional Information