Karen McWilliam introduced the item by stating that Aon Hewitt had undertaken similar governance reviews before, but this was the first one to be commissioned by a Local Pension Board.
The review considered a large amount of submitted paperwork by officers, held individual meetings with key pensions officers, observed the December 2015 Pension Committee, and conducted a survey in which the majority of Pension Committee members and key staff responded.
The overall conclusion is that the fund is well run, with experienced officers. It was emphasised that although there were many recommendations arising from the report, this was not to be considered a negative reflection on the Committee.
The Committee is generally good on policies and strategy but some could be clearer; for example there is no cash management strategy however everyone knows what they are doing in this area. The Committee should feel ownership over strategies and therefore regular reviews should be timetabled into the Committee's business plan. The Pension Regulator's Code of Practice is also an important document that has not yet been actioned - however this is the case with many authorities at present.
A Risk Register and Risk Management Strategy are required however it was encouraging to hear that these documents were already being developed. The Council Constitution could be revisited to make the role of the Pensions Committee, and its Terms of Reference, clearer.
Conflicts of Interest should be considered broadly, and where there is doubt it would be better to declare. It was reassuring to see such declarations being made at the present meeting. There should be formal training sessions at least once a year on conflicts of interest.
In response to questions from the Board, the following was stated:
The issue of political behaviour by members during Committee meetings was not a huge concern and happens at all authorities. At the observed Committee, report authors noticed a few signs of political behaviour but such conduct did not affect the final decision made on that item. The issue of political behaviour was also raised by some Councillors in the survey. It was an issue to be aware of and discuss, but no further action would be required beyond this.
There was evidence of a good history of training for members, and quality, difficult questions were asked at Committee. The knowledge of members is a very strong aspect of the Committee; the only concern is when experienced, long standing members move on.
Training should be considered an important "buy in" for members of the Committee. Potential members of the Committee should take into account the time commitment for training and not simply just the Committee meetings themselves.
The Governance and Compliance Manager added that there are difficulties surrounding the construction of a training policy for Pension Committee members. As the Committee is made up of Councillors, separate training schemes are already in place, a problem that doesn't affect the Pension Board as the membership contains only one Councillor. Discussions are already taking place with the Legal Department regarding a training policy for Committee members.
The Board RESOLVED to:
Note the recommendations made by Aon Hewitt and which are set out in the Final Governance Review Report, attached as Appendix A.
Send all the recommendations in the Final Governance Review Report to the Pension Committee.
Draft an action plan to plot progress against meeting these recommendations.
Require that progress against this action plan be reported to the Board periodically
The Final Governance Review Report be considered a public document in its entirety.
Before conclusion of the meeting, the Chair asked officers present whether the Pension Board is covered by the Council's indemnity policy. The Head of Pensions and Treasury responded that the position was currently unclear; a Counsel's Opinion suggests that as a Non-Executive Committee local pension boards would not be covered by such insurance. However it wouldn't be clear as to what the Board would be insuring against - potentially where breaches have not been picked up. The issue would be further investigated.
The Meeting ended at 4.07pm