Issue - meetings

[To present for approval the Operating Budget for 2019/2020 and the Medium-Term Financial Plan for the five years up to and including 2023/2024]

An updated report was tabled. Rachel Brothwood, Director of Pensions presented the report requesting approval for the Fund’s operating budget for 2019/2020 and the medium-term financial plan for the five years up to and including 2023/2024. The Director informed the Committee that a higher operational budget for 2019/2020 was being requested to enable the Fund to build capacity to respond to higher service demands, enable project work to support transformation and ensure sufficient expertise in-house to deliver on the industry-leading policy frameworks in place.

Malcolm Cantello (Unison) requested a report on the Fund’s staffing structure arising from the increased staffing budget.  He also sought clarification on the proposed budget for External Investment Management costs which was at variance with the figure contained in the Budget Monitoring 2018/2019 and Quarterly Accounts December 2018 report elsewhere on the agenda. The Director of Pensions undertook to share more detailed information on the staffing structure with the Committee

Referring to the Fund’s staffing budget for 2019/2020, the Chair reported that the Fund was looking to develop its people through workforce development and meet the challenge of recruitment and retention faced across the LGPS as a whole. . Regarding the external management investment costs he noted that the area was difficult to forecast with a high level of accuracy due to scale of assets and variable performance fees.  Until the invoices are received and cost transparency data captured the actual costs would not be known.

Malcolm Cantello also referred to the budgeted 6 % annual increase in External Investment Management costs during the life of the financial plan to 2023/2024. The Director of Pensions recognised that the projections were simplistic but that there were a number of unknowns which could impact future costs including changes to the Fund’s investment strategy where a need for greater income-generating assets could result in re-allocation to more expensive assets, albeit still targeted to meet return and cashflow requirements.

The Chair said that he wanted to see greater transparency within the industry on the reporting of investment management costs.

Responding to a point of clarification from Malcolm Cantello, the Director of Pensions confirmed that there was an error with the opening and closing balances in tables 5 and 6 in the original published report. The first column should not have been included in both tables. The error had been corrected in the tabled report.

Resolved:

1.     That the Operating Budget for 2019/2020 be approved.

2.     That the Medium-Term financial plan for the period to 2023/2024 be approved.