Archived decisions

Agenda item: 11

HAMPSHIRE COUNTY COUNCIL

Decision Report

Decision Maker:

Pension Fund Panel

Date of Decision:

20 November 2009

Decision Title:

Review of the Fund's Governance Policy and Governance Compliance Statements

Decision Reference:

1063

Report From:

County Treasurer

Contact name:

Anthony Dodridge

Tel:

01962 847407

Email:

[email protected]

1. Executive Summary

1.1. The purpose of this paper is to review Hampshire Pension Fund's Governance Policy and Governance Compliance Statements, which should be reviewed and updated by the Pension Fund Panel each year.

2. The Governance Policy and Governance Compliance Statements

2.1. Revised drafts of the Governance Policy and Governance Compliance Statements are attached as Appendix 1 for approval. The amendments to the two Statements are highlighted.

2.2. The changes required to the documents this year are minimal. The most significant concern the Panel's decision to prepare a formal Training Plan and maintain training logs for Panel members. This allows "full compliance" to be reported in the Governance Compliance Statement under the section on training.

3. Recommendation

3.1. That, subject to any amendments the Panel may wish to make, the updated Governance Policy and Governance Compliance Statements be approved.

CORPORATE OR LEGAL INFORMATION:

Links to the Corporate Strategy

Hampshire safer and more secure for all:

Yes/no

Corporate Business plan link number (if appropriate):

Maximising well-being:

Yes/no

Corporate Business plan link number (if appropriate):

Enhancing our quality of place:

Yes/no

Corporate Business plan link number (if appropriate):

OR

This proposal does not link to the Corporate Strategy but, nevertheless, requires a decision because it requires approval of the Pension Fund's Governance Policy and Governance Compliance Statements.

Other Significant Links

Links to previous Member decisions:

  

Title

Reference

Date

     
     

Direct links to specific legislation or Government Directives

 

Title

Date

   
   

Section 100 D - Local Government Act 1972 - background documents

 

The following documents discuss facts or matters on which this report, or an important part of it, is based and have been relied upon to a material extent in the preparation of this report. (NB: the list excludes published works and any documents which disclose exempt or confidential information as defined in the Act.)

 

Document

Location

None

  

IMPACT ASSESSMENTS:

1. Equalities Impact Assessment:

1.1. Equality objectives are not considered to be adversely affected by the proposals in this report.

2. Impact on Crime and Disorder:

2.1. The proposals in this report are not considered to have any direct impact on the prevention of crime.

3. Climate Change:

a) How does what is being proposed impact on our carbon footprint / energy consumption?

      No specific impact.

b) How does what is being proposed consider the need to adapt to climate change, and be resilient to its longer term impacts?

      No specific impact.

Governance Policy Statement

The Local Government Pension Scheme (Amendment) (No 3) Regulations 2007 require the Fund to maintain a Governance Policy Statement.

The County Council, as administering authority for the Hampshire Pension Fund, has delegated responsibility for managing the Fund's investments to the Pension Fund Panel through its Audit Committee.

The Pension Fund Panel oversees the proper administration and management of the Pension Fund. It is responsible for:

- appointing external fund managers and advisers

- making suitable custody arrangements for the Fund's investments

- considering and approving actuarial valuations every three years and determining the level of employers' contributions

- considering changes in pension fund regulations and determining actions required

- considering and approving strategic advice on investment policy

- considering and approving the external managers' investment strategies

- monitoring the investment performance of each manager against their target and benchmark, based on statistics prepared by Northern Trust

- the periodic review of the Statement of Investment Principles, the Fund's Business Plan, its Funding Strategy Statement, this Governance Policy Statement and the Governance Compliance Statement and the Fund's Communication Policy Statement.

The Pension Fund Panel normally meets four times each year. There are usually two meetings in the spring and two meetings in the autumn of each year. Two of these meetings, one in the spring and one in the autumn, are used mainly for discussions with the Fund's investment managers, using a report on their strategies and performance prepared by the County Treasurer, any views of the independent adviser, and presentations prepared by the managers themselves. The other meetings are `business meetings', where the Panel considers reports from the County Treasurer, the independent adviser and other consultants as necessary on a range of issues, for example reviews of the SIP, the Fund's business plan, training matters, and proposals for Scheme changes.

The Pension Fund Panel is constituted to reflect the views of:

    · the County Council as administering authority and the largest employer with 46% of the contributing membership

    · the two city unitary authorities with 22% of the contributing membership

    · the district councils and other employers with 32% of the membership, and

    · the Fund's pensioners and contributors themselves.

The Pension Fund Panel consists of:

- nine county councillors with voting rights

- one representative of the unitary city councils of Portsmouth and Southampton with voting rights

- one representative of the 11 district councils in the Hampshire county area with voting rights

- one representative of the Fund's contributors with voting rights

- one representative of the Fund's pensioners with voting rights.

There is also an independent adviser/sounding board without voting rights, who attends all Panel meetings.

Training

Members of the Pension Fund Panel and officers in the County Treasurer's Department have opportunities to attend training courses and seminars on pension fund matters, when necessary and appropriate. The cost of attending such events is charged to the Pension Fund.

A training plan for members of the Pension Fund Panel has been prepared and training logs for individual members are maintained.

Use of advisers

The County Treasurer advises the Panel on all Pension Fund investment and administrative matters.

The Fund's independent adviser and sounding board, Mr Harvey Cole, advises the Panel on investment matters.

The Panel uses the Fund's actuary, Hewitt Associates Limited, and other consultants as necessary, for advice on matters when in-house expertise is not available. The Panel takes advice from the actuary, the fund managers or specialist consultants or advisers as required on allocating assets, selecting managers, and investment performance targets.

Communications with Fund employers and members

Each financial year, an annual report on the Fund is prepared for consideration by the Fund's employers at an Annual General Meeting to be held by 30 September in the next financial year. This covers the Fund's accounts, investment arrangements and policy, investment performance, Scheme changes and other issues of current interest.

A leaflet for Fund pensioners and contributors is also prepared annually and distributed in the autumn. This summarises the accounts, and the investment management and administrative arrangements.

The Statement of Investment Principles is published and made available to Scheme employers within three months of any amendment(s).

Annual benefit statements are provided to contributors and deferred pensioners, together with an annual newsletter to pensioners.

Membership of external bodies

The Hampshire Pension Fund is a member of the following external bodies:

- the National Association of Pension Funds (NAPF)

- the Local Government Pensions Committee (LGPC).

Service standards

The County Council follows best practice as set out in the LGPC circular `Principles of Good Practice for the Management of Local Government Pension Schemes'.

Governance Compliance Statement

This statement shows how Hampshire County Council as the administering authority of the Hampshire Pension Fund complies with guidance on the governance of the Local Government Pension Scheme (LGPS) issued by the Secretary of State for Communities and Local Government in accordance with the Local Government Pension Scheme (Amendment) Regulations 2008.

Ref.

Principles

Compliance and comments

A

Structure

  

a.

That the management of the administration of benefits and strategic management of fund assets clearly rests with the main committee established by the appointing council.

Full compliance. Hampshire County Council's constitution sets out the functions of the Pension Fund Panel.

b.

That representatives of participating LGPS employers, admitted bodies and scheme members (including pensioner and deferred members) are members of either the main or secondary committee established to underpin the work of the main committee.

Partial compliance. The Pension Fund Panel includes representatives of the other local authorities in the Fund, and pensioner and contributor members. Admitted bodies, which represent only 2% of contributions in the Fund, are not represented on the Pension Fund Panel.

c.

That where a secondary committee or panel has been established, the structure ensures effective communication across both levels.

No formal secondary committees or panels have been established.

d.

That where a secondary committee or panel has been established, at least one seat on the main committee is allocated for a member from the secondary committee or panel.

No formal secondary committees or panels have been established.

B

Representation

  

a.

That all key stakeholders have the opportunity to be represented within the main or secondary committee structure. These include:

i) employing authorities (including non-scheme employers, eg admitted bodies)

ii) scheme members (including deferred and pensioner scheme members)

iii) where appropriate, independent professional observers, and

iv) expert advisers (on an ad-hoc basis).

Partial compliance. The Pension Fund Panel includes representatives of the other local authorities in the Fund, and pensioner and contributor members. Admitted bodies, which represent only 2% of contributions in the Fund, are not represented on the Pension Fund Panel. The Fund's independent adviser attends meetings of the Pension Fund Panel. Independent professional observers are not regarded as appropriate.

b.

That where lay members sit on a main or secondary committee, they are treated equally in terms of access to papers, meetings, and training and are given full opportunity to contribute to the decision-making process, with or without voting rights.

Full compliance. Equal access is provided to all members of the Pension Fund Panel.

C

Selection and role of lay members

  

a.

That committee or panel members are made fully aware of the status, role and function they are required to perform on either a main or secondary committee.

Full compliance.

D

Voting

  

a.

That the individual administering authorities on voting rights are clear and transparent, including the justification for not extending voting rights to each body or group represented on main LGPS committees.

Full compliance. All representatives on the Pension Fund Panel have full voting rights, but the Panel works by consensus without votes being required.

E

Training/facility time/expenses

  

a.

That in relation to the way in which the administering authority takes statutory and related decisions, there is a clear policy on training, facility time and reimbursement of expenses for members involved in the decision-making process.

Full compliance. Full training and facilities are made available to all members of the Pension Fund Panel.

b.

That where such a policy exists, it applies equally to all members of committees, sub-committees, advisory panels or any other form of secondary forum.

Full compliance.

c.

That the administering authority considers adopting annual training plans for committee members and maintains a log of all such training undertaken.

Full compliance. A Training Plan has been prepared for the Pension Fund Panel and training logs are maintained for individual Panel members.

F

Meetings (frequency/quorum)

  

a.

That an administering authority's main committee or committees meet at least quarterly.

Partial compliance. The Pension Fund Panel meets at least four times a year to fit its business needs, but not necessarily at quarterly intervals.

b.

That an administering authority's secondary committee or panel meets at least twice a year and is synchronised with the dates when the main committee sits.

No formal secondary committees or panels have been established.

c.

That an administering authority that does not include lay members in its formal governance arrangements must provide a forum outside of those arrangements to represent the interests of key stakeholders.

Full compliance. The Pension Fund Panel includes lay members. An Annual General Meeting of the Pension Fund is held and road shows arranged for employers.

G

Access

  

a.

That subject to any rules in the County Council's constitution, all members of main and secondary committees or panels have equal access to committee papers, documents and advice that are due to be considered at meetings of the main committee.

Full compliance. Equal access is provided to all members of the Pension Fund Panel.

H

Scope

  

a.

That administering authorities have taken steps to bring wider scheme issues within the scope of their governance arrangements.

Full compliance. The Pension Fund Panel deals with fund administration issues as well as fund investment.

I

Publicity

  

a.

That administering authorities have published details of their governance arrangements in such a way that stakeholders with an interest in how the scheme is governed can say they want to be part of those arrangements.

Full compliance. The County Council's Governance Policy Statement is published in the Pension Fund's Annual Report and on its website.