Issue - meetings

Report of the Director of Finance

The Committee considered a report of the Director of Finance and Assurance which presented the draft Pension Fund Annual Report for the year ended 31 March 2022, and the External Audit Plan and invited the Members to comment.  The report also updated on progress with the 2021-22 audit.

An officer introduced the report, stating that the audit had been delayed by some complex discussions on asset funds. It was hoped to submit the final audit report to the next meeting of the GARMS Committee and the Pension Fund Committee, subsequent to sign off of the Council’s main accounts.  The Committee agreed that it would be useful for the Council’s external auditors to attend the meeting when the final audit report was received.  In response to a question, it was noted that the appointment of External Auditors was part of a national procurement exercise with a fee scale based on the size of the authority.

A Member enquired about the membership of the Pension Fund by an independent school and was advised that it was historical, a common practice in the 1960s and 70s.

In response to a suggestion by an Independent Adviser, it was agreed that the strategic benchmark should be used when measuring performance.  It was noted that underlying indices and not peer group returns were applicable.

The representative from Hymans Robertson drew attention to the fact that the fund was starting to be cash negative and suggested that there was a need to plan with advisers.  The representative from Aon advised that at present it was an operational issue rather than cash drag on solvency.  The officer advised that the trend towards maturity would result in the need to look at cash flow modelling over the next few years.  The representative from Aon stated that cash flow modelling would be used to inform the Investment Strategy review which would follow once the triennial valuation was completed.

An Independent Adviser referred to the Fund’s investments with the London CIV which reinvest income from dividends and interest thereby accumulating income rather than distributing it.  He suggested that distributing income could be a simple option in the first instance rather than realigning the investment strategy ahead of the completion of the triennial valuation.

RESOLVED:  That

(1)            the draft Pension Fund Annual Report for 2021-22 be approved for publication and the Director of Finance and Assurance be authorised to make any changes arising from the audit of accounts before publication;

(2)            the Council’s external auditors be invited to the next meeting;

(3)            the potential distribution of income be pursued with the London CIV.