Advisory Board – 22nd May 2023 – 1.00pm

Full details of the meeting and agenda papers can be found on the board meetings page.

The minutes of the meeting on 22nd February were approved.

The main points arising from the meeting are shown below:

Code of Transparency Compliance System – The Board agreed that the Transparency Code itself had been very successful in providing funds with the information that they needed from managers to report and manage investment costs. However, awareness of the compliance system was more mixed and the Secretariat reported that it had set up a series of “roadshows” in six locations in England and Wales to promote its use over the summer months. The contract for provision of this system expires in August 2024 and the Board asked the Secretariat to bring a paper to the July meeting on procurement options and a timetable for decision making.

Annual Report update – The final scheme level report will be published online at the time of the PLSA conference in week commencing 26 June.

HM Treasury Scheme Valuation / Cost Control Mechanism Draft Directions – Although there is not a formal public consultation process for HMT Valuation Directions, the Board had been given sight of and been asked to give its views on draft directions ahead of them being finalised. These would be discussed at the CMBDA meeting on 26 June, with GAD providing some further explanation.

Pooling/Levelling Up -DLUHC officials confirmed that they were no longer saying to expect this consultation on investment issues “soon” but “by summer recess”, which is 20 July.

Climate Risk reporting – DLUHC have confirmed that implementation of climate reporting obligations would be delayed at least until next year. Presuming regulations are forthcoming in time for 1st April 2024, reports covering the period 1 April 2024 – 31 March 2025 would need to be produced by December 2025. In the meantime, the Responsible Investment Advisory Group (RIAG) would look at what advice could be given to funds wishing to do a shadow reporting year, and also what could be done to standardise the development of climate reporting approaches at the pool level.

Survivor benefits and death grants – The Board heard that the Minister has rejected advice that the scheme rules needed to be amended to address the clear age discrimination of having a cut off at age 75 for payment of death grants. The rationale for his decision had not been shared but it constitutes a clear legal risk for funds. The Chair stated that this was a matter of concern for the Board, and that he would raise this in the meeting he was seeking with the Minister.

Good Governance – The Board noted that the Minister had given DLUHC officials a steer that any changes to the regulations would not be made until the next calendar year. DLUHC were considering what could be achieved through guidance. The Secretariat would review the Good Governance recommendations and see what might be appropriate for pursuing on that basis, whilst acknowledging that this meant that some of the benefit of including some elements in legislation could be lost.

Pension fund audit – The Board noted the very productive and pragmatic audit summit which had been held on 20 April. This brought together representatives of funds, their actuaries and the main auditors involved in auditing LGPS fund and scheme employer accounts. A further summit would be held on 12 July to update on actions that were agreed in April. It was expected that these summits would become annual events, to ensure that any unnecessary friction could be taken out of the process, or at least reduced.

Academy Conversions – It was agreed that the note on actuarial treatments for the establishment of academies on conversion should be published on the Board’s website. This had been produced by a working group set up by the Board, which included GAD, DLUHC, fund actuaries, fund practitioners and academy representatives. Publication would follow a short consultation with the actuaries who had not participated in the working group.

Date of Next Meeting – 17th July 2023