The Dyfed Pension Fund Pension Board met on Tuesday 29 October 2024 to review various reports on the fund's financial performance, administration, and investment strategies. Key discussions included budget monitoring, pension administration updates, risk management, and updates from the Wales Pension Partnership (WPP).

Dyfed Pension Fund Committee Meeting 19 September 2024

The Board noted the reports submitted to the Dyfed Pension Fund Committee for its meeting on 19 September 2024. These reports covered a range of topics, including the Pension Board Chair's reports from previous meetings, budget monitoring, pensions administration, the breaches register, the risk register, the training plan for 2024-2025, a resolution concerning the Bute Group of Companies, and updates from the WPP Joint Governance Committee and on responsible investment.

Budget Monitoring and Cash Position as at 30 June 2024

The Board reviewed the Dyfed Pension Fund's budget monitoring report and cash position as of 30 June 2024. It was reported that there was an underspend of £116,000 compared to the budget. Expenditure was projected to be £642,000 under budget, with pensions payable forecast to be £342,000 under and management expenses £300,000 under. Income was forecast to be £526,000 under budget, although contributions were expected to be £1.9 million over budget due to increased augmentation income from employers and higher employee pensionable pay. Transfers in were forecast to exceed the budget by £500,000, while investment income was projected to be £2.9 million below budget. Overall, total expenditure was estimated at £133 million and total income at £133.1 million, resulting in a positive variance of £116,000 against the budget. The fund's cash position showed £5.6 million held by Carmarthenshire County Council for immediate cash flow needs.

Pensions Administration Report

A report was considered, providing an update on the activities within the Pensions Administration service. This included updates on regulatory matters, the breaches register, the i-Connect system, Guaranteed Minimum Pension (GMP) reconciliation, and workflows. Clarification was sought regarding the timeline for pension dashboards, with the Pensions Manager explaining that while the Dyfed Pension Fund Scheme was required to be ready by October 2025, the ultimate deadline for all schemes was October 2026. Work was ongoing to validate data and ensure smooth integration with the software provider and the three Additional Voluntary Contribution (AVC) providers: Prudential, Utmost, and Standard Life. The Pensions Manager assured the Board that all work was on target.

Breaches Report

The Board received the Breaches Report for the Dyfed Pension Fund, which details instances where the law has been breached, as required by Section 70 of the Pension Act 2004 and the Dyfed Pension Fund Breaches Policy. It was noted that there had been no instances of late receipt of contributions from employers since the previous meeting. The Director of Resources confirmed that a previous issue with Burry Port Marina Ltd regarding payments to the fund had been resolved by the company's administrators.

Risk Register

An update on the Risk Register was presented, highlighting identified risks related to the Dyfed Pension Fund's functions. The register includes details of risks, their potential impact, probability, risk rating, and control measures. The focus for this review was on the 13 Funding and Investment risks (F1-F13). It was confirmed that there had been no changes to these individual risks since the register was approved in March 2024.

Regarding risk F4, concerning the underperformance of Baillie Gifford within the Global Alpha product (invested via the Wales Pension Partnership - WPP), the Treasury & Pension Investments Manager explained that Baillie Gifford's holdings within the Global Growth Fund sub-fund were being reduced from 40% to 18% as the management of this sub-fund transitions from Waystone to Russell Investments.

Concerning risk G4, Lack of training for officers and members; turnover in officers and members, the Treasury & Pension Investments Manager stated that regular online training provided through the WPP for Committee and Board members had increased significantly since the WPP's establishment in 2016, and the current level of training was considered sufficient.

Training Plan 2024-2025

The Board received an update on the Training Plan for 2024-2025, which outlines the schedule of committee meetings and training events for members and officers of the Dyfed Pension Fund.

Pension Board Resolution in Relation to the Bute Group of Companies

The Board received a report concerning a referral from its meeting on 14 May 2024, which related to correspondence from Councillor A. Lenny regarding the Wales Pension Partnership's investment in the Bute Group of companies and its energy projects. The Board had requested that the Dyfed Pension Fund Committee explore the possibility of releasing the fund from its funding arrangements with the Bute Group, recovering advanced sums, engaging with the Bute Group and Ofgem, and clarifying the role of law firm Burges Salmon LLP. The Board was informed that the Pension Committee would issue a response to this resolution at its next meeting.

Wales Pension Partnership (WPP) Joint Governance Committee (JGC) Update

An update from the WPP's JGC meeting held on 17 July 2024 was presented. This update covered governance, ongoing sub-fund development, operator services, investments and reporting, communication and training, resources, budget and fees, and the training plan. The report also included an operator report with market updates, business updates on third-party oversight, WPP sub-fund values as at 31 March 2024, a fund snapshot for equities and fixed income, fund launches and changes, and Waystone's corporate update and engagement. A summary and commentary on WPP's investment performance for Q1 2024 were also appended.

Wales Pension Partnership Responsible Investment Update - June 2024

The Board received the WPP's Responsible Investments update report as at 30 June 2024. This report detailed recent Responsible Investment activities and provided information on the Global Growth, Sustainable Active Equity, and Global Credit sub-funds in which the Dyfed Pension Fund is invested. The update also included a Stewardship Summary and relevant appendices.

Draft Minutes of the Pension Committee Meeting 19 September 2024

The draft minutes of the Dyfed Pension Fund Committee meeting held on 19 September 2024 were noted.

Pension Board Budget Monitoring 1 April 2024 - 30 September 2024

The Board reviewed the Pension Board Budget Monitoring report for the period 1 April to 30 September 2024. Total actual expenditure incurred was £12.8k, with forecasted expenditure for the year projected to be £2.5k below budget.

Pension Board Work Plan 2024 and 2025

The Board considered and noted the Pension Board Work Plan for 2024, which outlines the Board's activities and items to be presented throughout the year. The Pension Board Work Plan for 2025 was considered and approved, outlining the planned work for the following year. Both plans are subject to review and revision at each Board meeting.

Pension Board Action Log

The Board considered the Pension Board Action Log, which details actions and updates from previous meetings. The log is reviewed and updated at each Board meeting.

Exclusion of the Public

It was resolved to exclude the public from the meeting during the consideration of specific items due to the presence of exempt information, as defined in the Local Government Act 1972.

Robeco Engagement Report 1 January 2024 - 31 March 2024

The Board considered the Robeco Engagement report for the period 1 January to 31 March 2024, which provided detailed statistics on engagement activities undertaken within the WPP portfolio during the quarter, along with case studies related to Just Transition in Emerging Markets.

Northern Trust Securities Lending Performance Review 2023-24

The Board reviewed the Northern Trust Securities Lending Performance Review report for the Dyfed Pension Fund for the period 2023-24.

Independent Advisor Performance & Risk Report to 30 June 2024

The Board considered the Independent Investment Adviser Performance and Risk Report, which detailed investment managers' performance for quarterly, 12-month, and rolling 3-year periods ending 30 June 2024. The report also included global market background and issues for consideration.

Northern Trust Performance Report to 30 June 2024

The Northern Trust Performance report for the Dyfed Pension Fund as at 30 June 2024 was considered, providing performance analysis at both a total fund level and by individual investment manager since inception.

Investment Manager Reports to 30 June 2024

The Board reviewed investment manager reports detailing performance as at 30 June 2024 for BlackRock, Schroders, Partners Group, and the WPP Global Growth, Global Credit, and Sustainable Active Equity Funds.