The Authority considered the Quarter 2 Corporate Performance report, noting that this was later than normal due to the cancellation of the December Authority meeting because of the General Election.

Key messages for the Quarter were that the Corporate Plan remained on target, sickness levels were improving, the funding level was above 100% (based on 2019 assumptions) and investment returns were above the benchmark.

On the downside, administration performance remained below benchmark, this was linked to a high number of staff vacancies for which recruitment was now underway and there was a large variance between the budget and the forecast outturn.

In answer to a question from a Member, the Head of Pensions Administration confirmed that interviews were being held for 12 vacant posts for both Customer Service Officers and Pensions Officers and it was hoped that they would start towards the end of February.  After an initial training period, it was expected that performance levels would begin to rise.

The reasons for the forecast of a large underspend against the budget were detailed within the report including staffing costs which were expected to be a £382k underspend and expenditure on fees relating to internal and external management of investments reflecting the changes as the transition to pooling continued to progress.

Members noted that the Senior Management Team had reviewed the overall position on the budget and reserves in order to inform the financial planning for 2020-21 and the medium term financial strategy.  The plans in the Corporate Strategy and supporting documents would require capital resources for the following areas:

·       New core business systems.

·       Re-procurement of the Pensions Administration System.

·       Initial scoping of the options for long-term office accommodation which would require external specialist support.

The capital costs of these projects were expected to be in the region of several hundred thousand pounds.  Therefore Members were asked to approve the suggestion to use the current underspend (forecast at £510k) to finance the projects and thereby reduce the amount that would have to be financed from internal borrowing.

It was proposed to set up a new ‘Capital Projects’ reserve and to transfer the 2019/20 underspend into this reserve.  Additionally, it was proposed to transfer £150,000 from the existing Corporate Strategy reserve into the new Capital Reserve to be earmarked for those projects.

With regard to the Risk Register, Members were informed that no new risks had been added during the quarter but one risk rating had been changed – the risk of failure to ensure that the Authority had appropriate access to its cash resources.  The risk score had reduced as a result of the existing control measures in place including new software that assisted with cashflow modelling.

With regard to the climate change risk, the Fund Director informed the Authority that this would be reassessed following the review of the Investment Strategy at the next meeting of the Authority.

RESOLVED – That the Authority:

(i)     Note the Corporate Performance Report for Quarter 2.

(ii)     Approve the setting up of a Capital Projects reserve and the transferral of the 2019/20 underspend into this reserve to fund the capital projects as detailed within the report.

(iii)    Approve the transfer of £150,000 from the Corporate Strategy reserve into the Capital Projects reserve.