The Chair welcomed everyone to the meeting.

Applogies were noted as above.

Questions were received from Mrs S Owen and Mr S Ashton. The Director replied on behalf of the Authority.  

Written copies of the questions and responses were given to the questioners.  

The written replies are attached as appendices to these minutes. 

The Director announced that SYPA had been accredited under the UK Stewardship Code, which recognises high standards in investment principles and corporate governance and promotes the responsible allocation, management, and oversight of capital to create long-term value for clients and beneficiaries leading to sustainable benefits for the economy, the environment, and society. The Chair thanked officers for their work towards gaining accreditation. 

The Chair announced that she had attended the LGA LGPS Conference in January 2025 representing SYPA and reported that it had been a useful and productive conference covering multiple issues, particularly the implementation of outcomes arising from the Government’s Fit for the Future consultation. 

To determine whether there are any additional items of business which by reason of special circumstances the Chair is of the opinion should be considered at the meeting; the reason(s) for such urgency to be stated.

None.

To identify where resolutions may be moved to exclude the public and press.  (For items marked * the public and press may be excluded from the meeting.)

None.

None.

The Chair announced that a motion in relation to Responsible Investment had been received by Sheffield City Council and that she will feedback the details to Authority when available. 

RESOLVED: That the minutes as presented for the Authority Meeting held on 12 December 2024 are a true and accurate record. 

The Director introduced the context of the refresh of the Corporate Planning Framework and the Assistant Director – Resources presented the report and sought members’ consideration and approval for the triennial detailed refresh and update of the complete corporate planning framework.  

Members asked how and when the Authority planned to engage with stakeholders regarding the Investment Strategy and other decisions. 

The Director explained that a questionnaire regarding Responsible Investment and Environmental, Social and Governance matters in relation to SYPA’s investments had been developed by an independent market research company and would start to be circulated to all scheme members, active, deferred and pensioners, on a phased basis from 19 February 2025. The Director explained that an independent market researcher was being used to ensure the questions held no bias in favour of the Authority and because they had the technology and expertise to analyse the responses thoroughly and effectively. A report on the results will be presented to the Authority when ready and the Director agreed to circulate a blank version of the survey to all members following the meeting for reference. 

The Director explained that a different strategy was required to consult with employers as they have different priorities to scheme members regarding the Investment Strategy. It was explained that engagement was on going and in progress and that close communication between SYPA and employers would continue through to the finalisation of the valuation of the fund in December 2025. 

Members queried whether the action to develop and deliver an Environmental Sustainability plan referred to a new or existing plan and asked for further information on the indicators for success in responsible investment (the trend in level of carbon emissions and in the ESG score from equity portfolios compared to benchmark indices) as noted in the Investment Strategy. 

The Assistant Director – Resources stated that the Environmental Sustainability plan was a new plan, yet to be started, regarding how SYPA operate as an organisation. It was explained that the Net Zero goals related to investments only and that this plan would look at metrics to measure sustainability of SYPA as an organisation. 

The Assistant Director – Investment Strategy explained that indicators for Responsible Investment were covered in quarterly reports including information regarding the investments held by Border to Coast Pensions Partnership and the metrics regarding carbon emissions and carbon intensity. It was explained there was a formalised scoring mechanism to gauge the ESG score which shows absolute performance and performance in relation to benchmark indices along with tracking of progress. 

Members noted the action to implement the outcomes arising from the Government’s Fit for the Future consultation and asked if SYPA had adequate resources to cope with the potential workload. 

The Director explained that the workload and the pressure on SYPA would depend on how the Government resolves to enforce implementation of the changes. It was explained that a legal mandate to force changes would add pressure but that a more likely outcome would the continuing development of products  ...  view the full minutes text for item 9.

The Head of Finance and Performance presented the Authority budget proposals for 2025/26 for approval. 

RESOLVED: Members approved the 2025/26 budget for the Authority, a total of £9,050,830. 

The Head of Finance and Performance presented the Authority’s Medium Term Financial Strategy 2025/26 to 2027/28 for consideration and approval. 

Members queried what potential effect the policies of the new President of the United States of America might have on SYPA investments. 

The Assistant Director – Investment Strategy answered that there were many variables to consider and that investments and the economy would be closely monitored for potential repercussions. 

Members queried the management costs detailed in the report and asked whether these were fixed costs and what controls were in place to ensure value for money. 

The Assistant Director – Investment Strategy explained that a benchmarking exercise is undertaken by an external provider to ensure all costs are acceptable and that they are challenged if not. It was explained that, as going forward most costs would be borne by Border to Coast Pensions Partnership, management costs will be driven down. 

RESOLVED: Members approved the Medium Term Financial Strategy 2025/26 to 2027/28 

The Head of Finance and Performance presented the Treasury Management Strategy for approval.  

RESOLVED: Members 

a. Approved the 2025/26 Treasury Management and Annual Investment Strategy, and the treasury & prudential indicators set out in this report;  

b. Approved the Treasury Management Policy Statement attached at Appendix B;  

c. Approved the Treasury Management Practices attached at Appendix C; and  

d. Approved the Minimum Revenue Provision statement as set out in this report. 

The Assistant Director – Resources presented the report to secure approval of the updated Pay Policy Statement for 2025. 

RESOLVED: Members approved the Pay Policy Statement at Appendix A. 

The Director presented the report to agree the framework for setting contribution rates and associated actuarial assumptions to be consulted on with employers as part of the 2025 valuation process. 

Members queried whether any significant economic events could take the adjusted funding level of 120% below 100%. 

The Director expressed that a significant economic event could impact the funding level but that the Authority needed to remain in a risk-taking position to maximise returns while monitoring the market and managing risk as necessary. 

Members acknowledged the positive funding level and queried whether SYPA could go further in the planned reduction of employer contributions, especially given that Local Authorities, a major employer in the scheme, were experiencing increased financial demands. 

The Director recognised the financial difficulties faced by Local Authorities and explained there was scope for adjustment and nuance in the final contribution rates set, as well as the possibility of differentiating contribution rates to different employers. The Director advised a cautious approach adding that if contribution rates were cut too far, they may then need to be raised again and this would be harmful to employers and their budget management. 

Members asked whether employee contribution rates might change. The Director explained that the LGPS set national employee contribution rates which are reviewed every 4 years and could only be changed with Government intervention so SYPA regarded employee contributions as fixed when making plans. 

Members queried whether the positive funding level of the Authority might allow it to strengthen its Responsible Investment policies, for example by divesting from companies with low ESG scores. 

The Director explained that the Authority’s priority remained maximising returns and servicing benefits but that Responsible Investment would continue to remain part of the Investment Strategy. 

Members referenced the recent decision made by the Kensington and Chelsea London Borough Council to reduce employers’ contributions rate to zero with the reasoning that it was believed this would not materially affect the pension fund's position and asked whether this may lead to a similar decision in South Yorkshire. 

The Director explained that the pension fund in question was currently over 200% funded so the temporary reduction of contributions would have a negligible effect, but that SYPA was not in the same position. It was also explained that the actuary to the aforementioned fund had not certified the reduction and that SYPA had taken legal advice and been advised not to set a rate that the actuary would not approve. The Director explained that pressure from Local Authorities to reduce rates was expected but that all recommendations in the report were made with all aspects taken into account. 

Members referenced the South Yorkshire Mayoral Combined Authority consultation on bus franchising and the resultant potential changes that would open up the LGPS to more people and queried whether this could affect calculations made in the report. The Director explained that this would not affect the position of the Authority but would need to be looked at in more detail to gain  ...  view the full minutes text for item 14.

The Head of Governance and Corporate Services presented the Authority’s Procurement Forward Plan to members for approval. 

Members asked whether procurement policy was subject to the Responsible Investment policy and SYPA practised responsible procurement. 

The Assistant Director – Resources explained that procurement was covered by Contract Standing Orders in the SYPA constitution which had been aligned with the Procurement Act (2023) due to come in to force on 24 February 2025. The Director added that SYPA’s procurement policy did not explicitly address responsible procurement but that regulations ensured procurement was done through detailed frameworks using an approved list of suppliers. Officers accepted that this approach could be strengthened and would be addressed in the Environmental Sustainability plan as part of the Corporate Strategy. 

RESOLVED: Members approved the Procurement Forward Plan 2025 to 2028 presented at Appendix A. 

The Head of Governance and Corporate Services detailed decisions taken as a matter of urgency between meetings of the Authority. 

RESOLVED: Members noted the decisions taken between meetings of the Authority using the appropriate urgency procedures. 

The Director presented the report and asked members to approve the objectives agreed with the Independent Investment Advisers 

Members received the objectives noting that the Independent Investment Advisers were a useful asset to the Authority and that they welcomed the formalisation of their role. 

RESOLVED: Members approved the objectives for the Independent Investment Advisers set out in the body of the report.