8a)      Feb 2023 Review of the Corporate Strategy 2022/25

           

The Director presented the 3-year Corporate Strategy update. There had been no substantive changes although there has been a degree of slippage, some of which is beyond the Authority’s control. The revised timeline for actions was shown in the report.

 

The staffing changes agreed at the Staffing Committee in October were designed in part to counter any future slippage of deadlines. Some positive benefits of the changes are already being seen.

 

Councillor Fisher asked about section 5.5 of the report. Is it expected that Fund Manager fees will reduce because of the updated investment strategy?

 

The Director responded that as more of the fund’s investments are moved into Alternatives, we will be subject to more performance fees. The high fees indicate the fund has been successful in providing a return.

 

Councillor Nevett asked about the intended increase of Full Time Equivalent (FTE) employees. Does the Authority have the resilience needed to move to 115 FTE from 94 FTE in the next financial year?

 

The Director replied the increase is designed to add resilience to the organisation. There may be some issues around the capacity to find suitable applicants for some roles. It will be a staggered recruitment process to ease the impact on HR and 3^rd party recruitment agencies are also being engaged to help with the process.

 

Councillor Dimond sought confirmation that Net Zero was still the goal of the Responsible Investment strategy. The Director confirmed that it is.

 

Councillor Dimond then questioned the strategy to engage with companies that are currently high producers of CO2 and that in his opinion are not decarbonising quickly enough to reach Net Zero by 2030.

 

The Director replied, engagement has been the focus of the fund’s approach to dealing with this. A decision to commit to a dis-investment strategy is not one the Authority can make alone as its assets are held in pooled funds.

 

Councillor Dimond asked about staff appraisals. Concern that the information whether staff are receiving appraisals is not available given the importance of regular supervision.

 

The Assistant Director – Resources replied that currently it is not possible to produce the information in a format that would be useful to Members. The situation is monitored and reviewed and all staff do receive regular monthly meetings with Team Leaders and Managers, a half yearly review in addition to a full appraisal at year end.

 

Councillor Cox asked about the number of staff who currently Work from Home (WFH).

 

The Assistant Director – Resources replied that SYPA operates a hybrid working policy. This enables FTE staff to have 3 days per week WFH and 2 days in the office. Part Time staff can have 1 day per week WFH. Several people choose to do more than 2 days per week in the office.

 

Councillor Cox expressed concern around performance monitoring and data security for staff WFH.

 

The Assistant Director – Resources confirmed all monitoring standards around performance are maintained and regular face to face meetings are required.

 

In response to a further point the Director added the security risk has been reduced significantly as no paper files for scheme members are used. Equipment including additional monitors and desks are provided to help staff have a separate workspace where possible. Regular data security training and reminders are given to staff.

 

 

8b)      Pensions Authority Budget 2023/24

 

The Assistant Director – Resources presented the operating budget proposals for 2023/24.

 

The overall proposed total is £6.6 million, an increase of £800k on the current year.

 

This includes £200k increase in general costs and £600kin the salaries budget. An analysis of the staffing cost increase can be found on page 57 of the agenda.

 

Page 59 of the agenda presents the detail for the other cost increases. This is subject to change due to estimates of various factors being uncertain. Office accommodation and utility cost increases forms a significant part of this.

 

In the current year the budget includes a Corporate Contingency budget to cover various costs that were unknown at the time in relation to the Director’s review into resilience and sustainability, the pay award for 2022 and the outcome from the pay and benefits review.

 

These figures are now known and been included in the forecast. Work on the pay and benefits review is now likely to crossover into 2023/24. Consequently, a large underspend is expected from the contingency budget in the current year; it is therefore proposed to carry that over into an earmarked reserve specifically for that purpose. If required it could also be used to cover the costs of a pay award beyond the estimated 2% increase.

 

8c)       Medium Term Financial Strategy 2023/24 to 2025/26

 

The Financial Services Manager presented the strategy.

 

External factors like the war in Ukraine and volatile inflation rates are impacting the ability to make accurate forecasts particularly of some of the Fund’s cashflows.

 

The fund’s total costs as a proportion of its value continue to show the Authority providing good value for money.

 

The permitted level of reserves has been increased to 10% as a precaution to the uncertainty noted above.

 

Councillor Sangar asked why the figure of 2% been used to estimate the pay award and at what point is it anticipated that the funds costs will begin to reduce as a result of pooling?

 

The Assistant Director – Resources replied to the pay question. 2% is the figure built into the main budget, but as reported previously, there is also the contingency fund if required. The forecast was also done before the Unions had submitted their pay claim for 2023/24.

 

Councillor Sangar asked if it would be better to factor in 4% and have less of a contingency?

 

The Assistant Director – Resources replied that historically the Authority underspends on the staff salaries budget, due to turnover of staff and delays in recruitment. It also factors in the phased recruitment of the additional FTE mentioned previously. On this basis it was felt that there were likely to be sufficient compensating savings to fund a higher pay award as had been the case in the current year.

 

The Director responded to the question around pooling. The Authority was starting from an unrealistically low-cost base and the move of assets away from Listed Equities into Alternatives increases costs due to Alternatives being a more expensive asset class, but one that better meets the requirements of the investment strategy.

 

The Director added that there is significant pressure across the LGPS that is pushing up costs and is reflected in the uprating budget. The administering of a more complex scheme naturally impacts cost While Governance reporting requirement increases are also a factor and requires additional resources to comply with.

 

 

Councillor Nevett asked about utilities costs. Have any changes been made to the budget to factor in the rapid and continued increase?

 

The Assistant Director – Resources confirmed these had been factored in. Some of the increase in cost has been off-set by a reduction in the cost of the facilities management contract.

 

Councillor Dimond sought further clarification on the 2% amount used for staff pay award increase in the budget and whether an award at this level was the intention.

 

The Assistant Director – Resources indicated the inclusion in the budget was not a recommendation or endorsement of the figure; it had been concluded that 2% was the best estimated figure to include in the forecast.

 

Resolved: Members approved the updated Corporate Strategy (at item 8a), the 2023/24 Authority Budget (at item 8b) and Medium-Term Financial Strategy (at item 8c).