Agenda and minutes

Apologies for absence were received from Councillor Beacham, Councillor Jones and Councillor Whyte.

The Chair will consider the admission of any late items of urgent business. Late items will be considered under the agenda item where they appear. New items will be considered under agenda item 9 for unrestricted items and item 13 for exempt items of urgent business.

There were no new items of urgent business.

A member with a personal interest in a matter who attends a meeting of the authority at which the matter is considered must disclose to that meeting the existence and nature of that interest at the commencement of that consideration, or when the interest becomes apparent.

A member with a personal interest in a matter also has a prejudicial interest in that matter if the interest is one which a member of the public with knowledge of the relevant facts would reasonably regard as so significant that it is likely to prejudice the member’s judgement of the public interest and if this interest affects their financial position or the financial position of a person or body as described in paragraph 8 of the Code of Conduct and/or if it relates to the determining of any approval, consent, license, permission or registration in relation to them or any person or body described in paragraph 8 of the Code of Conduct.

Cllr Winskill declared a personal interest as a contributing member of the Haringey Pension Scheme.

David Corran declared a personal interest as a pensioner member of the Haringey Pension Scheme.

Cllr Mallett declared a personal interest as a contributing member of the Haringey Pension Scheme.

Cllr Harris declared a personal interest as a contributing member of the Haringey Pension Scheme and as having attended training events at which Fund Managers had been present.

To confirm and sign the unrestricted minutes of the Pensions Committee meeting held on 28 January 2010.

RESOLVED

That, subject to the correction of two typographic errors under Declarations of Interest, the unrestricted minutes of the meeting held on 28 January 2010 be approved and signed by the Chair.

Report of the Assistant Chief Executive, People and Organisational Development, to consider regulatory changes affecting the administration of the Local Government Pension Scheme together with relevant issues covered in circulars issued by the Local Government Pensions Committee (LGPC) and Department for Communities and Local Government (DCLG).

Steve Davies, Head of Human Resources, presented the Fund Administration update.

Members were advised that regulations now permitted members with a nominated co-habiting partner to purchase pre April 1988 membership to increase a survivors pension. The Committee was asked to approve the recommendation that the medical declaration required to purchase added membership under Regulation 14 of the LGPS (Benefit Membership and Contributions) Regulations 2007 (as amended) be extended to payment of Additional Survivor Benefit Contributions under Regulation 14A of those regulations. In response to a question from the Committee regarding whether everyone was required to provide a report from a medical practitioner, it was reported that this was required from those who had been seen by a medical practitioner within the previous 12 months. The Committee suggested that it would fairer to require that everyone applying to purchase additional membership provide a medical report. 

In response to a question from the Committee regarding whether the proposed approach was compliant with the Disability Discrimination Act, Mr Davies advised that the Council was required to make reasonable adjustments for any person with a disability, and that people would not necessarily be precluded from purchasing additional membership. It was suggested that the policy wording be revised for clarification of what would happen in the event that someone were to declare a pre-existing medical condition, and the criteria on which any decision regarding the acceptance or refusal of an application would be based. Mr Davies agreed that the wording of the policy could be reviewed for clarification regarding this issue.

The Committee asked whether there might be any wider implications for members of the scheme as a result of making a medical declaration as part of their application. It was reported that this would depend on the nature of the declaration, however all such information would be subject to medical privilege.

In response to a question from the Committee regarding whether there would a time limit for when an investigation would be carried out in the event that a member died after purchasing additional membership, it was reported that this would depend on the circumstances. Each case would be assessed on its own merits as to whether an investigation was necessary.

RESOLVED

i) That the Administration Report be noted.

ii) That the medical declaration required to purchase added membership under Regulation 14 of the LGPS (Benefit Membership and Contributions) Regulations 2007 (as amended) be extended to payment of Additional Survivor Benefit Contributions under Regulation 14A of those regulations, with a report from a medical professional to confirm the content of the medical declaration being required from all those applying to purchase added membership.

iii) That the wording of the policy be revised for clarity as to what would happen in the event of a pre-existing medical condition being disclosed by an applicant, and the criteria on which any decision to refuse or accept an application would be made in the event of a pre-existing medical condition being disclosed.

Report of the Chief Financial Officer to consider the latest investment performance data for the Pensions Fund and for each of the Fund’s investment managers, to compare responsible investments information provided by our Fund Managers with that supplied by LAPFF and to report 2009/10 budget monitoring to the end of February 2010.

The Committee considered the report on Fund Performance.

The Committee asked how the information that annualised performance of the Fund had declined in absolute terms up to December 2009 tallied with the statement that markets had risen significantly in the past period. It was reported that the decline in performance related to the performance of the Fund since its inception, whereas the rise in the markets only related to the previous quarter.

In response to a question from the Committee regarding comparison of the Haringey Fund performance with other London boroughs, it was reported that generally Haringey fell within the 70^th percentile but that the performance statistics did not reflect like for like comparison. It was emphasised that while there could be volatility in the short term, it was necessary to focus on long term Fund performance.

The Chair advised that issues around costs and fees would be looked at as part of the forthcoming strategic investment review and that it was important to acknowledge that these represented calls on the Fund.

 RESOLVED

i)                    That the Fund performance position as at end of December 2009 be noted.

ii)                  That responsible investments information provided be noted.

iii)                That the budget management position to the end of February 2010 (period 11) be noted.

Attendance by Fund Managers for a presentation and questions from Trustees, the Advisor to Trustees and the Chief Financial Officer.

7:15pm - Capital

The Committee received a presentation from the Fund Manager Capital, as follows:

CAPITAL

Fund performance for the equity mandate was 0.14% above the benchmark and 0.36% below the target in the previous quarter, and 1.6% below the benchmark and 3.6% below the target in annualised terms in the 33 month period to the end of December 2009.

Fund performance for the fixed income mandate was 0.43% above the benchmark and 0.18% above the target in the previous quarter, and 0.75% below the benchmark and 1.75% below the target in annualised terms in the 33 month period to the end of December 2009.

Capital explained the reasons for current performance and answered questions from Trustees. In response to a question from the Committee regarding the fees charged by Capital, it was agreed that this information would be provided to officers for circulation to all members of the Committee.

RESOLVED

That the presentation and answers to questions given by Capital be noted.

Report of the Chief Financial Officer to review the Fund’s asset allocation position.

Roger Melling left the meeting at 20:30hrs.

Emily McGuire of Hewitt presented the report on the fund’s asset allocation position. The aim of the quarterly review was to identify areas where small changes could be made to the fund’s asset allocation position in order to maximise the value of the fund between three-yearly strategic investment reviews.

The report anticipated that there would be a decline in the value of fixed income assets, and advised a reduction in gilts and corporate bonds, to be held in cash in the short term, until the time of the strategic investment review. The report also recommended an increase in property, although it was recognised that the property manager would need to identify suitable opportunities for investment in order to implement this.

In response to questions from the Committee regarding inflation and interest rates, it was reported that Hewitt expected that interest rates would rise in the second half of the year and that there were concerns regarding inflation.

Ms McGuire advised that the adjustment proposed was intended to protect the fund’s capital from any further shock to the financial market. In relation to the strategic investment review, it was reported that Hewitt would look for capital protection and real returns as outcomes. The strategic investment review would also provide an opportunity to review the structure of the fund’s investments, and it was suggested that there would be benefit in providing fund managers with increased flexibility.

In response to a question from the independent investment advisor, Howard Jones, Ms McGuire confirmed that Hewitt would recommend the reduction in gilts and corporate bonds whether or not any opportunities for investment in property arose. It was proposed that the amount reduced be held in cash in anticipation of opportunities for investment in property, although it was acknowledged that the fund’s property manager may not be in a position to call down funds for investment as quickly as hoped.

The Committee asked on what basis Hewitt were recommending that property offered good value, in response to which it was reported that capital values in commercial properties had decreased to a low level and that, where investments could be identified with secured tenancy, these could offer good value opportunities for investment. It was reported that property was an asset class that was performing well and that, if the fund were to remain significantly underweight in this asset class, overall fund performance would be affected negatively.

RESOLVED

i)                    That gilts be reduced by 2.0%, index-linked gilts by 0.3% and corporate bonds by 2.4%, to be held in cash for the short term.

ii)                  That the underweight position in property be closed once opportunities are identified by the property manager for investment, up to the benchmark weighting.

There were no new items of unrestricted urgent business.

The following items are likely to be the subject of a motion to exclude the press and public from the meeting as they contain exempt information as defined in Section 100a of the Local Government Act 1972; namely information relating to the business or financial affairs of any and particular person (including the Authority holding that information).

RESOLVED

That the press and public be excluded.

To confirm and sign the exempt minutes of the meeting of the Pensions Committee held on 28 January 2010.

RESOLVED

That the exempt minutes of the meeting held on 28 January 2010 be approved and signed by the Chair.

Report of the Chief Financial Officer to provide information to the Committee on the nature of the underlying investments contained in the European and Asia investment vehicles.

RESOLVED

That the content of the report be noted.

There were no new items of exempt urgent business.

The meeting closed at 21:20hrs.