Agenda and draft minutes

Please note this meeting may be filmed or recorded by the Council for live or subsequent broadcast via the Council’s internet site or by anyone attending the meeting using any communication method.  Members of the public participating in the meeting (e.g. making deputations, asking questions, making oral protests) should be aware that they are likely to be filmed, recorded or reported on.  By entering the ‘meeting room’, you are consenting to being filmed and to the possible use of those images and sound recordings.

The Chair of the meeting has the discretion to terminate or suspend filming or recording, if in his or her opinion continuation of the filming, recording or reporting would disrupt or prejudice the proceedings, infringe the rights of any individual, or may lead to the breach of a legal obligation by the Council.

The Chair referred Members present to agenda Item 1 as shown on the agenda in respect of filming at this meeting, and Members noted the information contained therein.

To receive any apologies for absence.

There were no apologies for absence.

The Chair will consider the admission of any late items of Urgent Business.  (Late items of Urgent Business will be considered under the agenda item where they appear. New items of Urgent Business will be dealt with under item 15below).

There were no items of urgent business.

A member with a disclosable pecuniary interest or a prejudicial interest in a matter who attends a meeting of the authority at which the matter is considered:

(i) must disclose the interest at the start of the meeting or when the interest becomes apparent, and

(ii) may not participate in any discussion or vote on the matter and must withdraw from the meeting room.

A member who discloses at a meeting a disclosable pecuniary interest which is not registered in the Register of Members’ Interests or the subject of a pending notification must notify the Monitoring Officer of the interest within 28 days of the disclosure.

Disclosable pecuniary interests, personal interests and prejudicial interests are defined at Paragraphs 5-7 and Appendix A of the Members’ Code of Conduct

The Public Service Pensions Act 2013 defines a conflict of interest as a financial or other interest which is likely to prejudice a person’s exercise of functions. Therefore, a conflict of interest may arise when an individual:

i)             Has a responsibility or duty in relation to the management of, or provision of advice to, the LBHPF, and

ii)            At the same time, has:

-       a separate personal interest (financial or otherwise) or

-       another responsibility in relation to that matter,

giving rise to a possible conflict with their first responsibility. An interest could also arise due to a family member or close colleague having a specific responsibility or interest in a matter.

At the commencement of the meeting, the Chair will ask all Members of the Committee and Board to declare any new potential conflicts and these will be recorded in the minutes of the meeting and the Fund’s Register of Conflicts of Interest. Any individual who considers that they or another individual has a potential or actual conflict of interest which relates to an item of business at a meeting must advise the Chair prior to the meeting, where possible, or state this clearly at the meeting at the earliest possible opportunity.

There were no declarations of interest.

To consider any requests received in accordance with Part 4, Section B, paragraph 29 of the Council’s constitution.

The Pensions Committee and Board considered a deputation from Anita Chandler, Haringey Unison Environment Rep (St Aidan's), and Marc Lancaster, acting Chair of Unison Haringey. Anita Chandler introduced the deputation and noted that she was accompanied by Marc Lancaster and by Pamela Harding, local resident.

Anita Chandler stated that Haringey Unison had passed a motion in 2022 which asked the Haringey Pension Fund to divest from the carbon-based economy; a response was requested. She asked that the Pension Fund:

·         Provided a report on the current fossil fuel exposure and an explanation of why this had increased;

·         Reported on the Investment Strategy Statement (ISS) review; including the carbon footprint and the impact of the Pension Fund engagement strategy and how these would inform future investment decisions. It was believed that the public interest in disclosing this information outweighed the public interest in exempting this information;

·         Surveyed the Pension Fund members for their views;

·         Agreed a motion to divest the rest of the indirect investments within three years;

·         Agreed to make the motion to divest public;

·         Reinvested in local and green investments and reported on and promoted the fund’s green investments.

The Chair thanked the deputation for their comments and, in advance of questions, recognised the significant steps that the Pension Fund had taken to reduce the carbon footprint of its investment portfolio in recent years. It was noted that, since June 2021, all of the Pension Fund’s listed equity allocation had been invested with sustainable, low carbon funds; this included the Pension Fund being one of the first investors in the Paris-aligned RAFI Multifactor Climate Transition Fund which targeted annual reductions in carbon exposure. The Pension Fund had also committed approximately £130 million to renewable infrastructure funds that invested in various renewable energy projects, including solar and onshore wind. It was noted that further details could be included in the written response to the deputation.

The Chair noted the commitment of the Pensions Committee and Board to ensuring that the Pension Fund invested responsibly; this included longstanding membership of the Local Authority Pension Fund Forum (LAPFF) and regular instructions to investment managers to vote in line with their recommendations. It was noted that further details could be included in the written response to the deputation. It was acknowledged that, although a significant amount of progress had been made, more could be done and this would be a key consideration in the Pension Fund’s upcoming investment strategy review..

In relation to Pension Fund’s engagement strategy, Anita Chandler stated that she was not convinced that the Pension Fund’s current approach to engagement using LAPFF was effective. She stated that a number of LAPFF’s AGM voting recommendations were outvoted and it had been noted at previous meetings that votes were difficult to win without a shareholder majority. It was commented that a Dutch public health fund, ABP, found that their engagement strategy had failed and was now looking to divest from fossil fuels within two years; it was suggested that the Haringey Pension Fund  ...  view the full minutes text for item 5.

Note from the Head of Legal and Governance (Monitoring Officer)

When considering the items below, the Committee will be operating in its capacity as ‘Administering Authority’. When the Committee is operating in its capacity as an Administering Authority, Members must have due regard to their duty as quasi-trustees to act in the best interest of the Pension Fund above all other considerations.

It was noted that Councillor John Bevan had undertaken the following training: Fiera Capital private markets navigating turbulent times, SPS Current investment issues for pension funds, SPS Local Authority Pensions Conference, SPS Property Infrastructure and Asset Investment Strategies for Pension Funds, and EPFIF Endgame Update buy in vs buy outs vs run off  vs consolidation (November 2022); Local Authority Pension Fund Forum Conference (December 2022); SPS Annual Bonds Conference: Investment & Risk Management Strategies (January 2023); and Local Authority Pension Fund Forum Strategic Investment Forum (February 2023).

The Chair reminded members to inform the Pensions Committee and Board officers whenever they had attended training so that this could be recorded.

To confirm and sign the minutes of the Pensions Committee and Board meeting held on 22 November 2022as a correct record.

It was noted that Item 13, Forward Plan, referred to including training opportunities in the forward plan. It was confirmed that including all training opportunities individually would be onerous and that this request related primarily to Local Government Association (LGA) training. However, officers would inform members directly of any available training opportunities as soon as they become aware of them.

RESOLVED

To confirm and sign the minutes of the Pensions Committee and Board meeting held on 22 November 2022 as a correct record.

This report provides updates regarding:

·         Pension Fund membership update

·         Online Member Self Service portal update

·         Update on McCloud

The Pensions Manager introduced the report which provided updates regarding a Pension Fund membership update, an online Member Self Service (MSS) portal update, and an update on McCloud.

In relation to membership, it was reported that the number of members had been fairly consistent in the quarter. There had been a similar number of active members, a slight increase in pensioner members, and a slight decrease in deferred members. In relation to the online MSS portal, it was explained that this allowed Pension Fund members to view and update their personal info as well as generate retirement benefit estimates. It was noted that there had been a slight increase in the use of MSS; the Pensions Team had been undertaking sessions with employers to raise awareness of the service and further engagement was planned in the upcoming financial year. It was added that the report presented MSS usage figures although it was noted that there was no target to maximise usage because members would only need to use the portal based on their individual requirements.

In relation to the McCloud legal case on age discrimination, it was noted that new guidance had been issued by the Scheme Advisory Board in March 2023; this provided options for administering authorities where employers had not responded to requests for information or where the data provided did not appear to be correct. It was explained that preparatory work was continuing with Heywood, the Pension Fund’s administration software provider. It was commented that approximately 45% of employers had provided responses so far and that the next stage of the process would involve analysis to determine the accuracy of the data provided. It was added that future updates would be provided to the Pensions Committee and Board at future meetings.

In terms of staff awareness of the MSS portal, some members suggested that it could be useful to include information on staff payslips. The Pensions Manager noted that work was underway to include improved information about pensions as part of staff inductions. It was stated that it may not be possible to include pensions administration information on payslips as the payroll system was separate from the Pension Fund but that this could be investigated. It was clarified that any member of the Pension Fund who did not use the MSS portal could still contact the Pensions Team directly for any queries related to their member record. It was understood that MSS accounts would need to be set up by individuals and were not generated automatically.

In relation to the actions required in response to the McCloud age discrimination court case, some members expressed concerns that the response rate from employers was 45%. The Head of Pensions and Treasury noted that, because of the nature of the historical data required, it was prudent to assume that funds would generally struggle to attain a 100% response rate. It was explained that the Haringey Pension Fund had been in contact with all relevant employers and was working to obtain  ...  view the full minutes text for item 8.

This report provides the following updates for the quarter ended 31 December 2022:

·         Independent advisor’s market commentary

·         Investment performance

·         Investment asset allocation

·         Funding position update

·         London Collective Investment Vehicle (LCIV) update

The Head of Pensions and Treasury introduced the report whichprovided updates for the quarter ended 31 December 2022 in relation to the independent advisor’s market commentary, investment performance, investment asset allocation, a funding position update, and a London Collective Investment Vehicle (LCIV) update.

It was reported that the market value of the Pension Fund’s investment assets on 31 December 2022 was £1.663 billion; there had been minimal movement since the previous quarter. It was noted that there had been volatility in some asset classes and a full performance update was set out in the Confidential Appendix 1 to the report, including performance over time and a comparison to the index. It was added that section 6.7 of the report showed the Pension Fund’s current asset allocation compared to the target allocation. The Head of Pensions and Treasury also highlighted that the Pension Fund now had approximately 75% of assets invested with the LCIV.

Some members noted that there had been some major market events in the last quarter and  enquired whether the Pension Fund’s investment portfolio was likely to experience an adverse impact as a result of these events. The Independent Advisor commented that some recent market events had not significantly impacted the world equity markets between December 2022 and March 2023 and it was suggested that this may have been a result of lessons having been learnt from the 2008 banking crisis.

The Head of Pensions and Treasury noted that there was still uncertainty in the sector and that decisions from central banks were anticipated shortly; the reactions would be monitored. It was commented that this demonstrated the importance of having a diversified portfolio and that, as part of the investment strategy review, views would be sought on whether the current investment strategy was aligned to the return requirements of the Pension Fund or whether signification changes to the strategic asset allocation would be required.

Following consideration of the exempt information, it was

RESOLVED

To note the information provided in section 6 of the report regarding the Pension Fund’s investment performance and activity for the quarter ended 31 December 2022.

This report provides an update on the external audit progress for the Pension Fund’s Statement of Accounts for the year ending 31 March 2021.

The Head of Pensions and Treasury introduced the report which updated the Pensions Committee and Board on the external audit progress for the Pension Fund’s Statement of Accounts for the year ending 31 March 2021.

It was noted that the 2020-21 audit had been ongoing since November 2021 but that there had been a number of challenges which had contributed to the delay in the completion of this exercise which included the increasingly complex requirements for public sector accounting. It was stated that a detailed progress update was provided in the report. It was highlighted that this was a challenging environment for the audit sector nationally and that Haringey was not the only Pension Fund in this position.

It was highlighted that the majority of testing had been completed although, there were a few key areas that required further evidence and assurance. It was noted that officers were engaging with the external auditors regularly and it was unlikely that any of the outstanding issues would result in a change to the overall audit opinion. It was commented that there was one material misstatement in relation the valuation of private equity investments, as set out in the report. It was explained that the valuation of private equity was complex and estimates were often used whilst the final valuation reports were awaited; it was stated that, due to this timing difference, it was not uncommon to have material differences. It was confirmed that officers agreed with this finding and that the amendment would be included in the final audited version of the statement of accounts.

David Eagles, BDO, provided a summary of the external audit for 2020-21. It was explained that the ‘materiality’, or amount of discrepancy that was noted as significant, for the Haringey Pension Fund was based on 1% of the value of investments (£16 million) or 5% of the value of contributions (£2.3 million). It was noted that one material misstatement had been identified, as mentioned by the Head of Pensions and Treasury, in relation to private equity investment valuation. It was acknowledged that this was not a particular issue in Haringey and that it was reasonably common for Pension Fund draft accounts to be based on provisional information which was later amended. It was stated that this was not a significant issue and would be easy to amend.

In relation to the assumptions used by the Pension Fund’s actuary to calculate expected liabilities, it was stated that all but one of the assumptions statistics were within an acceptable range. It had been noted that the figure outside of the acceptable range was based on estimates, as set out in the report footnotes; this was considered to be reasonable, subject to confirmation from the National Audit Office (NAO).

In relation to private equity investment valuation, it was noted that the capital investment statement had been confirmed after the deadline for preparing the draft accounts and it was confirmed that the final accounts would include the amended information. In relation  ...  view the full minutes text for item 10.

This report provides information on the outcome of the actuarial valuation exercise at 31 March 2022. It also presents the conclusions made by the Fund’s actuary, Hymans Robertson, regarding the actuarial valuation results for the whole fund. This includes revised contribution rates for the next three years starting on 1 April 2023, as well as the funding position as of the valuation date. An updated version of the Funding Strategy Statement has also been included for approval, subject to the completion of the consultation with the Fund’s employers.

The Head of Pensions and Treasury introduced the report which provided information on the outcome of the actuarial valuation exercise at 31 March 2022, presented the conclusions made by the Fund Actuary, and reported an updated version of the Funding Strategy Statement (FSS) for approval, subject to the completion of the consultation with the Fund’s employers.

Overall, it was reported that employer contribution rates had been reduced largely due to investment outperformance and revisions to actuarial  assumptions since the 2019 valuation exercise. It was noted that the Pension Fund was required to consult employers on any changes to their contribution rates as well as the updated FSS. The majority of employers were content with the proposals and, following some updates to the FSS, further engagement was ongoing. The funding position had also improved since 2019 and it was noted that this was routinely monitored to ensure that the Pension Fund retained a healthy funding position.

Douglas Green, Hymans Robertson, explained that the valuation exercise measured the Pension Fund’s position as at 31 March 2022 and the FSS was a guide for engaging with employers over the next three years. It was explained that the purpose of the Pension Fund was to ensure that the pension benefits of its members were paid in full and on time to members when they retired. It was noted that, unlike most public sector pension schemes, the Local Government Pension Scheme (LGPS) had assets to which would be used to pay benefits. These assets generally came from two sources: investment returns and contributions paid into the scheme. It was noted that the Haringey Pension Fund had approximately 50 employers, with Haringey Council as the largest employer. It was explained that the position of each employer was monitored and, through the actuarial valuation, the funding plan for each employer was analysed and reset every 3 years in line with the LGPS Regulations.

It was noted that the process for the valuation was set out in paragraph 6.3 of the report. It was commented that the majority of tasks had been undertaken and that all work was expected to be completed by the end of March 2023. It was explained that some final information had been received recently from the government but that it was anticipated that there would be a fully compliant valuation within the regulatory timescales.

In relation to the Pension Fund funding level, it was reported that the position was significantly stronger than 2019 and the funding level was now 113%. This was primarily due to strong investment returns. However, it was too early in the process to determine how this compared to other funds but it was considered that this performance was likely to be at the higher end.

In relation to the contribution rate for each employer, it was noted that some details were awaited from employers. It was explained that these details would be confirmed and that the new contribution rates would apply from 1 April 2023. In relation to the  ...  view the full minutes text for item 11.

The purpose of the paper is to identify and agree upon the key priorities for the upcoming months and to seek members’ input into future agendas. An overview of the planned investment strategy review work that will follow the completion of the actuarial valuation exercise has also been included for members’ consideration.

The Head of Pensions and Treasury introduced the report which presented the forward plan for consideration. It was noted that the forward plan was set out in full at Appendix 1 to the report.

It was highlighted that the Forward Plan had been updated in relation to the Pension Fund’s investment strategy review process. It was noted that, following the conclusion of the actuarial valuation exercise, it was prudent to review the Pension Fund’s investment strategy and the process for the review was set out in the report. It was explained that, based on discussions with the Pensions Committee and Board member working group, three priorities had been identified: reviewing the cashflow requirement, setting the investment objectives, and agreeing any changes to the ISS and exploring investment opportunities.

It was enquired whether members could receive a briefing on the introduction of pensions dashboards, which aimed to make pensions information more accessible, and the likely impact on the Pension Fund; the Head of Pensions and Treasury noted that this would be possible once the guidance on pensions dashboards had been made more clearer.

Some members drew attention to the deputation that had been received earlier in the meeting and noted that the investment strategy review did not specifically reference climate change goals; it was suggested that this should be included as a focus for review. The Head of Pensions and Treasury explained that climate change would be included under the topic of responsible investments but agreed that this could be more explicitly noted.

RESOLVED

1.    To note and agree to the proposed key priorities identified in section 6 of the report regarding the investment strategy review work.

2.    To note the Pensions Committee and Board’s forward plan.

This paper provides an update on the Pension Fund’s risk register and provides an opportunity to further review the risk score allocation.

The Head of Pensions and Treasury introduced the item which provided an update on the Pension Fund’s risk register and an opportunity for the Pensions Committee and Board to further review the risk score allocation.

It was noted that the area of focus for the meeting was investment related risks but that the report also included a summary of key risks. It was commented that high inflation and the delay of the Pension Fund account publication were key risks at present. It was added that the increasing risk of a market downturn had been identified as a medium risk but, as there was increasing uncertainty, this would likely be re-adjusted to high risk. Members agreed that there was increasing uncertainty and expressed support for classifying this as a high risk. 

RESOLVED

To note the Pension Fund’s risk register.

The Fund is a member of the Local Authority Pension Fund Forum (LAPFF) and the Committee and Board has previously agreed that the Fund should cast its votes at investor meetings in line with LAPFF voting recommendations. This report provides an update on voting activities on behalf of the Fund.

The Head of Pensions and Treasury introduced the report which provided an update on the Local Authority Pension Fund Forum’s (LAPFF) engagement and voting activities on behalf of the Pension Fund.

It was explained that the agenda contained a condensed report on LAPFF activities and that the full report was available on the LAPFF website. It was reported that LAPFF had engaged with 26 companies in 12 jurisdictions and had focused on issues related to climate change. It was noted that there had not been a lot of voting activity in the quarter but that the Pension Fund’s investment manager had voted in line with the LAPFF recommendations.

RESOLVED

To note the report.

There were no items of urgent business.

To note the provisional dates of future meetings:

13 July 2023

5 September 2023

4 December 2023

29 January 2024

5 March 2024

It was noted that the provisional dates of future meetings were:

13 July 2023

5 September 2023

4 December 2023

29 January 2024

5 March 2024

Items 18-21 are likely to be subject to 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 (as amended by Section 12A of the Local Government Act 1985); para 3 – namely information relating to the financial or business affairs of any particular person (including the authority holding that information) and para 5 – information in respect of which a claim to legal professional privilege could be maintained in legal proceedings.

That the press and public be excluded from the meeting for consideration of items 18-21 as they contained exempt information as defined in Section 100a of the Local Government Act 1972 (as amended by Section 12A of the Local Government Act 1985); paras 3 and 5; namely information relating to the financial or business affairs of any particular person (including the authority holding that information) and information in respect of which a claim to legal professional privilege could be maintained in legal proceedings.

As per item 9.

The Pensions Committee and Board considered the exempt information.

As per item 11.

The Pensions Committee and Board considered the exempt information.

To confirm and sign the exempt minutes of the Pensions Committee and Board meeting on 22 November 2022as a correct record.

To confirm and sign the exempt minutes of the Pensions Committee and Board meeting held on 22 November 2022 as a correct record.

There were no new items of exempt urgent business.