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.

Apologies had been received from Ishmael Owarish and Craig Pattinson.

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 3below).

None.

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.

None.

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

None.

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.

The Pensions Committee and Board had received training shortly before the start of the meeting regarding one of the exempt items on the agenda. Craig Pattinson and Cllr Iyngkaran attended a LAPPF programme day course.

To confirm and sign the minutes of the Pensions Committee and Board meeting held on 6  September 2023 and 13 July 2023 as a correct record.

Report to follow.

RESOLVED:

That the minutes of the meeting held on 21 March 2023 be confirmed

and signed as a correct record.

Matters arising

Cllr Bevan noted that in the July committee it was raised that a representative from the London CIV would attend a committee – Tim Mpofu would revisit this and look into further.

Cllr White and Cllr Iyngkaran had attended the LGA training that was offered to members regarding the London CIV.

Cllr Bevan raised the need for further discussion around the self-service portal. In response, officers acknowledged they were happy to arrange a workshop for members to talk through this, although it was suggested that this session be conducted outside of the formal Committee and Board meeting. It was further noted that, the team offered this training to staff as part of the onboarding process, this could be further extended to all Committee and Board members.

This report provides the Pensions Committee and Board (PCB) with the following updates regarding Pension Fund’s administration activities:

a.       Pension Fund membership update

b.       Online Member Self Service portal update

c.       Update on McCloud project

d.       Update on Service Level Agreement (SLA) statistics

e.       Update on staffing and recruitment

Jamie Abbott, Pensions Manager, presented the item which detailed the below,

o   Pension Fund membership update

o   Online Member Self Service portal update

o   Update on McCloud project

o   Update on Service Level Agreement (SLA) statistics

o   Update on staffing and recruitment

The following was noted in response to questions from the committee:

·         Cllr Bevan sought clarification on the provided performance figures for the various service level agreements, and it was explained going forward these would be provided at every meeting. Currently the SLA figures quoted in the report were those agreed in the administration strategy. The CIPFA figures were slightly different, and these were not included within the extract yet. This would be worked on and included in the next report.

·         The pensions administration team had undertaken a significant recruitment exercise over the past year and onboarding new members of the team had taken some time. It was confirmed that two new apprentices had now been recruited into the team, and both were local to the Haringey area. Work had been undertaken with the HR team to create an additional post as a result of the high quality of candidates who had applied for the role. Both apprentices would be on a structured training plan which was expected to take 18-24 months for them to become fully fledged pensions officers.

·         Service Level Agreements (SLA’s) were how the fund detailed how quickly casework would be processed. The administration strategy outlined how quickly, for example, a change of address or retirement would be processed; performance could be measured against that. There were benchmarking processes in place, but the team were looking to update these. A good SLA performance figure would be above 90%, and the team envisioned the figure internally would improve over the coming months as a result of having a more permanent team in place.

RESOLVED

The Pensions Committee and Board is recommended to note this report and the information provided regarding the Pension Fund’s administration activities for the quarter ending 31 December 2023.

This report provides the Pensions Committee and Board (PCB) with an update on the outcome of the government’s consultation on Local Government Pension Scheme (LGPS): Next steps on investments, (the Consultation) which waspublished by the Department for Levelling Up, Housing and Communities (DLUHC) on 11 July 2023. The Consultation closed for responses on 2 October 2023.

Tim Mpofu, Head of Pensions, introduced the report for this item. This report provided the Pensions Committee and Board (PCB) with an update on the outcome of the government’s consultation on Local Government Pension Scheme (LGPS): Next steps on investments, (the Consultation) which was published by the Department for Levelling Up, Housing and Communities (DLUHC) on 11 July 2023. The Consultation closed for responses on the 2^nd of October 2023.

The following was noted in response to questions from the committee:

·         John Raisin explained that where pooling had suited this fund; pooling had occurred. There were a few funds that had set themselves against pooling on principle; however, most LGPS funds had taken the logical and sensible approach, which was where the pool provided an advantage it was used.

·         Cllr White queried on how the fund supported levelling up. John Raisin explained that there were investments in assets which supported levelling up, this could be seen particularly through the infrastructure debt investments. The London Fund within the London CIV would also support this. The allocation to the UK’s infrastructure debt investments was around 2.5% of the Fund’s investment portfolio. The intention of going into these investments was primarily to meet investment strategy objectives rather than to achieve levelling up objectives.

·         Regarding the Government’s statutory guidance there would be no compulsion in terms of levelling up, private equity or pooling. The Government’s response had signalled that the approach to the new statutory guidance would be a comply or explain regime. Within the consultation response, the Government noted that the Fund would be required to set out its approach to levelling up, private equity and pooling within the investment strategy. For example, in setting out its asset allocation as part of its investment strategy statement, the Fund could provide an explanation as to why it was an unable to allocate to a particular asset class given the factors specific to the Fund.

·         John Raisin noted that there were few civil servants working on LGPS issues. This may account for the Government not issuing outcomes in respect of earlier LGPS Consultations such as on Fair Deal and Climate Reporting. In response to a query regarding any penalties for non-compliance, it was further acknowledged that if the Government could penalise funds for not complying, then one could argue that the Government may be indirectly mandating funds to a particular course of action. As such, it would be expected that any statutory guidance issued would consider this carefully.

·         Cllr Bevan queried investing in more than one pool, John Raisin explained that LGPS funds could not do this directly. The London Fund was essentially an investment strategy managed by one of the other pooling companies, the Local Pensions Partnership Investments (LPPI) , and the London CIV had come to an arrangement with the LPPI to give access to the London boroughs. The Government expected there to be more inter pool collaboration, this would allow for easier pool amalgamations in the long term.

·         Cllr Hymas  ...  view the full minutes text for item 9.

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

Tim Mpofu introduced the item, this paper provides an update on the Local Authority Pension Fund Forum’s (LAPFF) engagement and voting activities on behalf of the Fund. The Fund is a member of LAPFF, and the Pensions Committee and Board (PCB) has previously agreed that the Fund’s investment managers should cast its votes at investor meetings in line with the LAPFF voting recommendations.

The following was noted in response to questions from the committee:

• Cllr Bevan flagged that he received various emails from LAPFF regarding investment holdings figures, Tim Mpofu would look into this after the meeting.

RESOLVED

To note the content of this report.

This paper has been prepared to update the Pensions Committee and Board on the Pension Fund’s risk register and provide an opportunity for the Pensions Committee and Board to further review the risk score allocation.

Jamie Abbott introduced the item; this paper has been prepared to update the Pensions Committee and Board on the Pension Fund’s risk register and provide an opportunity for the Pensions Committee and Board to further review the risk score allocation. The risk assessment presented at this meeting focused primarily on the investment-related risks.

The following was noted in response to questions from the committee:

• Cllr Hymas sought clarification regarding the Fund’s Environmental, Social and Governance (ESG) policy. Tim Mpofu explained that the Fund’s ESG policy would be further discussed as part of the Investment Strategy Statement (ISS) agenda item which had been included as part of the exempt portion of the meeting’s agenda. The ISS sets out what investments the Fund can and cannot invest in. Through engagement with members, it had been determined that more time should be taken to consider the Fund’s approach to responsible investment. The development of such a policy may require the use of external specialists to advise the Committee and Board. It was further noted that Funds were required to outline their approach to managing ESG risks in their ISS, however a responsible investment policy would be supplementary to the ISS.
• Cllr White explained that he thought more emphasis was needed on other parts of the ESG, such as the social and other ethical sides of investments. He suggested it would be good to have a deeper conversation about this and updating the investment strategy upon reflection.
• Following a query regarding the outstanding audits, it was confirmed that officers had investigated whether separate auditors could be appointed, and this was deemed not possible under the current regulations. There was an ongoing conversation between the Haringey finance team and the external auditors to try and address the external audits backlog. It was confirmed that this issue had been raised at previous meetings as a concern hence why this had been included as part of the risk register. It was further noted that the Government had sent out a letter in the autumn of 2023 where they had set out how they were planning on tackling public sector audit backlog; 40% of audits were still outstanding across the country in the public sector. The Scheme Advisory Board was working closely with the Government to explore whether pension fund audits could be separated from the audit of the Council’s statement of accounts. It was confirmed that a new audit firm would be undertaking the audit of the current financial year ending 31 March 2024 and the team had already started to engage with on the planning work. The finance team had discussed the issues relating to the outstanding audits with them. The team were trying to progress this but unfortunately the way in which the rules were set up meant there was not much more that could be done to progress the issue.
• It was further noted that there was no provision in the Council’s constitution that would enable the combined Pensions Committee and Board to appoint  ...  view the full minutes text for item 11.

This report provides the Pensions Committee and Board (PCB) with the following updates on the Pension Fund’s performance for the quarter ended 30This report provides the Pensions Committee and Board (PCB) with the following updates on the Pension Fund’s performance for the quarter ended 30 September 2023:

a.       Independent advisor’s market commentary

b.       Investment performance

c.       Investment asset allocation

d.       London Collective Investment Vehicle (LCIV) update

e.       Funding position update

Tim Mpofu introduced the item. This report provides the Pensions Committee and Board (PCB) with the following updates on the Pension Fund’s performance for the quarter ended 30 September 2023.

a. Independent advisor’s market commentary

b. Investment performance

c. Investment asset allocation

d. London Collective Investment Vehicle (LCIV) update

e. Funding position update

The following was noted in response to questions from the committee:

• Investments in the London CIV were approximately 76% of total fund assets The funding position as of 30th of November had been included in the confidential appendix. The funding position for the pension fund was 139%, as per the Fund Actuary’s latest estimates.
• Cllr Iynkaran questioned the performance of the portfolio. Tim Mpofu explained that there were assets within the portfolio that had not performed as expected due to the changes in economic conditions. The Fund’s allocation to Index Linked Gilts was an example of one of the asset classes that had underperformed. Although inflation had increased, the impact from the increase in interest rates had resulted in significant mark-to-market capital losses. There were also some asset classes that were not revalued on a regular basis, and as a result there would be a lag in terms of their performance. It was further noted that although property had underperformed during the period, it was still considered appropriate for the Fund due to its payment of distributions and income generation characteristics.
• Keith Brown flagged that he would caution about putting too much emphasis on the total fund performance relative to the total fund benchmark. This was because for quite a few of the asset classes, they were quite difficult to benchmark as well as being lagged.
• In response to a query regarding performance reporting, Tim Mpofu suggested that the team could work on different models and explore how the existing performance reporting could be further improved. Traditionally, the fund’s approach had been to use the Fund’s benchmark as a means of checking whether the asset manager was delivering on their performance objectives. It did not necessarily attribute the performance of the Committee and Board’s own investment decision making process.
• The Chair sought clarification from Mercer in relation to private debt and whether this should be something still investigated. He also flagged if there could be a report of other asset classes for future investment strategies. Alex Goddard, Mercer, explained that private debt continued to be an asset class that investment managers spoke to LGPS funds about and it was at a floating rate. As interest rates have gone up there, returns had gone up as well. This is why some had seen it as appealing, and it would fit within that diversifying alternatives bucket. The question would be, if the committee were going to look to allocate this, where they would allocate this from. That would be a discussion that needed to be had across a range of asset classes.

Cllr Mark Blake attended the committee and read out a statement:

Cllr Blake expressed, in his view,  ...  view the full minutes text for item 12.

This report provides the Pensions Committee and Board (PCB) with an assessment of the of the Pension Fund’s current strategic asset allocation in comparison to various alternative options.

Tim Mpofu introduced the item. This report provided the Pensions Committee and Board (PCB) with an assessment of the of the Pension Fund’s current strategic asset allocation in comparison to various alternative options which would be considered during the exempt part of the agenda.

The following was noted in response to questions from the committee:

·         Cllr White raised concerns and wanted the committee to look more widely at the ESG part of the investment strategy. He flagged not just the environmental aspects, but other ethical parts of the investments needed to be looked at. The concerns were acknowledged, and it was confirmed that they would be considered as part of the Committee and Board’s forward plan.

RESOLVED

To note Mercer’s Investment Strategy Review paper, appended as Confidential

Appendix 1 of this report, and the advice contained therein.

To approve a change to the Pension Fund’s strategic asset allocation to Option 1

as set out in Confidential Appendix 1 of this report.

To delegate the authority to the Head of Pensions and Treasury to implement the

above strategic asset allocation (if approved), including appointing the investment

manager identified on page 13 of Confidential Appendix 1 of this report. This will

be done in consultation with the Chair of the PCB and Independent Advisor, and

after seeking professional advice from the Pension Fund's investment advisors.

Report to follow.

This item was to be discussed under the exempt section of the meeting.

This paper has been prepared to identify and agree upon the key priorities for the Pensions Committee and Board over the upcoming months, as well as seek members’ input into future agendas.

Tim Mpofu introduced the item. This paper has been prepared to identify and agree upon the key priorities for the Pensions Committee and Board over the upcoming months, as well as seek members’ input into future agendas.

The following was noted in response to questions from the committee:

·         Cllr Iynkaran flagged whether responsible investment could be looked into further in regard to aspects of the fund and navigating the strategy going forward. Tim Mpofu confirmed this would be taken forward in terms of the future work for the fund.

RESOLVED

To note the progress made towards the agreed key priorities outlined in section 6

of this report, specifically in relation to the investment strategy review work.

To identify additional matters and training requirements for inclusion within the

Pensions Committee and Board’s forward plan.

There were no new items of urgent business.

To note the dates of future meetings:

5 March 2024

The date of the next meeting is 5^th March.

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.

Items 19-21 were subject to a motion to exclude the press and public

from the meeting 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); 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.

As per item 12.

The exempt recommendations were considered and approved.

As per item 13.

The exempt recommendations were considered and approved.

As per item 14. Report to follow.

The exempt recommendations were considered and approved.

None.