Agenda and 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. Although we ask members of the public recording, filming or reporting on the meeting not to include the public seating areas, members of the public attending the meeting should be aware that we cannot guarantee that they will not be filmed or recorded by others attending the meeting. 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 and using the public seating area, 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.

There were apologies for absence submitted from Cllr McShane and   in accordance with Committee Standing order  53 and 54 Councillor Adamou substituted.

There were also apologies for absence from John Raisin, the financial adviser to the Committee.

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 X below).

There were no items of urgent business submitted.

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  put forward.

Note from the Assistant Director of Corporate Governance and 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.

Further notification of training received prior to the meeting had been submitted as follows:

Cllr Bevan

·         Pensions CIV Sectoral Joint Committee 31/01/18

·         LAPF Strategic Investment Forum 07/02/18

·         AON Pension Conference 2018

·         London Councils Pensions CIV Sectoral Joint Committee 14/03/18

·         SPS Local Authority Pension Fund Investment Issues 15/03/18

Cllr Viv Ross  attended a round table dinner discussion on ‘longevity’ for Chairs of Pension Schemens and experienced Trustees at AON Hewitt offices, Leandenhall Building London EC3.

The Committee noted that correspondence, relating the  Pensions Board and Committee  views that it should  be  mandatory for the Chair of Corporate and the Chair Staffing & Remuneration Committee to sit on the Pensions Committee & Board and that the term should be for 4 years. It was agreed appropriate for the  letter be submitted to both political party whips and this issue  be discussed at group meetings in May.

 Action : Vice Chair

RESOLVED

That the minutes of the meeting held on the 18^th of January 2018 be approved as a correct record of the meeting.

Report of the Chief Finance Officer and S151 Officer presenting the audit plan prepared by the external auditors, BDO, for the audit of the Pension Fund accounts 2017/18.

The Committee considered a report which set out the audit plan prepared by the external auditors, BDO, for the audit of the Pension Fund accounts 2017/18 for the Committee’s consideration.

The Committee noted the scope of the audit and the areas of risk which would be investigated. There was not yet a position reached whereby the pension accounts could be included in the council statement of accounts.

The Auditor outlined the type of investigations that would be taken including:  valuations, data, market average as manipulative, testing contributions to make sure employees making correct payments, membership data will be checked, indirect costs will be analysed, whether fund managers are being  transparent on unit price.   Also related party transactions would be looked at to check that benefits paid were correct

The Auditor would report back findings to Committee in July 2018.

In response to a question, noted that an example of indirect costs was stamp duty and the auditor would review what was being claimed on the Council’s behalf.  It was important to understand the elements of the unit price.

RESOLVED

To approve the 2017/18 Audit Plan prepared by BDO

Report of the Chief Finance Officer and S151 Officer to update the Committee and Board on Pensions administration matters including a review of the Pensions Administration Strategy Statement.

The Committee considered a report which set out a review of the Pensions Administration Strategy Statement. The report also provided a breakdown of the amount of visits made to the Haringey Pension Fund website.   

The new strategy took account of the updated rules on data protection as outlined at page 68. It was noted that pensions records of staff and staff who had left the authority  , would be kept according to LGA guidelines. The Committee noted the importance of keeping to these requirements as an employee may have left the authority but their contributions may continue to make a return and would be claimable in the future by the ex- employee or their relative, if they are  deceased.

In response to a question from Cllr Ross regarding Urban Futures employee contributions, it was noted that the council were seeking these through the insolvency process. Assurance was provided that this  payment was being pursued and the Council would expect to obtain these payments in full.

RESOLVED

1.    To approve the updated Administration Strategy Statement.

2.    To note and approve the application of the Local Government Association’s (LGA) guidance on retaining pensions data for the Data Protection Act 2018 purposes.

3.    To note the cessation of Urban Futures (London) as an Admitted Employer to the Pension Fund.

4.    To note the contents of this report in respect of the administration of the Pension Fund.

Report of the Chief Financial & S151Officer giving an overview of recommended changes to the strategy of investing.

The Chair agreed to vary the agenda to consider item 9, immediately after consideration of the minutes as Cllr Bevan would need to leave the meeting to attend Planning Committee.

The Head of Pensions introduced the public part of the report which set out a review of the fund’s existing equity strategy, along with actions that could be taken in relation to this.

The Committee noted that Haringey Pension Fund had increased in value by roughly £350m since the 2016 valuation, and the majority of this increase was attributable to continued global stock market growth. This had materially improved the fund’s funding level , however, these gains could be reversed before the date of the next triennial valuation in 2019, should stock markets decline and this would impact on employer contribution rates.

The Committee noted that the Fund’s equity was currently all invested passively in market cap weighted index linked funds, with set percentages allocated to different geographic regions. 50% of the developed market equity was invested in global low carbon funds, this was also market cap weighted, however with a tilt away from certain stocks to create a significant decrease in exposure to carbon emissions and carbon reserves.

The Committee were asked to consider potential changes to the strategy of investing only in line with market cap indices, as well as the use of fixed allocations to specific geographic regions, and were asked to consider both alternative index use and active equity management.

Following presentation of the exempt information from Mercers attached at item 16 , and discussion on the merits and draw backs of the 3 models of investment proposed, which concentrated on the management fees applicable following a change in strategy, and the general risks perceived around an active style management, ,there was a vote on the proposed strawman equity portfolios, set out in the exempt part of the report.

Strawman 3 - [ set out as a recommended option at 3.2 ] received 2 votes and Strawman 2 received 4 votes.

RESOLVED

1.    To approve a change to the fund’s investment strategy to implement strawman 2 equity portfolio as shown in the exempt appendix 1 attached at item 16, namely to;

·         Allocate 42.6% to multi factor portfolio.

·         Allocate 14.8% to market cap portfolio

·         Retain the current allocations to emerging market equity and low carbon equity, but to switch all of the low carbon portfolio into a currency hedged fund, to retain the fund’s overall 50% currency hedged position in developed markets

2.    To grant delegated authority to the CFO to implement this investment strategy change, including any due diligence necessary with the requisite fund managers, and to effect the movement of investment assets.

3.    To grant delegated authority to the Head of Pensions to update the Fund’s Investment Strategy Statement and republish this, consistent with any changes agreed, as detailed above.

Tactical Rebalancing:

4.    To agree to a tactical rebalancing of the portfolio, as detailed in Confidential Appendix 2 as ‘option 3’, but namely to complete  ...  view the full minutes text for item 173.

Report of the Chief Operating Officer to identify topics that will come to the

attention of the Committee in the next twelve months and to seek Members

input into future agendas. Suggestions on future training are also requested.

The Committee was invited to identify additional issues & training for inclusion within the work plan and to note the update on Member training attached at Appendix 3.

In response to a suggestion by the Pensions Auditor to have training on governance strength, it was noted that this had already been covered in recent training sessions.

RESOLVED

To note the work plan and Committee members to, separately, advise the Pensions Manager of training needs.

Report of the Chief Operating Officer to provide an update on the Fund’s risk

register and an opportunity for the Committee to further review the risk score

allocation.

The Committee considered an update on the Fund’s risk register and  were given the opportunity to further review the risk score allocation.

The Committee noted that there were no new issues since the previous report. The only risk was the growing  number of employers in the fund which  now stood at 71.

RESOLVED

1.    To note the risk register.

2.    To note the area of focus for this review at the meeting is ‘Funding and Liability’ risks.

Report of the Chief Finance Officer & S151 Officer to report the following in respect of the three months to 31st December 2017:

•           Funding Level Update

•           Investment asset allocation

•           Investment performance

•           Investment Update

The  Committee  and Board  noted the quarterly Pension Fund update report, as introduced by Thomas Skeen , Head of Pensions.  It was noted that  at the most recent  valuation, the fund had a funding position of 79%  - meaning  the fund’s investment assets were sufficient to pay 79% of the pension benefits accrued at that date.

The Pensions Manager  continued to refer to  paragraphs 11.1 to 11.3 which outlined the improvement to an 88.2% funding level for the Pension Fund and the increase being mainly attributable to investment returns.  This position was improved slightly from 30 September 2017 at 86.5%to a net deficit of £277m, which has decreased to £186m as at 31 December 2017 when the indicative funding level was 88.2%.

Good decision  making in relation to investments was further cemented with the Council’s current investment with CQS  now coming under the CIV’s oversight. This meant that the Council  immediately starts to benefit  from the various efficiencies associated with having funds which are invested via the CIV pool.  This was similar to Haringey’s investments with LGIM which are also under the CIV’s oversight

In relation to a query about paragraphs 8.7 to 8.8, noted that this outlined  that Japan contained a better  market to invest in  due to deflation, compared to the  UK . It was also noted that gilts were calculated according to RPI.

RESOLVED

To  note the information provided in respect of the activity in the three months to 31^st December 2017 .

Report of the Chief Financial & S151Officer to provide an update to Committee and Board:

•              on progress toward compliance with Scheme Advisory Board (SAB) key performance indicators;

•              to highlight areas where improvement is still needed in order to achieve full compliance.

•              on the London CIV Consultation that was sent out in February 2018

The Committee noted that there was no movement in the Key performance indicators relating to compliance with Scheme Advisory Board.

The London CIV consultation was circulated in February 2018 and the response provided by the council was included in exempt  item. This had been accompanied by a strongly worded letter from the Council which highlighted that the  proposals   were incompatible with the Council’s  ESG  funding activities and blended mandates being taken forward.

The CIV business plan  proposals had  generally  been viewed negatively  by local authorities  and the CIV were now redrafting proposals, set out in page 201 to 205 of the agenda pack.

Noted that the Council would be responding to the  new  consultation before the local elections.

RESOLVED

To note progress since the last report to the Committee and Board on performance against SAB’s key indicators.

To note the London CIV consultation which was circulated in February 2018.

Report of the Chief Finance & S151 Officer to provide members of the Pensions Committee and Board with details of the procurement exercise undertaken in relation to the Fund’s investment consultant.

[ Mercer representatives left the meeting at this point]

The Committee were reminded that the current contract for investment consultancy services with Mercer expires on 31 March 2018.  This contract  had been extended at the Pensions Committee and Board meeting of 18 January 2018, in order to bridge the period to the end of the financial year.  At this Committee meeting, delegated authority was granted to the CFO to enter into a new two year contract for investment consultancy services (with possible extension for one further year), following a procurement exercise carried out by officers with the involvement of the Independent Advisor to the Fund.   The contract will run from 1 April 2018 to 31 March 2020, and will provide for an option to extend the contract for a further year to 31 March 2021.

The attached  report to provided members of the Pensions Committee and Board with details of the procurement exercise undertaken.

Following consideration of  exempt information at  item 18 , there were no questions or queries from members of the committee and Board relating to the procurement exercise.

RESOLVED

That the Pensions Committee and Board note the contents of this report, and note that Mercer Ltd will be re-appointed as the fund’s Investment Consultant from 1 April 2018, following the competitive procurement exercise carried out by officers.

Reason for Decision

N/A this is a noting item.

Other options considered

The fund must appoint an investment consultant to ensure it is able to access proper investment advice in order to fulfil its duty as Administering Authority for Haringey LGPS Fund. Therefore, not appointing an investment consultant would be an inappropriate course of action.

To consider any items admitted at Item 3 above.

None.

As per item 9.

As per item 13

As per item 177.

As per item 14

To consider any items admitted at Item 3 above.

None