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.

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 12 below).

Prior to the start of the meeting, the Committee were informed that the group Wood Green Friends of the Earth sought to address them with regard to divestment. As the formal procedure rules had not been followed, the Chair sought the Committee’s permission as to whether to allow the leader of the group to make representations on behalf of the group to the Committee. The Committee unanimously agreed to allow the group to address them.

Quentin Given, on behalf of Wood Green Friends of the Earth, spoke to the Committee. It was raised, that:

·         The number of natural disasters were increasing and this was because of the continual usage of fossil fuel. Governments were not giving the issue the urgency nor the action it was due and the group wanted to see Haringey Council’s Pension Committee and Board make a commitment to complete divestment from fossil fuel. It was noted that other Councils had made similar commitments and were moving towards alternative investments which the group claimed were performing far better;

·         The group wanted the Committee to go beyond its 5% commitment to investing in renewable energy and asked it to timetable a report for the next meeting setting out the steps moving towards divestment in fossil fuel; and

·         The group were mindful of the reality of the time needed to create reports and to make decisions on such issues but asked the Committee to make a decision as soon as it was able to, with regard to the issues raised above.

The Chair thanked Quentin Given for his speech and reassured the group that the Committee shared their concern on the impacts of fossil fuel. The Chair noted that it was his intention to liaise with other Pension Chairs on the issue of a unified and collective commitment to future divestment.

On behalf of Haringey Council, Thomas Skeen, Head of Pensions, addressed the Committee and Board on this topic and noted this the issue of the Fund’s Equity Strategy had only recently been addressed at a previous meeting in March 2018 and there were good reasons why the changes made at this time were done. It is not good practice to make regular changes to the Fund’s Equity Strategy within short time periods. This could potentially damage the fund’s reputation, with participating employers questioning the decisions taken by the Committee, and might affect their contributions to the Fund. Further, the Committee had already invested £276m in a low carbon fund. With regard to when the issues raised by the group could next be timetabled, it was noted that due to time-consuming items on future agendas it was unlikely that this would happen before March 2019.

The Fund’s Investment Consultant, Steve Turner, of Mercer, also addressed the Committee. The approach that Haringey Council’s Pension Committee had taken over the past 4 years had been proactive in committing to a renewable energy allocation of 5%, when other Local Government Pension Schemes (LGPS) had yet to make such commitments. The Committee had  ...  view the full minutes text for item 201.

Apologies for absence were received from Cllr Moyeed Khaled and Randy Plowright.

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.

No declarations of interest declared.

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.

Cllr White, Cllr Bevan, Cllr Dennison, Cllr Ross, Cllr Amin, Keith Brown and Ishmael Owarish attended a training session delivered by the Fund’s Independent Advisor, John Raisin, and the fund’s investment consultants, Steve Turner and Alex Goddard, of Mercer. 13/09/2018.

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

Cllr Bevan

• LBH Pensions training, 07/2018
• LBH Pension committee, 07/2018
• SPS Credit & Private Debt Investing for Pension Funds, 30/08/2018

Clr White

• London CIV meet the managers day 16^th August
• Completed 2 modules online Public Sector Tool Kit.

To confirm and sign the minutes of the meeting held on 23rd July 2018 as a correct record.

In discussing the minutes of the meeting held on 23rd July 2018, it was noted that a decision on whether to continue being a subscriber to the Pensions and Lifetime Savings Association (PLSA) was not necessary before March 2019, as this had been paid for up until that date. The Head of Pensions informed the Committee that advice on whether there is merit in continuing this subscription would be circulated to members before the next meeting but that this did not have to be an agenda Item. Members were invited to consider the advice to be circulated before the next meeting and ask follow up questions of the Head of Pensions.

Resolved

To approve and sign the minutes of the meeting held on 23rd July 2018 as a correct record.

This report presents details of potential new admission to the pension fund. The report also gives a breakdown of the amount of visits made to the Haringey pension fund website.   

This report introduced by the Pensions Manager, Janet Richards, presented details of a potential new admission to the pension fund and gave a breakdown of the amount of visits made to the Haringey pension fund website.

The Committee was informed that The Grove School would be a new school, with effect from 1 September 2018. It was noted that 23 members of the support staff who are currently members of the Local Government Pension Scheme would transfer to The Grove School and remain in the Local Government Pension Scheme. The Committee was also informed about the performance of the Haringey pension website in the months of June 2018 and July 2018, with it being noted that the average amount of users per month to the pension website was 336, viewing on average 1309 pages.

Annual Benefit Statement

Although this was not on the Agenda, the Committee were informed by the Pensions Manager that the Annual Benefit Statements, which are an annual estimate of pension benefits earned by individuals, should have been sent out before 31^st August 2018 (as per the relevant legislation), however, this was not done. 

It was explained that Haringey Council used a third party to send out the Annual Benefit Statements. Whilst the Council had sent these to the third party on 24^th August 2018 for printing, there appeared to have been an administration level error that caused there to be a delay before the printed statements were then sent to the postal room for posting. Consequently, the statements were not sent out in time. The Council’s Pensions Team became aware of the error and queried this with the third party. Upon discovery of this delay, and having investigated the error, the Pensions Team sought advice from the Pensions Regulator as to whether the issue amounted to a breach. The advice from the Pensions Regulator was that the relevant Pensions Committee should be consulted with the facts of the incident and it was for them to decide whether the incident amounted to a material breach or not. It was noted that a finding of a material breach could, depending on its severity, result in the Council being fined.

Following discussion, there were conflicting views amongst members of the Committee. It was mindful that:

• This error was outside the control of the Council, and that there appeared to have been no negative impact on the recipients of the statements;

• The Council had been proactive in investigating the issue, which had only recently occurred; and
• The Committee were reassured that the incident would not happen again and that the Council were moving towards sending out the statements online in the future, which it was believed would mean the statements would not then have to be posted.

However, it was not content that:

• This information had been presented without being included in any report, which did not give members of the public an opportunity to review the issue; and
• No formal recommendation had been prepared for the Committee  ...  view the full minutes text for item 206.

This report presents an overview of some of the fund’s private market asset class investments: property and private equity, and highlights where the fund is unable to achieve the targets set out in the fund’s Investment Strategy Statement through existing committed funds.  The report goes on to consider potential options to remedy this.

The Head of Pensions, Thomas Skeen, introduced this report, which gave an overview of some of the Fund’s private market asset class investments – property and private equity – and highlighted where the Fund is unable to achieve the targets set out in the Fund’s Investment Strategy Statement through existing committed funds. The report went on to consider potential options to remedy this.

The Committee were directed to sections 4.2 and 4.3 of the report, and it was highlighted that when the Fund made new commitments to investment, the rate at which the Fund would grow in the future it could not be anticipated. Looking at the Aviva commitment, when 5% was allocated to this back in 2016, the Fund was worth approximately £1bn. The Fund had since grown significantly, and the Aviva commitment equalled roughly 3.5% at the time of this report. This divergence had occurred in a number of the Fund’s private market asset classes. Due to the Fund’s overall strategic allocation being down 3.5% due to the Fund’s growth, two options were suggested to bring this back up to the agreed level. Firstly, the Committee and Board could choose to commit to invest further funds with existing fund managers to bring these amounts in line with the strategic allocation, or secondly, it could explore the possibility of further diversifying its private market portfolio by including a new mandate within the portfolio.

Property was highlighted as being a useful asset class. The Fund’s Investment Consultant, Mercer, had advised that residential property often displays a strong inflation linkage, and that this could sit well within the Fund’s overall property allocation. The Committee were informed that the suggested approach would be to consult London CIV to initiate discussions.

With regard to Private Equity, it was noted that this was a growth asset class that allowed the Fund to gain exposure to companies that were not available to invest in via public stock exchanges. Recommendation 4 was brought to the Committee’s attention for noting as the existing allocation to Private Equity was going to be underweight on its strategic allocation.

With regard to the options for the Fund, diversification would be positive in terms of mitigating risk exposure. However, increasing the number of fund managers would create a disproportionate drain on resources.  It was noted that nine fund managers was close to the average of existing funds of a similar size to Haringey. It was considered appropriate to work with other London boroughs, and consult London CIV about further investing by that route rather than by acquiring a new fund manager. The Independent Advisor to the Committee concurred with this positon.

Following discussion amongst the committee, it was noted that:

·         The Chair was due to discuss with fellow Pension Committee Chairs about further investing in residential property at a meeting in October 2018.

·         Property (Private Rented Sector) was not social housing.

·         Further investment in the London CIV did not entail adding a new fund manager, as the CIV is essentially an  ...  view the full minutes text for item 207.

This report identifies 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 Head of Pensions introduced this report for noting, which identified topics that would come to the attention of the Committee in the next twelve months, and sought Members’ input into future agendas. Suggestions on future training were also sought from Members.

The Committee’s attention was drawn to Appendix 1, which outlined the items on the agenda of future meetings, Appendix 2, which detailed training events Members may wish to attend, and Appendix 3, which detailed the Public Sector Toolkit and the Members that had completed this.

Following discussion, the Committee noted reports in the media that individuals had been choosing to cash in on their pensions. The Committee queried whether the Council kept a record of which of its members had cashed in on their pensions and what efforts were being made to advise them that this might not be in their best interests in the long term. In response, it was acknowledged that individuals had a legal right to cash in on their pension if they wanted to, and that the only obligation of the Council was to ensure that any individuals who did so were appropriately financially advised before so. It was further noted by the Fund’s Investment Consultant that this trend was occurring predominantly in the private sector, and that it was not currently an issue that the Local Government Pension Scheme was witnessing.   

Resolved

The Committee noted the report and the Forward Plan.

This report provides an update on the Fund’s risk register and an opportunity for the Committee to further review the risk score allocation.

The Head of Pensions introduced this report for noting, which gave an update on the Fund’s risk register and provided an opportunity for the Committee to further review the risk score allocation. The Committee were invited to note the risk register and that the area this review at the meeting is ‘Administration’ and ‘Communication’ risks.

The Committee’s attention was drawn to risk number 50, “Member’s don’t make an informed decision when exercising their pension options whilst employer’s cannot make informed decisions when exercising their discretions leading to possible complaints against the Fund”, which had its overall risk rating increased. Although there was a communications strategy in place that provided explanatory notes and guidance to members, the number of smaller employers in the fund (such as catering and cleaning providers in schools) increased this risk of more likely occurring.

In response to the Committee, it was noted that there was a general lack of understanding with regard to pension entitlements by both employees and employers. The Council was looking to change this through their Communication Strategy.

For clarity, it was noted that the columns headed ‘Probability’ on pages 39 - 42 in Appendix 1 to Agenda Item 10, should instead read ‘Overall Risk Rating’.

Resolved

1. That the Committee note the risk register.

2. That the Committee note that the area of focus for this review at the meeting is ‘Administration’ and ‘Communication’ risks.

This report provides an update on the Fund’s risk register and an opportunity for the Committee to further review the risk score allocation.

The Head of Pensions introduced this report on the quarterly performance of the Pension Fund for noting. The Local Government Pension Scheme Regulations require the Committee to review investment performance, as detailed in sections 11 and 12 of the report. The Committee’s attention was drawn to Appendix 1, ‘Market Background April to June 2018’, which highlighted the advances made by Equity markets during this period.

The Committee was informed that the funding level of 79.1% as at its most recent valuation on 31 March 2016 (a net deficit of £277m) was calculated as being an indicative 89% as at 30 June 2018, corresponding to a net deficit of £175m. (It was noted that there was a typographical error in 11.3 of the report, and that it should have read “...£175m as at 30 June 2018” and not 31 March 2018).This substantial decrease in the net deficit was a positive for the Fund’s position.

In looking at the portfolio allocations against benchmarks set, it was noted that the property, renewable energy infrastructure and multi asset absolute return investments performed above benchmark during this quarter. The equity allocation exceeded target by 1.14%, which was due to the Fund’s decision in March 2018 to allocate surplus funds being held for new investments in property and renewable energy to the fund’s multi asset absolute return and multi asses credit mandates.

Following discussion amongst the Committee, it was noted that:

• Regarding the Copenhagen Infrastructure Partners investment, only recently had a small amount of the total allocated £35m been invested. It was expected that the investment would rise to the full £35m over the course of the next 2-3 years.
• Existing contributions could not be reassessed until the next valuation of the Fund. It was possible for a formal valuation to be done earlier, but this was a large piece of work that would be costly and took a significant period of time to complete.

Resolved

To note the information provided in respect of the activity in the three months to 30 June 2018.

To consider any items identified at Item 2 on the Agenda.

None.

Item 14 is likely to be subject to a motion to exclude the press and public be from the meeting as it contains 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.

Resolved

That the press and public be excluded from the remainder of the meeting as the items below contain exempt information, as defined under paragraph, 3 and 5, Part 1, schedule 12A of the Local Government Act 1972.

To consider exempt information pertaining to Item 11.

Considered exempt information pertaining to the Quarterly Update Report.