Agenda and minutes
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Contact: Felicity Foley, Acting Committees Manager
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FILMING AT MEETINGS 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. Minutes: 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. |
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Apologies for absence Minutes: Apologies for absence was received from Keith Brown. |
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Urgent Business 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 15 below). Minutes: There were no items of urgent business. |
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Declarations of interest and conflicts of interest 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.
Minutes: No declarations of interest declared.
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Record of training undertaken since last meeting 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. Minutes: Cllr White, Cllr Bevan, Cllr Dennison, Cllr Ross, Cllr Amin, Randy Plowright and Ishmael Owarish attended a training session delivered by Hymans Robertson on ‘Actuarial perspectives and your role’. 23/07
Further notification of training received prior to the meeting had been submitted as follows:
Councillor White
Councillor Bevan
Councillor Dennison
Ishmael Owarish
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To approve the minutes of the meeting held on 20 March 2018. Minutes: Resolved
That the minutes of the meeting held on the 20th of March 2018 be approved as a correct record of the meeting. |
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Pension Fund Annual Report and Accounts This report presents the Pension Fund Annual Report and audited Accounts for 2017/18 for the Committee and Board’s approval. The annual audit report from the Fund’s external auditor BDO is also presented.
Annex 1 BDO Audit Report (ISA 260) – to follow
Additional documents:
Minutes: The Committee and Board considered the Pension Fund Annual Report and audited Accounts for 2017/18 for the Committee and Board’s approval, presented by Thomas Skeen, Head of Pensions. The annual audit report from the Fund’s external auditor BDO was also presented. The Committee was referred to Annex 2 for the full contents of the report and the recommendations as shown at 3.1 – 3.3.
The Committee and Board was referred to the financial statements and notes in Appendix 1 which showed that the value of the Fund's assets increased by £48m to £1,356m as at 31 March 2018. During the year, the rate of return on the Fund’s investments was 4.40%. It was noted that this was 1.02% below the Fund’s target of 5.42% for the year, however, it was emphasised that when this target figure was compared with that of other funds, it actually performed higher than the average.
The external auditor, BDO, was present to give an update to the Committee on the audit that they carried out on the Council’s accounts. The auditor went through the pension fund accounts that has been prepared (Annex 2, Appendix 1). The auditor noted they were impressed with how the Pension team was carrying out the Council’s duties as administering authority for Haringey Pension Fund.
With regard to the future, the auditor noted that in looking at the cash balances and investment plans, there was a balance of £3.1 million, which Council Officers had treated as part of the investment portfolio in the accounts, whereas BDO took the view that this should be treated as a current asset. BDO noted that this makes no bottom line difference to the value of the fund overall, but that this was noted in their audit report.
The auditor concluded stating that it was a thoroughly positive audit and that they were ready to sign on the pension fund account, however, would like it to be noted that there appeared to be some discrepancies in the actuaries sum and those presented by Haringey Council’s accounts.
The independent legal advisor, John Raisin, spoke to the Committee about the report that he had prepared on ‘Market Background 2017/18’ for the Committee and Board to consider. Amongst the significant events that affected the market during this time, were:
· The United States Federal Reserve initiating a significant change of direction in monetary policy; · The unpredictability of current administration in the USA; · Japan continuing their quantitative easing programme; · Since the end of last year, emerging markets had performed well. · Due to the uncertainties surrounding the United Kingdom exiting the European Union, foreign investors were wary of investing in the United Kingdom.
With regard to cash balance, it was noted that the College of Enfield and Haringey was leaving the Fund imminently, which meant that approximately £40 million had to be made available to cover this transfer of pension funds. It was understood that this would now take place in September 2018, later than what was originally planned for. A further ... view the full minutes text for item 190. |
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Local Government Pension Scheme (Amendment) Regulations 2018 The Local Government Pension Scheme (LGPS) Regulations were updated in May 2018 by a new set of ‘amendment’ regulations – these update the previous 2013 Regulations. This report highlights changes made within these regulations for the Committee and Board to note for information purposes. Minutes: The Committee considered the report, presented by Thomas Skeen, on the Local Government Pension Scheme (LGPS) Regulations. The Committee noted that LGPS Regulations were updated in May 2018 by a new set of ‘amendment’ regulations – these update the previous 2013 Regulations. The report highlighted changes made within these regulations for the Committee and Board to note for information purposes.
The committee considered ‘exit credits’. It was explained that employers who cease to participate as scheme employers can be due a credit payment, if it is assessed that they are leaving the fund in a surplus position – that is to say, that the assets held on behalf of that employer exceed the liabilities accrued to pay pension benefits for its employees. It was noted that the Fund could potentially have to pay exit credits, affecting its liquidity, investments and overall financial standing.
It was further noted that it is probable that some form of policy may need to be created that will address situations regarding exit credit. The new LGPS regulations came out at short notice and the Council was still looking into how to address any impact they might have.
It was queried whether the Fund had made an assumption on the potential sum of credit that it would be liable to pay if any given number of employees were to leave. The Committee was told that the Fund was looking at what the position is now and is considering various factors such as when contracts are due to end.
Resolved The Committee and Board note the contents of this report. |
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The purpose of the paper is 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. Additional documents:
Minutes: The Committee and board considered the report, presented by Thomas Skeen, on the Forward Plan. The Forward Plan identified topics that would 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 plan sets out the key activities anticipated in the coming twelve months in the areas of governance, members/employers, investments and accounting. The Committee and Board was invited to consider whether it wished to amend future agenda items as set out in the work plan.
The Committee was told that this was a standard item that is considered at every meeting. The Committee’s attention was drawn to the need for all members to complete the Public Sector Tool Kit and that it was a legal requirement for them to do so.
In discussion, the value of continuing to be a subscriber to the Pensions and Lifetime Savings Association (PLSA) was questioned. It was noted that several of the training courses that Members are invited to participate in are free and at no cost to the Council. With the various number of free training courses available, it was suggested that the Council reviews its continuing subscription to PLSA. In response, the Council highlighted that PLSA do provide a number of live training events and various seminars online but that this subscription could be reviewed to establish cost effectiveness.
It was noted that training provided by the Council is required. Members are not compelled to do any additional training outside of the Public Sector Tool Kit and the training sessions before committee meetings. It was, however, ideal that members participate in training courses, wherever possible to continue development. There was agreement amongst the Committee that the training sessions provided before the sessions were of great value to Members.
Resolved The Committee noted the report and the forward plan. |
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Risk Register - review / update This paper provides an update on the Fund’s risk register and an opportunity for the Committee to further review the risk score allocation.
Additional documents: Minutes: The committee considered the report on the Risk Register, as presented by Thomas Skeen. This report provided an update on the Fund’s risk register and gave the Committee an opportunity to further review the risk score allocation. It was noted that this was a standard item on the agenda and the Committee had a legal duty to review internal controls and the management of risks.
The Committee noted the change in the probability of risk for ‘Failure to adhere to LGPS legislation (including regulations, order from the Secretary of State and any updates from The Pension Regulator) leading to financial or reputational damage’ being reduced from 2 to 1 since the last meeting.
In accordance with the Committee’s duty, it noted the two red rated risks on the Risk Register, namely:
With regard to the second red rated risk, the Committee was informed that this has since been downgraded to 3 (from 5) following a review. This was due to positive interactions with the CIV in appointing one fund manager in 2017, and the significant savings being made on management expenses negotiated by the CIV on the Fund’s behalf.
In discussing the overall outlook of risk at present, it was noted that, generally, the risks had been moving down but certain risks change from time to time and it was important for these to be identified for the Committee and Board to observe.
Resolved
That the Committee and board:
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Pension Fund Quarterly Update To report the following in respect of the three months to 31st March 2018: · Funding Level Update · Investment asset allocation · Investment performance · Investment Update Additional documents:
Minutes: The Committee considered the Pension Fund Quarterly Update report, presented by Thomas Skeen, which is produced on a quarterly basis. The report provides an update from 31st May 2018, in respect of the following;
The Committee noted the indicative funding position of the Fund was 84%, as of 31 March 2018. This has increased from the most recent valuation level of 79%, in 31 March 2016. It was highlighted that this position was a deterioration from 31 December 2017 at 88.2%, following a stock market fall in the first quarter of 2018. It was noted that this showed just how volatile the value of the Fund can be.
The Independent Advisor gave an overview of the market background from January to March 2018. The month of March was affected by various issues, such as:
The Independent Advisor noted that March was a negative month for global equities. Overseas buyers had been notably absent from the UK’s markets which could be attributed to the uncertainty surrounding the issue of the United Kingdom leaving the European Union. Finally, it was noted that emerging markets performed well in the period of January to March.
Resolved
That the information provided in respect of the activity in the three months to 31st March 2018 is noted.
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The purpose of the paper is provide an update to Committee and Board: · on the London Collective Investment Vehicle (CIV) governance structure · on the terms of appointments to the Pensions Committee and Board Additional documents:
Minutes: The Committee and Board considered a report, introduced by Thomas Skeen, on the governance update on the London Collective Investment Vehicle (CIV) governance structure and on the terms of appointments to the Pensions Committee and Board.
The Committee noted the changes in the governance structure of CIV, notably:
· General meetings, which all of the boroughs attend, will be held twice annually. These meetings will be in July (to approve the accounts), and in January (to approve the Medium Term Financial Strategy). These meetings will continue to be attended by either the Chair or Vice Chair of Haringey Pensions Committee and Board. · Shareholder Committees will meet on a quarterly basis on a consultative capacity only, with 12 Shareholders represented: four S151 Officers, and eight Pension Chairs. The Pension Chairs would be selected via the collective political processes of the London Councils, providing political, geographical and gender diversity.
It was noted that, under the old system of governance, problems arose due to the sheer number of shareholders (32) trying to make decisions. The new structure of four S151 Officers and eight Pension Chairs was expected to create more effective dialogue by streamlining the number of participants in the decision making. Haringey Council did initially challenge the selection process of the eight Pension Chairs and questioned whether this would secure the best individuals for the committee.
In discussing the selection of the eight Pensions Chairs to attend the quarterly meetings of the shareholder committees, it was noted that, contrary to the objective of selecting chairs that reflect the political balance of London, the proposed chairs do not in fact do this. It was further noted that it was important for the Chair of the Pensions Committee and Board to build effective working relationships with the other Pension Committee Chairs.
Terms of appointment for the Pension Committee and Board
The Chair gave an update on the terms of appointment to the Pensions Committee and Board. Regarding his discussion with both Chief Whips, it was acknowledged of the need for continuity to ensure that members have the necessary knowledge and training to sit on the committee. Both Chief Whips have stated that they are committed to appointing the same members onto the Pensions Committee and Board each year within the election cycle, while recognising that Groups may wish to hold elections for their nominees for the Chair and Vice Chair positions. It was suggested that this would be a better alternative to the cumbersome approach of changing the Constitution of the Council to mandate 4 year terms for members of the Pensions Committee and Board. The Chair stated that this would be reviewed in 2 years’ time to ensure that this approach is still a workable and effective one. However, it was noted in discussion that this approach only works for members of the Pensions Committee and Board who wish to remain on the committee.
Resolved
That the Committee and board:
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Local Authority Pension Fund Forum (LAPFF) Voting Update The Fund is a member of the 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. Minutes: The Committee considered the report, introduced by Thomas Skeen, which provided an update on voting activities on behalf of the Fund. The Committee noted that the Fund was a member of the 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.
It was noted that the voting shareholders are encouraged to act ethically and responsibly and to vote accordingly. Whilst it is not possible to force fund managers to vote a particular way, the Fund was able to strongly advise them of the position it feels they should take. It was acknowledged that this advice is generally adhered to and voting is, more often than not, done in line with the Fund’s position.
In discussion, the question was raised about what happened when a fund manager did not vote in line with the Fund’s preferred position. In response, it was noted that, whilst the Fund is unable to force fund managers to vote a particular way, it is mandatory for fund managers to provide detailed reasoning when their vote is that against the preferred choice of the Fund. It was suggested that it might be helpful if future Pensions Committee and Board meetings were provided with an update on the rationale behind why some companies vote in a different way to how the Fund would like them to vote.
The Committee and Board questioned how effective it was to ask companies to vote a certain way, with particular reference drawn to Anadarko, which votes in compliance with the Fund’s position only 52% of the time. The Committee was assured that engagement with companies is helpful and can have a positive investment impact. It was also highlighted to the Committee that engagement with companies is important in getting them to change their behaviour.
Resolved
The Committee note this report. |
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Administration Report This report presents details of potential new admissions to the pension fund.
Update of Haringey Council’s Discretionary Policy Statement.
The report also gives a breakdown of the amount of visits made to the Haringey pension fund website.
This report includes the most recent internal audit of the pensions administration service, which showed a substantial assurance rating of the service, this is for members to note. Additional documents:
Minutes: The Committee considered this report, presented by Janet Richards, which detailed potential new admissions to the pension fund. The Committee noted in the report:
· the steady increase of users visiting Haringey Website. · the most recent internal audit of the pensions administration service, which showed a substantial assurance rating of the service, this is for members to note. · the update to the Pensions Administration Discretionary statement to make it clear that Haringey Council will exercise the discretion to abate the pensions of former employees who are retired early, if they are re-employed by any of the scheme employers in the Haringey LGPS Pension fund.
The Committee was informed that this was a regular item on the agenda and that there were certain areas that needed improving, such as employer’s provision of information to the fund.
It was drawn to the Committee’s attention that, since the publication of the report, there was a new school in Haringey that had started to make some contribution to the Fund.
It was queried why, on page 235 of the Report Pack, Standing data was ‘Amber’ and not ‘Green’ (signalling weaker effectiveness of controls). It was noted that attaining information from outside providers can be challenging, and there are various factors that impact the delay or lack of information, such as turnover of staff.
In response to a question regarding the potential admissibility of new employees of ISS Mediclean Ltd as fund members, it was noted that this admission to the fund would be on a closed basis, meaning that new members of staff not employed on the date of the admission would not be eligible to join the fund.
Resolved
That the Committee:
Reason for decision
New Admission Body to the Fund ISS Mediclean Ltd
West Green School has tendered its cleaning service and the successful bidder was ISS Mediclean Limited. It is proposed that ISS Mediclean be admitted to the Haringey Pension Scheme as an Admission Body in relation to the provision of the cleaning Service for West Green School, subject to ISS Mediclean Ltd entering into an admission agreement with the Council so that those eligible employees can remain within the Haringey Pension Fund.
That an admission agreement satisfactory to the Council be entered into ... view the full minutes text for item 197. |
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New items of urgent business Minutes: None. |
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Dates of future meetings 13 September 2018 20 November 2018 21 January 2019 14 March 2019 Minutes: 13 September 2018 20 November 2018 21 January 2019 14 March 2019 |