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.  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 to the notice of filming at meetings and this information was noted.

To receive any apologies for absence.

Apologies for absence were received from John Raisin (Independent Advisor); it was noted that the meeting date had been rearranged and that the new date conflicted with another local authority Pensions Committee meeting.

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 16 below).

There was no 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.

There were no deputations, petitions, presentations, or questions.

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.

It was noted that all members of the Pensions Committee and Board had attended a training session on 23 November 2020 entitled: Investing in Multi Factor Climate Transition Strategy.

It was also noted that the Chair had undertaken the following training: London CIV Low Carbon briefing, North London Pension Funds Chairs’ Forum, LGPS Live: Local Government Pension Scheme briefing, CIV Budget briefing, and Pension Trustees Circle Virtual Forum Update and Group Discussion.

To agree the minutes of the Pensions Committee and Board meeting held on 20 October 2020.

RESOLVED

That the minutes of the Pensions Committee and Board meeting held on 20 October 2020 be confirmed and signed as a correct record.

This report provides updates regarding:

·         The amount of visits made to the Haringey pension fund website;

·         Details of an employer leaving the pension fund; and

·         An update in light of the current Coronavirus pandemic.

The Pensions Manager introduced the report which provided an update on pension administration matters. It was noted that Lunchtime UK was no longer leaving the Pension Fund. It was also explained that KM Cleaning had left the scheme as an employer as their contract for Local Government Pension Scheme schools had ceased on 31 August 2020.

The Chair noted that one school had taken back cleaning staff as their employees; it was commented that it was unusual for a school to provide its own cleaners and it was enquired how this affected the pensions of these staff. The Pensions Manager stated that these staff would remain in the pension scheme and it would be as if they had never left. It was explained that these staff had been employed by the school in the past, then transferred (TUPEd) to KM Cleaning, and then returned to being employees of the school and had therefore always remained in the scheme.

Cllr Denniston noted that less information was provided to pension scheme members in hard copy and therefore the number of visits to the website was more important. It was highlighted that the number of visits to the website was generally reducing and enquired whether there was a strategy to increase these numbers. The Pensions Manager explained that, when letters were sent to pension scheme members, information about the website was always provided and members could access the website if they wished. It was clarified that there was no comprehensive record of all pension scheme members’ email addresses; these were only recorded if they were provided by pension scheme members.

RESOLVED

1.    To note the information in the report which gave a breakdown of the amount of visits made to the Haringey pension fund website and an update regarding pension administration matters.

2.    To note that K M Cleaning had left as an employer in the scheme.

This report presents the Pension Fund Annual Report and Statement of Accounts for 2019/20 for the Pensions Committee and Board’s approval. The report also presents the annual audit report from the Fund’s external auditor, BDO.

The Head of Pensions and Treasury introduced the report which presented the Pension Fund Annual Report and audited Accounts for 2019/20 for the Pension Committee and Board’s approval. The draft annual audit report from the Fund’s external auditor, BDO, was also presented. It was explained that the annual report and accounts would normally be considered in July but that the deadline had been extended due to the Covid-19 pandemic. The Pensions Committee and Board was asked to note the interim findings of the annual report and accounts. It was highlighted that the audit was very near completion and that the conclusion would be finalised in the next few days; it was noted that there was no audit opinion yet but the BDO Partner working on the audit would expand on this later in the meeting. It was added that no major changes were anticipated but that, if there were any, they would be reported back to the Pensions Committee and Board.

As the audit had not concluded, the Pensions Committee and Board was asked to delegate authority to Director of Finance, after consultation with the Chair, to make any necessary final changes and approve the final accounts, subject to reporting back any major changes. Additionally, it was requested to authorise the Chair of the Pensions Committee and Board and Director of Finance to sign the letter of representation to the auditor to acknowledge the Council’s responsibility for the fair presentation of the information in the financial statement and annual report.

The Head of Pensions and Treasury provided a summary of the annual report that was included in the agenda pack. It was noted that there had been a modest growth of 51 members in 2019-2020, some movement of members to retired and deferred membership, and a slight reduction in active membership. It was explained that there had been a slight reduction in the Pension Fund’s value as a result of the Covid-19 pandemic and that, at 31 March 2020, there had been a negative return of 3.7% which equated to a loss in value of approximately £56 million. It was noted that this did not compare well against the benchmark target of -1.2% but it was highlighted that the Pension Fund had outperformed the average local authority fund performance which was -4.1%. It was added that most of the losses as a result of the Covid-19 pandemic had now been recovered.

A member of the Pension Committee and Board noted that the annual report showed that, compared to 2010-2011, there were 30% more pensioners drawing their payment and 8% fewer paying members; it was enquired whether this was a concerning trend and whether there should be a strategy for the Council to transition more staff from temporary to permanent posts. The Head of Pensions and Treasury noted that the Council was not the only employer in the Pension Fund and so the actions of a number of employers had impacts. It was explained that Pension Funds were designed to operate  ...  view the full minutes text for item 9.

This report provides an update on the investment consultancy services contract and procurement exercise.

The Head of Pensions and Treasury introduced the report which provided an update on the Pension Fund’s investment management consultancy services tender. It was explained that the existing contract was due to end on 31 March 2021 and the report set out the proposals for the Fund to tender a new investment management consultancy service. It was also noted that the Pensions Committee and Board would be asked to approve the selection at its next meeting, following the tender process.

It was highlighted that there was an amendment to the recommendations as the proposed contract was now for a three year term with possible extension for one further year, rather than a two year term with possible extension for one further year.

It was noted that, under the procurement rules, only officers could be members of an interview panel. Cllr Ross stated that members of the Pensions Committee and Board had previously observed the interview process, without formal involvement as members of the interview panel, to fulfil their oversight role and enquired whether this would be possible for this contract. The Chair agreed that this would be beneficial. It was noted that the provisional interview date was 8 January 2021 and it was agreed that all Pensions Committee and Board members would be invited to observe the interview process.

The Pensions Committee and Board agreed to note the report and noted the amendment to the recommendations, namely that the proposal was for the Fund to tender for a new three year contract with possible extension for one further year, rather than for a two year contract with possible extension for one further year.

RESOLVED

1.    To note the proposals for the Fund to tender for a new three year contract for investment management consultancy services, with possible extension for one further year; this would be similar to the contract that is about to lapse.

2.    To note that this contract award will be made following a procurement exercise carried out by officers, using the National LGPS Framework; and

3.    To note that the Pensions Committee and Board will be asked to approve the appointment of the successful bidder once the selection process is complete.

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 Local Authority Pension Fund Forum (LAPFF) voting activities. It was explained that, in this quarter, there had been three voting recommendations. The Pension Fund’s equity manager, Legal and General Investment Management (LGIM), had voted in line with all three LAPFF recommendations but, in all cases, the results of the votes had been contrary to the LAPFF recommendations.

RESOLVED

To note the report.

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

The Head of Pensions and Treasury introduced the report which provided an update on the Fund’s risk register and an opportunity for the Pensions Committee and Board to further review the risk score allocation. It was stated that the Pensions Committee and Board may wish to review risk 22 which related to the potential liabilities due to the McCloud and Guaranteed Minimum Payment (GMP) rulings. It was explained that some assessment of the risks had indicated that the impact was estimated to be 0.3% of 1% of the fund at a value of approximately £4 million. It was noted that risk 22 was currently rated ‘very high’ (red) but suggested that it might be more appropriately rated ‘moderate’ (yellow). It was clarified that the risk ratings, from lowest to highest risk, were: low (green), moderate (yellow), high (amber), and very high (red).

Some members of the Pensions Committee and Board enquired whether it might be appropriate to increase the risk ratings of risk 23 (Brexit) and risk 58 (the London Collective Investment Vehicle’s (LCIV) investment strategy). The Head of Pensions and Treasury acknowledged that some Brexit changes would come into force from 1 January 2020 but that, in relation to the Pension Fund, there were limited actions that could be taken in advance; it was noted that the unknown nature of this issue was recognised. In relation to the LCIV, it was noted that the LCIV were engaging on investment issues and it was explained that this risk would be kept under review.

RESOLVED

1.    To note the risk register.

2.    To reduce the risk rating of risk 22 from very high to moderate.

3.    To note that the area of focus for review at the meeting was Governance and Legal.

The purpose of the paper is to identify topics that will come to the attention of the Committee and Board in the next twelve months and to seek members’ input into future agendas. Suggestions for future training are also requested.

The Head of Pensions and Treasury introduced the report and explained that the two investment reports scheduled for the meeting in January 2021, Gilts Portfolio and Residential Property, may be considered at a later date depending on progress.

Some members noted that an issue had been raised at a previous meeting about the Pension Fund’s exposure to companies investing in illegal settlements in the West Bank, as defined by the United Nations (UN). It was enquired what the next steps would be to disinvest from these companies.

The Chair explained that, since the issue had been raised at the last meeting, he had liaised with other North London Pension Committee Chairs who met on a regular basis. It was noted that, as the holding of shares linked to illegal settlements was so small and the cost of changing would be about £10 million, the Chairs had asked the Local Authority Pension Fund Forum (LAPFF) to investigate and provide a report on their findings.

The Head of Pensions and Treasury explained that the Pension Fund did not invest in these companies directly. It was noted that all equities investments were done on a passive basis; this meant that the fund manager was instructed to select investments that replicated the market and this was how the Pension Fund had come to invest in these companies. As such, it was not possible to force the fund manager to disinvest from these companies. However, it was noted that the Pension Fund, like a number of other funds, had appointed and was a member LAPFF who advocated and engaged with companies directly when there were concerns about their approach to Environmental, Social, and Governance (ESG) issues. It was added that the Pension Fund had indirectly invested in 12 companies that were identified as investing in illegal settlements. It was noted that this related to approximately 0.21% of 1% of the Pension Fund’s investments, which was approximately £3 million.

Members noted that this was a small investment but that a number of Pension Funds would be in a similar position and the overall amount invested could be more substantial. It was also noted that there were additional companies which were not on the UN list but which had been identified by campaign groups. It was acknowledged that the approach of applying pressure through Pension Committee Chairs was sensible as a starting point. It was agreed that an update on this issue would be provided within the quarterly report at the next Pensions Committee and Board meeting and that the LAPFF report would be included as an appendix.

The Head of Pensions and Treasury noted that The Pensions Regulator (TPR) required Pensions Committee and Board members to receive regular training. Members were asked to complete or re-complete TPR’s training needs analysis so that any relevant training could be organised. Members were also encouraged to complete TPR’s online learning programme, the public service toolkit. It was noted that the relevant links would be circulated to members.

RESOLVED

1.  ...  view the full minutes text for item 13.

In March 2020, the Pensions Committee and Board agreed in principle to switch the Fund’s investment in the RAFI Multi Factor developed strategy to a low carbon derivative of the RAFI strategy: RAFI Multi Factor Climate Transition (MFCT) Developed Index. This report presents the result of further assessment of the RAFI MFCT index in line with Pensions Committee and Board instructions and summarises implementation considerations for the Fund.

The Head of Pensions and Treasury introduced the report which presented the result of further assessment of the RAFI Multi Factor Climate Transition (MFCT) index in line with Committee and Board instructions and summarised implementation considerations for the Fund. It was noted that the report recommended implementation of the RAFI MFCT (Developed) strategy and it was explained that further information was set out in the exempt appendix to the report.

The Chair thanked the members of a local organisation who had been in contact about clarifying the recommendations in this report; it was noted that the amended recommendations had been included as a late paper.

It was explained that the Pension Fund had been seeking to reduce its carbon intensity. It was noted that a test of the RAFI MFCT strategy had been undertaken and it was found that, had this strategy been used for the Pension Fund, it would have resulted in reduced carbon intensity and would have outperformed the current strategy in all periods tested. It was commented that the only outstanding issue was the cost of moving to the RAFI MFCT (Developed) strategy; it was noted that Mercer was awaiting further information from Legal and General Investment Management and that it may be possible to discuss this in more detail in the exempt section of the meeting. 

The Pensions Committee and Board agreed to the recommendations and agreed the amendment to the recommendations, namely to note that moving to the RAFI Multi Factor Climate Transition Strategy will reduce carbon intensity, rather than will reduce the Fund’s carbon intensity.

Following consideration of the exempt information,

RESOLVED

1.    To agree to implement the RAFI Multi Factor Climate Transition (Developed) strategy set out in Appendix 1 and delegate the authority to implement the strategy to the Assistant Director of Finance, subject to confirmation of costs by Legal and General Investment Management.

2.    If the above recommendation is agreed, to delegate authority to the Assistant Director of Finance to update and republish the fund’s Investment Strategy Statement consistent with this change.

3.    To note that moving to the RAFI Multi Factor Climate Transition Strategy will reducethe Fund’s carbon intensity by 70% compared to the current index and will further reducethe Fund’s carbon intensity by 7% annually.

4.    To note that moving to the RAFI Multi Factor Climate Transition Strategy will reduce the Fund’s equity portfolio carbon footprint overall by 50% compared to current levels.

This report presents a review of the performance of the pension fund’s investment management consultants, Mercer, over the past twelve months since the strategic objectives were agreed and will form the basis of the report which is required to be submitted to the Competition and Markets Authority.

The Head of Pensions and Treasury introduced the report which provided a review of the performance of the Pension Fund’s investment management consultants, Mercer, over the past twelve months. It was explained that the Competition and Markets Authority (CMA) had required the Pension Fund to review the performance of its investment management consultants. It was noted that the Pensions Committee and Board had agreed six strategic objectives for reviewing performance at its meeting on 19 November 2019.

It was explained that the performance review itself contained exempt information which would be considered in detail in the exempt section of the meeting. Once the Pensions Committee and Board had reviewed this performance, the results would be reported back to the CMA.

Following consideration of the exempt information,

RESOLVED

1.    To note the performance review of the Fund’s appointed investment management consultants against agreed strategic objectives; the review was attached as a exempt appendix to the report.

2.    To delegate authority to the Head of Pensions to communicate the outcome of this review to the Competition & Markets Authority in order to fulfil reporting requirements.

There were no new items of urgent business.

To note the dates of future meetings:

21 January 2021

4 March 2021

It was noted that the future Pensions Committee and Board meetings were scheduled for:

21 January 2021

4 March 2021

Items 19-22 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).

It was noted that items 19-22 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).

RESOLVED

That the press and public be excluded from the meeting for consideration of items 19-22 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).

As per item 14.

The Committee considered the exempt information.

As per item 15.

[The representatives from Mercer left the meeting for the duration of this item.]

The Committee considered the exempt information.

To agree the exempt minutes of the Pensions Committee and Board meeting held on 20 October 2020.

RESOLVED

That the exempt minutes of the Pensions Committee and Board meeting held on 20 October 2020 be confirmed and signed as a correct record.

There were no new items of exempt urgent business.