Agenda and draft minutes

Pensions Committee and Board
Thursday, 2nd December, 2021 7.00 pm

Venue: George Meehan House, 294 High Road, Wood Green, N22 8JZ

Contact: Fiona Rae, Principal Committee Co-ordinator  3541 Email: fiona.rae@haringey.gov.uk

Note: To watch the meeting, click the link on the agenda frontsheet 

Items
No. Item

1.

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.  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.

Minutes:

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

2.

APOLOGIES

To receive any apologies for absence.

Minutes:

Apologies for absence were received from Councillor Yvonne Say, Councillor Patrick Berryman, and Ishmael Owarish.

3.

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 14 below).

Minutes:

There were no items of urgent business.

4.

DECLARATIONS 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:

There were no declarations of interest.

5.

DEPUTATIONS / PETITIONS / PRESENTATIONS / QUESTIONS

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

Minutes:

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

6.

RECORD OF TRAINING UNDERTAKEN SINCE LAST MEETING

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.

Minutes:

The Chair reminded members to inform the Pensions Committee and Board officers whenever they had attended training so that this could be recorded.

7.

MINUTES pdf icon PDF 232 KB

To confirm and sign the minutes of the Pensions Committee and Board meeting held on 15 September 2021 as a correct record.

Minutes:

In relation to item 14, Forward Plan, it was noted that the political parties had previously agreed to have minimal changes in the membership of the Pensions Committee and Board due to the knowledge and training requirements. It was agreed that this message would be passed to the Whips. Post-meeting note: the Whips had been informed of the request to have minimal changes in the membership of the Pensions Committee and Board.

 

RESOLVED

 

That the minutes of the Pensions Committee and Board meeting held on 15 September 2021 be confirmed and signed as a correct record.

8.

PENSION FUND AUDIT PLAN 2020-2021 pdf icon PDF 194 KB

To receive an update on the Pension Fund audit plan.

Additional documents:

Minutes:

The Head of Pensions and Treasury introduced the report which presented the audit plan prepared by the Pension Fund’s external auditors, BDO, for the audit of the Pension Fund’s Statements of Accounts for the year ended 31 March 2021 for the Pensions Committee and Board’s consideration.

 

It was noted that the year end close down activities had been completed on time. The audit had commenced slightly later than usual due to the impact of Covid-19 on the auditor’s workloads. It was explained that fieldwork for the audit had started on 22 November 2021 and the auditors had identified the key areas of risk for testing. The Head of Pensions and Treasury highlighted that these areas were similar to previous years and officers were confident that assurances could be provided.

 

It was commented that an outline of audit fees was provided on page 19 of the agenda pack. It was anticipated that the auditors would be charging approximately £3,000 less this year as they were not required to conduct the triennial work that had been undertaken in the previous year. The Head of Pensions and Treasury explained that additional areas of testing might be required which would have an impact on fees and the audit timeline.

 

It was noted that the timeline for the audit was set out on page 29 of the agenda pack. It was anticipated that all testing would have been undertaken by February 2022 and that the auditors would be in a position to provide an initial audit completion report which would be presented to the Pensions Committee and Board in March 2022.

 

In response to a question about materiality, it was noted that the materiality figure was 1% and that this had not changed. It was explained that the auditors would seek additional assurances for anything in excess of 1% but could also ask for additional evidence for any issues, even where this was less than 1%.

 

Some members of the Committee noted that the auditor considered the management override of controls to be a significant risk but that management felt that this was low risk and asked why there was a variation in opinion. The Assistant Director of Finance explained that the management override of controls was always considered to be a high value risk in audit plans but highlighted that this was not a reflection of any particular concerns in Haringey.

 

In relation to a question about benchmarking controls against other Pension Funds, the Head of Pensions and Treasury explained that, although assurance was dictated by audit standards, an audit was based on the procedures and systems in place which would be different for each Pension Fund. It was noted that testing would be undertaken in areas that the auditor considered to be higher risk. It was added that no particular concerns had been highlighted at present but that the auditor would be able to provide more detail when they addressed the Pensions Committee and Board.

 

RESOLVED

 

To note and agree to the audit  ...  view the full minutes text for item 8.

9.

PENSION FUND QUARTERLY UPDATE AND INVESTMENTS UPDATE pdf icon PDF 247 KB

This report provides updates on the following for the quarter ended 30 September 2021:

 

·         Independent advisor’s market commentary

·         Investment asset allocation

·         Investment performance

·         Funding position update

·         London Collective Investment Vehicle (LCIV) update

Additional documents:

Minutes:

The Head of Pensions and Treasury introduced the report which provided an update on the Pension Fund’s performance for the quarter. It was noted that, in the quarter, the market value of the Pension Fund’s investment assets was £1.7 billion which represented an increase of 1.64% compared to the previous quarter.

 

It was noted that, at the last meeting, the Pensions Committee and Board had drawn attention to the overweight position in equities and had asked officers to consider options for rebalancing the allocation. It was explained that this exercise had been undertaken, after consultation with Mercer, and that £40 million of equity investments had been transitioned into the London Collective Investment Vehicle (LCIV) Absolute Return Fund (Ruffer). In addition, as part of the rebalancing, it was recommended that up to 1.5% of assets be held in cash and would be earmarked for illiquid investments such as the LCIV Renewable Infrastructure Fund and London Fund. It was added that the Pension Fund was recommended to review options for topping up the underweight position in relation to the property allocation.

 

Alex Goddard, Mercer, noted that the rebalancing was a prudent risk management decision. It was explained that equity assets had experienced strong returns which had driven the strong improvement in funding to over 100% as at 30 June 2021 but, as the allocation was now overweight, this also introduced some risks. It was noted that, although there would be an actuarial valuation exercise as at 31 March 2022, the proposed actions were intended to rebalance the Pension Fund’s portfolio to its strategic asset allocation. It was explained that Ruffer had experienced strong returns over the last year and had a track record in protecting when there was volatility in markets; this would provide a safer position for the Pension Fund than being overweight to equities if there was a significant market event. In response to a question about the ability of the Pension Fund to react to market events, it was noted that the rebalancing activity was a prudent measure and that any more ‘tactical’ changes would introduce additional governance challenges.

 

Steve Turner, Mercer, noted that consideration had been given to advising a top up to the LCIV Multi Asset Credit (MAC) Fund but that this had not been recommended as a new manager was due to be introduced shortly and, therefore, a top up in advance of this would have incurred two sets of transition costs. It was commented that, if the Pension Fund was still overweight in Quarter 1 of 2022-23, this option could be reconsidered after the new MAC manager was introduced.

 

In response to a question about whether it was possible to rebalance the Pension Fund to other areas of the world, it was noted that there was an existing allocation to developing and emerging markets but that it would be challenging to implement a regional approach without fundamental changes to the Pension Fund’s investment strategy. It was noted that the Pension Fund was currently 100% invested  ...  view the full minutes text for item 9.

10.

GOOD GOVERNANCE IN THE LOCAL GOVERNMENT PENSION SCHEME (LGPS) PROJECT pdf icon PDF 217 KB

This report provides an update on the progress of the Good Governance in the Local Government Pension Scheme (LGPS) Project and the possible actions the Pension Fund might take.

Additional documents:

Minutes:

The Head of Pensions and Treasury introduced the item which provided an update on the progress of the Good Governance in the Local Government Pension Scheme (LGPS) project and the possible actions the Pension Fund might take ahead of the formal introduction of Regulations and/or Statutory Guidance from the Department for Levelling Up, Housing and Communities (DLUHC). It was noted that the project aimed to consider the relationship between Pension Funds and their Administering Authorities, in this case Haringey Council.

 

It was explained that the project had three phases. The first phase considered ideas and outcomes, the second phase looked at the framework and highlighted some recommendations for good practice, and the third phase was now looking at the recommendations in detail and aiming to give them a statutory footing.

 

The Independent Advisor stated that the project had been ongoing for approximately three years and that the DLUHC had been involved. It was highlighted that there were no surprises in the report but that the Pensions Committee and Board were asked to look at the action plan and consider where it might be possible to implement things ahead of schedule.

 

In response to a question about why the report asked the Pensions Committee and Board to note the report, rather than accept the recommendations, the Independent Advisor explained that the report was seeking early views and that it would not be possible to implement the recommendations without some initial work from officers on the practicalities. The Head of Pensions and Treasury added that, before any work was undertaken, it was common practice to obtain direction from the Pensions Committee and Board. After this, it would be possible for some detailed options and timelines to be presented.

 

The Pensions Committee and Board commented that it would be beneficial to deliver most, if not all, of the recommendations in order to improve governance arrangements. It was suggested that it would be useful to consider which of the recommendations were most significant and to deliver these first. Some members suggested that recommendations A2, B1, C1, D1, and D3 were felt to be important as initial priorities.

 

In relation to recommendation E4, it was commented that the Pensions Committee and Board was already quite involved in budgeting and other matters and that this might not require as much attention as other recommendations. The Independent Advisor noted that the recommendations envisioned deeper involvement from the Pensions Committee and Board and consideration separate from Council budgeting. It was explained that the aim of this recommendation was to ensure that pensions were properly provided for everywhere across the LGPS.

 

In relation to recommendation A2, that each administering authority must have a single named officer who is responsible for the delivery of all LGPS related activity for that fund, it was clarified that this would still be a Council officer. It was added that this aimed to ensure that sufficient resources were allocated to Pension Fund activity.

 

The Head of Pensions and Treasury noted that officers could look  ...  view the full minutes text for item 10.

11.

LOCAL AUTHORITY PENSION FUND FORUM (LAPFF) VOTING UPDATE pdf icon PDF 207 KB

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.

Minutes:

The Head of Pensions and Treasury introduced the report which provided an update on the Local Authority Pension Fund Forum’s (LAPFF) voting activities on behalf of the Pension Fund.

 

RESOLVED

 

To note the report.

12.

RISK REGISTER pdf icon PDF 193 KB

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.

Additional documents:

Minutes:

The Head of Pensions and Treasury introduced the item and explained that the area of focus for review at this meeting was Accounting.

 

It was noted that some risks which were given a risk score of 15 were marked as amber risks. Some members of the Pensions Committee and Board believed that a score of 15 equated to a red risk. The Head of Pensions and Treasury explained that he would check this figure. Post-meeting note: any risks scored 16 or over became red risks.

 

RESOLVED

 

1.    To note the Pension Fund’s risk register.

 

2.    To note that the area of focus for review at the meeting was Accounting.

13.

FORWARD PLAN pdf icon PDF 193 KB

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.

Additional documents:

Minutes:

The Head of Pensions and Treasury introduced the report which identified items for future meetings and sought members’ input. It was highlighted that members were required to complete The Pension Regulator’s toolkit and the training needs assessment. It was also requested that members updated officers whenever they attended relevant training so that this could be included in members’ training records.

 

RESOLVED

 

1.    To identify additional issues and training for inclusion within the work plan and to note the update on member training attached at Appendix 3 to the report.

 

2.    To complete The Pensions Regulator’s public sector toolkit and training needs assessment.

14.

NEW ITEMS OF URGENT BUSINESS

Minutes:

There were no items of urgent business.

15.

DATES OF FUTURE MEETINGS

To note the dates of future meetings:

 

24 January 2022

15 March 2022

Minutes:

It was noted that the dates of future meetings were:

 

24 January 2022

15 March 2022

16.

EXCLUSION OF THE PRESS AND PUBLIC

Items 17-20 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); paras 3 and 5; namely information relating to the financial or business affairs of any particular person (including the authority holding that information) and information in respect of which a claim to legal professional privilege could be maintained in legal proceedings.

Minutes:

RESOLVED

 

That the press and public be excluded from the meeting for consideration of items 17-20 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); paras 3 and 5; namely information relating to the financial or business affairs of any particular person (including the authority holding that information) and information in respect of which a claim to legal professional privilege could be maintained in legal proceedings.

17.

PENSION FUND QUARTERLY UPDATE AND INVESTMENTS UPDATE

As per item 9.

Minutes:

The Pensions Committee and Board considered the exempt information.

18.

LONDON COLLECTIVE INVESTMENT VEHICLE (LCIV) REGULATORY UPDATE

This report provides an update on the regulatory arrangements for the London Collective Investment Vehicle (LCIV).

Minutes:

The Pensions Committee and Board considered the exempt information.

19.

EXEMPT MINUTES

To confirm and sign the exempt minutes of the Pensions Committee and Board meeting on 15 September 2021 as a correct record.

Minutes:

RESOLVED

 

That the exempt minutes of the Pensions Committee and Board meeting held on 15 September 2021 be confirmed and signed as a correct record.

20.

NEW ITEMS OF EXEMPT URGENT BUSINESS

Minutes:

There were no new items of exempt urgent business.