Issue - meetings

An update will be provided on the Asset Transfer following this being considered by the Pension Committee at its meeting on 21 November 2018.

The Chair updated the Board; its response on the Property Asset Transfer had been shared with the Members of the Pension Committee following the meeting in November 2018. This had accurately reflected the Board’s view (for example, including reference to protection for the non-Croydon Council employers and de minimis arrangements). 

It was noted that the Pension Committee had agreed the Property Asset Transfer recommendation and that for the first time this had put the Committee and Board out of step with each other. This raised the question of whether this brought to a close the Board’s responsibility on the matter. Members expressed their concern that a reduction in employer contributions at a time of uncertain economic conditions may result in a reduction in the value of the fund and possibly a larger deficit in the future. Whilst it was assumed it would be for the Council to address an increase in the deficit, it was noted that it would be more concerning if this were to become the responsibility of any other member of the fund. Whilst it was established that the Pension Regulator’s remit excludes investment matters, it was questioned whether this might actually regard the solvency of the fund.

The Head of Pensions and Treasury highlighted that the Secretary of State provides guidance on reaching funding goals and that diversity in the fund provides a flattening effect and removes volatility.

It was acknowledged that the actuary had stated the contributions of one Scheme Emloyer will not affect those of the others. However, Members were struggling to understand how this part of the fund will be ring-fenced. Members were also of an opinion that there remained a conflict of interest with Members making specific reference to the role played by Eversheds.

RESOLVED: The Board noted the response made to the Director of Resources as detailed in the report. It was also agreed to take legal advice (possibly from the Monitoring Officer) on whether or not the Board had fulfilled its legal duty and seek further information on how the ring fencing of non-Council employers will work.

Report to follow.

The Committee RESOLVED:

·        To receive into the Pension Fund, the 346 housing properties as set out in paragraph 3.1 of the report, from Croydon Council, between November 2057 and April 2059;

·        To adjust Croydon Council’s employer contribution rates to take account of the future transfer of properties. This will be based on assumed growth of CPI + 1.7% in the properties, which would result in a reduction of approximately 2.5% in the council’s employer deficit contributions. This would be reviewed and adjusted if required in the triannual valuation; and

·        To delegate to the Council’s s151 Officer, in consultation with the Chair of the Pension Committee, to agree the appropriate wording of the Council resolution, to gain agreement of Full Council to transfer these assets from the Council’s General Fund to the Pension Fund in 40 years.

Councillor Brew, Councillor Clancy, Councillor Hopley and Gilli Driver asked that their votes against the recommendations be noted.