Agenda and minutes

Pension Committee
Tuesday, 17th March, 2020 10.00 am

Venue: Council Chamber, Town Hall, Katharine Street, Croydon CR0 1NX. View directions

Contact: Annette Wiles 020 8726 6000 x 64877  Email: annette.wiles@croydon.gov.uk

Items
No. Item

19/20

Minutes of the Previous Meeting pdf icon PDF 98 KB

To approve the minutes of the meeting held on 11 February 2020 as an accurate record.

Minutes:

The minutes of the meeting held on 11 February 2020 were agreed as an accurate record.

 

20/20

Disclosure of Interests

In accordance with the Council’s Code of Conduct and the statutory provisions of the Localism Act, Members and co-opted Members of the Council are reminded that it is a requirement to register disclosable pecuniary interests (DPIs) and gifts and hospitality to the value of which exceeds £50 or multiple gifts and/or instances of hospitality with a cumulative value of £50 or more when received from a single donor within a rolling twelve month period. In addition, Members and co-opted Members are reminded that unless their disclosable pecuniary interest is registered on the register of interests or is the subject of a pending notification to the Monitoring Officer, they are required to disclose those disclosable pecuniary interests at the meeting. This should be done by completing the Disclosure of Interest form and handing it to the Democratic Services representative at the start of the meeting. The Chair will then invite Members to make their disclosure orally at the commencement of Agenda item 3. Completed disclosure forms will be provided to the Monitoring Officer for inclusion on the Register of Members’ Interests.

 

Minutes:

Co-opted Member and Pensioner Representative, Peter Howard declared that he was in receipt of a pension from the Fund.

 

21/20

Urgent Business (if any)

To receive notice of any business not on the agenda which in the opinion of the Chair, by reason of special circumstances, be considered as a matter of urgency.

 

Minutes:

In order to take an item of urgent business in Part B (a presentation on an investment fund offered by the London CIV), the following motion was moved by Councillor Pelling and seconded by Councillor Hall to exclude the press and public:

 

“That, under Section 100A(4) of the Local Government Act, 1972, the press and public be excluded from the meeting for the following items of business on the grounds that it involves the likely disclosure of exempt information falling within those paragraphs indicated in Part 1 of Schedule 12A of the Local Government Act 1972, as amended.”

 

22/20

Progress Report for Quarter 3 (to the end of December 2019) pdf icon PDF 140 KB

This report provides an update on the performance of the London Borough of Croydon Pension Fund to the end of quarter 3 (to the end of December 2019).

Minutes:

The item was introduced by the Head of Pensions and Treasury. It was noted that the report covered the quarter to the end of December 2019 and felt historic as a result of the adjustment that had occurred in the market since this time. The Fund was described as a long-term investor and having recovered well from the financial crisis in 2008. It was thought that the same would happen in response to the market adjustment that was in progress.

 

It was highlighted that there was benefit arising from 5% of the Fund being held in cash and the decision taken 18 months previously to reduce the Fund’s equity exposure in preference for investment in the bond market.

 

The Chair requested more information be provided on the performance of Bond funds specifically Aberdeen Standard Life and Pimco.

 

It was established that the constant review of Currency Foreign Exchange was achieved through regular updates provided by Mercer UK with more information to be sought.

 

RESOLVED: The Committee AGREED to note the report.

 

23/20

Key Performance Indicators for the Period Ended 31 December 2019 pdf icon PDF 65 KB

This report sets out the Key Perforance Indicators for the administraiton of the Local Government Pension Scheme for the period up to the end of December 2019.

Additional documents:

Minutes:

The item was introduced by the Head of HR and Finance Service Centre. It was noted that this was the first time that it had been possible to present the Committee with data for the whole of the quarter. This showed that performance was good for the priority areas of retirement and the payment of death benefits.  Recruitment was continuing to fill junior posts which meant resourcing for processing was not at capacity. The tendering process was continuing to outsource the clearance of the backlog; three bids had been received and were awaiting evaluation.

 

Member questions covered the following areas: the timeframe for clearing the backlog of cases; business continuity should working from home become necessary in the light of COVID-19; the number of agency workers in the administration team; the definition of a legal deadline and the action to be taken where this might be breached. The rate of completion of new cases during the peak in notifications experienced during December 2019 was also explored. This had resulted from the implementation of a new payroll system.

 

RESOLVED: The Committee AGREED to note the report.

 

24/20

Funding Strategy Statement pdf icon PDF 72 KB

For Members to receive and approve the finalised Funding Strategy Statement.

Additional documents:

Minutes:

The item was introduced by the Head of Pensions and Treasury. It was noted that the Committee had seen the Funding Strategy Statement in a draft format during its briefing from the scheme actuary at its meeting in February 2020. Since this time, the other scheme employers had been consulted on its contents. There was disappointment expressed that so few employers had participated in this process. However, this process was now complete and the Funding Strategy Statement presented would be in place until the 2022 triennial evaluation took place.

 

Members asked questions about how the engagement of other employers might be improved with a focus on academies and third-party contractors.

 

RESOLVED: The Committee NOTED the outcome of the consultation with other employers and AGREED the adoption of the Funding Strategy Statement.

 

25/20

Risk Management Policy pdf icon PDF 60 KB

For Members to receive and review the revised Risk Management Policy.

Additional documents:

Minutes:

It was noted that this policy had come through the governance review process and was being presented for re-adoption.  It was introduced by the Head of Pensions and Treasury, who explained it was last reviewed and adopted in December 2017. It had been subsequently reviewed by officers, judged acceptable and therefore was being brought forward for re-adoption. Reassurance was provided that it had been fully scrutinised and assessed to still be suitable.

 

RESOLVED: The Committee AGREED to re-adopt the Risk Management Policy.

 

26/20

Knowledge and Skills Policy pdf icon PDF 88 KB

For Members to receive and review the revised Knowledge and Skills Policy.

 

Additional documents:

Minutes:

The item was introduced by the Head of Pensions and Treasury. It was explained that whilst there were detailed expectations for Pension Board members, this was not the case for Pension Committee members. It was explained that the Secretary of State, through the Scheme Advisory Board, had noted this discrepancy and was seeking for this to be addressed. The Knowledge and Skills Policy had been drafted based on the framework provided by the Chartered Institute of Public Finance and Accountancy (CIPFA). It was suggested that once the policy was adopted the Committee could identify training needs to be addressed.

 

The Committee discussed how the policy was going to be implemented and tracked. It was acknowledged that participation in training by Members was recorded and featured in the Annual Report shared with Secretary of State. The option of online training was highlighted. Training for regulation, benefits and administration was noted as available with other investment training being available including from CIPFA.

 

Through their questions, Members established that there was more to do in terms of training for Reserve Members. There was discussion about the best providers of suitable training with the Local Government Association specifically mentioned. The knowledge Members were expected to have was described as extensive.

 

RESOLVED: The Committee AGREED the Knowledge and Skills Policy and adopted the CIFPA Knowledge and Skills Framework.

 

27/20

Revisions to the Asset Allocation Strategy pdf icon PDF 79 KB

For Members to receive and review the revised Asset Allocation Strategy.

 

Papers to follow.

Minutes:

Councillor Hall moved the recommendation as stated in the amended officer’s report, the Fund’s median percentage asset allocation to be set at 40 % Equities, 20 % Fixed Income and 40 % Alternatives. Additionally, Councillor Hall moved the recommendation for £55 million, being equivalent to the sum previously earmarked for investment in the London CIV Emerging Market Fund, to be invested in the London CIV Sustainable Equity Exclusion Fund with the timing to be determined by officers with advice from Mercer UK and that over time the Fund’s equity investments shall be moved into the London CIV Sustainable Equity Exclusion Fund.

 

Both recommendations were seconded by Councillor Pelling.

 

Officers pointed out that they were not able to give investment advice and the Pension Fund’s investment adviser had not been given the opportunity to offer appropriate advice to inform the decision.

 

All Members agreed the recommendation save for Councillor Hopley who asked that her reservation about all equity investments being placed within the London CIV Sustainable Equity Exclusion Fund be recorded.

 

RESOLVED: The Committee AGREED the amended recommendation in the officer’s report to approve the asset allocation strategy such that the Fund’s median percentage asset allocation be set at 40 % Equities, 20 % Fixed Income and 40 % Alternatives. Additionally, the Committee AGREED to move £55 million of the Fund’s Equity Investment to the London CIV Sustainable Equity Exclusion Fund with the timing to be determined by officers with advice from Mercer UK and that over time the Fund’s equity investments shall be moved into the London CIV Sustainable Equity Exclusion Fund.

 

28/20

Exclusion of the Press and Public

The following motion is to be moved and seconded where it is proposed to exclude the press and public from the remainder of a meeting:

 

“That, under Section 100A(4) of the Local Government Act, 1972, the press and public be excluded from the meeting for the following items of business on the grounds that it involves the likely disclosure of exempt information falling within those paragraphs indicated in Part 1 of Schedule 12A of the Local Government Act 1972, as amended.”

 

Minutes:

The following motion was moved by Councillor Pelling and seconded by Councillor Howard to exclude the press and public:

 

“That, under Section 100A(4) of the Local Government Act, 1972, the press and public be excluded from the meeting for the following items of business on the grounds that it involves the likely disclosure of exempt information falling within those paragraphs indicated in Part 1 of Schedule 12A of the Local Government Act 1972, as amended.”

 

The motion was put and it was agreed by the Committee to exclude the press and public for the remainder of the meeting.

 

The meeting adjourned briefly at 11:39am and reconvened at 11:47am.

 

 

29/20

Progress Report (Part B) for Quarter 3 (to the end of December 2019)

This report provides an update on the performance of the London Borough of Croydon Pension Fund to the end of quarter 3 (to the end of December 2019).

 

Minutes:

The meeting adjourned briefly at 12:17pm to allow the Committee time to consider the report. The meeting reconvened at 12:27pm.

 

The Committee considered the report of the Head of Pensions and Treasury that detailed the commercially sensitive context of the performance of the Pension Fund over the quarter to the end of December 2019.

 

RESOLVED: The Committee AGREED to note the report.

 

30/20

Revisions to the Asset Allocation Strategy (Part B)

For Members to receive and review the revised Asset Allocation Strategy.

Minutes:

The Committee considered the commercially sensitive report provided by Mercer UK regarding the Investment Strategy Review.