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Agenda and minutes

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

Contact: Marianna Ritchie, Democratic Services  Email: marianna.ritchie@croydon.gov.uk

Items
No. Item

24/22

Minutes of the Previous Meeting pdf icon PDF 123 KB

To approve the minutes of the meetings held on Tuesday, 8 December 2020; Tuesday, 16 March 2021; Tuesday, 25 May 2021; Friday, 3 December 2021 and Tuesday, 14 June 2022 as an accurate record.

Additional documents:

Minutes:

The minutes of the meetings held on Tuesday, 8 December 2020; Tuesday, 16 March 2021; Tuesday, 25 May 2021; Friday, 3 December 2021 and Tuesday, 14 June 2022 were agreed as accurate records.

 

Councillor Patricia Hay-Justice and Peter Howard abstained from the vote to approve the minutes.

25/22

Disclosure of Interests

Members and co-opted Members of the Council are reminded that, in accordance with the Council’s Code of Conduct and the statutory provisions of the Localism Act, they are required to consider in advance of each meeting whether they have a disclosable pecuniary interest (DPI), another registrable interest (ORI) or a non-registrable interest (NRI) in relation to any matter on the agenda.  If advice is needed, Members should contact the Monitoring Officer in good time before the meeting.  

 

If any Member or co-opted Member of the Council identifies a DPI or ORI which they have not already registered on the Council’s register of interests or which requires updating, they should complete the disclosure form which can be obtained from Democratic Services at any time, copies of which will be available at the meeting for return to the Monitoring Officer.

 

Members and co-opted Members are required to disclose any DPIs and ORIs at the meeting.  

·          Where the matter relates to a DPI they may not participate in any discussion or vote on the matter and must not stay in the meeting unless granted a dispensation.  

·          Where the matter relates to an ORI they may not vote on the matter unless granted a dispensation.   

·          Where a Member or co-opted Member has an NRI which directly relates to their financial interest or wellbeing, or that of a relative or close associate, they must disclose the interest at the meeting, may not take part in any discussion or vote on the matter and must not stay in the meeting unless granted a dispensation.  Where a matter affects the NRI of a Member or co-opted Member, section 9 of Appendix B of the Code of Conduct sets out the test which must be applied by the Member to decide whether disclosure is required.

 

The Chair will invite Members to make their disclosure orally at the commencement of Agenda item 3, to be recorded in the minutes.

 

 

Minutes:

There were none.

26/22

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:

Actions Arising from last meeting.

 

Reports to The Pensions Regulator – The Head of Pensions and Treasury read a letter dated 08 August 2022 from the Pensions Regulator following its investigation into the ‘The Property transfer’ and the reports mad regarding meeting minutes and record-keeping.

 

Regarding Minutes and Record-Keeping the letter read; Scheme managers of public service schemes are responsible for making sure schemes have accurate, complete and up-to-date records. They should have controls and processes in place to maintain these standards. Poor quality or missing data increases the risk of them being unable to meet their legal duties. During our engagement with the Scheme, we have become concerned by the:

 

·       Disproportionate length of time taken for meeting minutes to be approved; and

·       Missing minutes – i.e. lack of available meeting minutes to serve as an accurate record of the matters discussed and decisions taken at pension committee meetings.

 

Going forward, we expect appropriate controls and processes to be put in place to ensure that draft meeting minutes are produced in a timely manner and for them to be reviewed and approved promptly as a matter of process. This will ensure that they serve as an accurate record.

27/22

Triennial Valuation pdf icon PDF 168 KB

This report sets out a revised structure to the FSS and a few technical or regulatory updates required since the May 2021 review. The main updates for the Committee’s attention are in relation to the funding assumptions, climate risk and the ‘McCloud’ judgement.

 

Additional documents:

Minutes:

The Acting Head of Pensions and Treasury introduced the item and presented his report on the Triennial Valuation, stating that the purpose of the paper was to present the Funding Strategy Statement to the Committee and as part of the valuation process, this was to be reviewed every three years.  This was last reviewed in May 2021 following changes in legislation.

 

The format of the Funding Strategy Statement had changed, and the relevant policies were now attached to the statement.

 

The Acting Head of Pensions and Treasury informed the Committee that he wanted them to approve the draft Funding Strategy Statement before it was issued for consultation with employers. He also wanted the Committee to note the progress of the 2022 valuation and to note the initial whole fund results which were effective 31 March 2022.

 

The Acting Head of Pensions and Treasury invited the Fund’s Actuary from Hymans Robertson, Robert McInroy to address the Committee. Robert McInroy stated that the main changes to the funding strategy had been structural, to ensure that the strategy was more accessible, practical and user friendly. Robert McInroy informed the Committee that the funding assumptions had been updated to allow for emerging experience in market conditions as at the 31 March 2022. The second main change was the statutory requirement to document the allowance for climate risk in any funding plans. The final change was in respect of the treatment of the McCloud ruling.

 

Robert McInroy stated that the next step would be to go out and consult with the employers on the funding strategy statements, and then relay their comments to the committee in March for their approval of the Funding Strategy Statement.

 

In response to questions from members, officers informed the Committee:

 

·       That there was huge uncertainty which is why they undertook stress testing. This stress testing assessed various scenarios such as green initiatives which would see them make a move to more ‘green’ assets, this would present some disruption in the short-term and long term the physical risks such as flooding, fire would have less of an impact. Another scenario that was tested assessed the event that there was not much policy change, this would lead to less disruption in the short-medium term but in the longer term there may be more physical risks. 

 

·       That in terms of the increase in liabilities, the biggest factor was the fact that Members had accrued more benefits in the past three years. Rises in inflation had also led to the increase in liabilities, also as people are expected to live longer than they did in 2019 this has also increased the liabilities. In regard to the market volatility, his recommendation was to stick with the assumptions on market conditions made on the 31 March 2022.

 

·       That the funding plans were devised with a long-term view, yet he was mindful of the events in the market and if there was a long-term shift in the economic environment then they would look to act. If Members  ...  view the full minutes text for item 27/22

28/22

Governance and Compliance Statement pdf icon PDF 120 KB

This report updates the Governance Best Practice Compliance Statement for consideration by the Committee.

Additional documents:

Minutes:

The Acting Head of Pensions and Treasury introduced the item and presented the report to the Committee, stating that a report was originally brought to the Committee in June on the Governance and Compliance Statement. It was felt that the Fund was not fully compliant due to the performance on meeting papers. Officers confirmed that the Pensions Board was not a secondary or subcommittee and that the Governance and Compliance Statement had been updated to reflect this.

 

In response to questions from members, officers informed the Committee that:

 

·       The Pensions Board and Officers had discussed the recommendations from the governance reviews and various follow-up discussions.  Officers recommended that a voting non-council employer representative position be added to the Pension Committee, the staff trade union representative be granted voting rights and one pensioner representative would have voting rights and that this would form part of the constitution changes that would be recommended later in the meeting.

 

The Chair asked for a report explaining the rationale behind the enfranchisement and balance of representation of the Pension Committee.

 

The Pension Board Chair explained that a lot of work that had gone into the proposed constitutional amendments and he wanted to express his thanks to officers. The Chair of the Pension Committee agreed and expressed his thanks also.

 

Officers stated that the proposed constitutional changes would need to be agreed by the Monitoring Officer.

 

RESOLVED:

 

·       The Committee agreed the revised draft Governance Best Practice Compliance Statement attached as Appendix A subject to the agreed amendments to principle E.

·       Officers to present a paper to the next committee meeting explaining the rationale behind enfranchisement and balance of representation.

29/22

Progress on implementation of Aon Governance Review Action Plan pdf icon PDF 115 KB

The Pension Board were asked to consider the latest agreed list of recommendations and make comment for presentation to the Pension Committee. This report details those comments and suggested actions for the Committee’s consideration.

 

This report updates the Committee on the progress made in completing recommendation actions to August 2022.

 

Additional documents:

Minutes:

The Acting Head of Pensions and Treasury introduced the item and presented the report to the Committee and explained that the purpose of the report was to consolidate all the findings and comments which came from the governance reviews. This report was taken to the Pensions Board in June, and they had come up with a recommended action plan, which listed the actions that would be carried out moving forward.

 

In response to a question from members, officers informed the Committee that:

 

  • The recommendations on the action plan had been included in the proposed constitutional changes that were to be presented to the Monitoring Officer.

 

The Chair expressed concern that there were no constraints on the remuneration for members of the Pension Board.

 

RESOLVED:

 

  • The Committee agreed the outstanding actions to be taken forward as a result of the findings from the various Governance Reviews as detailed in section 3.4 of this report.
  • The Committee agreed to note the progress achieved in addressing the findings of the Governance Reviews of 2019 and 2021.
  • The Committee recommended that appropriate constraints on Board Member allowances are added to the proposed constitutional changes.

 

30/22

Breaches of the Law Policy pdf icon PDF 85 KB

This report asks the Committee to agree the revised Reporting Breaches of the Law Policy to the Committee and attached appendices.

Additional documents:

Minutes:

The Acting Head of Pensions and Treasury introduced the item and presented the report to the Committee and explained that there were certain individuals who were responsible for reporting breaches of the law to the Pensions Regulator. The Fund needed a policy on how to identify and record breaches and determine what was reportable to the Pensions Regulator. This policy would set out the procedures that were considered when making reports to the Pensions Regulator.

 

In response to a question from a member, officers informed the Committee that:

 

·       The report had not been presented in a before-and-after format as there had been numerous changes.

 

RESOLVED:

 

·       The Committee agreed the Fund’s new “Reporting Breaches of the Law Policy” and appendices.

31/22

Breaches of the Law Log pdf icon PDF 115 KB

It is consistent with The Pension Regulator’s Code of Practice that the Pension Fund maintains a breaches log detailing incidences where breaches have occurred.  In line with the recommendations of the Aon Hewitt Governance Review, on 15 September 2020 the Committee agreed the revised Reporting Breaches of the Law Policy.  This included a requirement for the Committee to monitor breaches on a regular basis.  This report presents the current log (Appendix A) for the Committee’s consideration and comment.

Additional documents:

Minutes:

The Acting Head of Pensions and Treasury introduced the item and presented the report to the Committee and explained that the Breaches of the Law Log had been presented to the Committee in June and they had removed two breaches from the log as they had passed the three-year limit for which they had to be included.

 

In response to a question from members, officers informed the Committee that:

 

·       The failure to produce minutes was reported to the regulator, however officers could not confirm how the issues regarding the property transfer had been reported but stated that the issue had been resolved.

·       The pension fund accounts formed part of the Council’s accounts, and therefore they could not be signed off until the Council’s accounts had been signed off.

·       The figures in the KPI report were taken at the end of July and great progress had been made since. Hymans Robertson had anticipated working through the backlog by the middle of October 2022.

·       During the property transfer Eversheds acted on behalf of the pension fund and had produced documents for the property transfer. He also explained that Burges Salmon provided Pension officers with legal advice when reviewing their reports, and Gowlings provided legal advice when dealing with legal agreements.

 

Members proposed that that officers change the comments in the appendix from ‘amber’ to ‘green’ as the outstanding Pension Committee and Board minutes had been published.

 

RESOLVED:

 

·       The Committee agreed the contents of the Pension Fund Breaches Log, Appendix A subject to the entry on minutes being changed to a ‘green rating’.

32/22

Constitution Changes pdf icon PDF 85 KB

The Pension Committee and Pension Board operate within the parameters defined within the Constitution. The Constitution should be reviewed annually and updated as appropriate. This report asks the Committee to consider the proposed amended sections of the Constitution as they relate to The Pension Committee and Pension Board and recommend them to the Monitoring Officer.

Additional documents:

Minutes:

The Acting Head of Pensions and Treasury introduced the item, presented the report to the Committee and explained that the Pensions Committee and the Pensions Board operated within the parameters set out by the Constitution. As a result of the governance review officers had devised an action plan which included changes to the constitution that were to be proposed to the Monitoring Officer.

 

In response to a question from members, officers informed the Committee that:

 

·       The reference to the London Collective Investment Vehicle (LCIV) structure was up to date and had been recently extracted from their website.

 

RESOLVED:

 

·       The Committee agreed the proposed amended sections of the Constitution as they relate to The Pension Committee and Pension Board, subject to the comments made during the discussion on the Governance and Compliance Statement and recommend them to the Monitoring Officer.

33/22

Training Plan pdf icon PDF 99 KB

This report advises the Committee of training undertaken by the Pension Board and Pension Committee members since January 2021 and asks them note the proposed joint Pension Committee and Pension Board training plan for 2022/23.

Additional documents:

Minutes:

The Acting Head of Pensions and Treasury introduced the item and presented the report to the Committee and explained that as part of the governance review recommendations officers were asked to assess the knowledge and skills policy, which was agreed at the previous Pensions Committee meeting. The agreed knowledge and skills policy enabled officers to formulate a training plan, which included mandatory courses such as the LGA course and the Hymans online course.

 

In response to a question from a Member, officers informed the Committee that:

 

·       They would consider the need for more interactive sessions and workshops where possible so that Members could consolidate their knowledge and asked whether Members could suggest dates for future interactive sessions.

 

RESOLVED:

 

·       The Committee agreed to note the contents of the joint Pension Committee and Pension Board Training Log and Training Plan.

34/22

Administration Performance Report pdf icon PDF 91 KB

This report sets out Key Performance Indicators for the administration of the Local Government Pension Scheme for the three month period up to the end of July 2022.

 

Additional documents:

Minutes:

The Pensions Manager introduced the item and presented the Administration Performance report to the Committee and explained that the backlog had impacted the reporting of stats and the service anticipated an improvement in future. Officers had focused on preparation for data submission for the valuation which was concluded on time. The Pensions Manager stated that two staff members had resigned, and that they were in the process of recruiting to those posts.

 

In response to questions from Members, officers informed the Committee that:

 

·       The statistics in the report included the backlog work that Hymans had carried out and once they had worked through the backlog, they anticipated that the statistics would improve moving forward.

·       Matthew Hallett was covering the Head of Pensions position which was vacated in March. The Council was experiencing issues in recruiting permanent staff in the finance department and the decision to recruit to the Head of Pensions position sat with the Section 151 Officer.

·       There had been discussion with the Pension Board about whether the pension fund would act as a sole entity. This would require larger staffing requirements and any potential benefits gained may be outweighed by the increased costs and the regulations that the Council would have to adhere to.

·       The Pension Committee fell under the Council’s remit regarding insurance as it was the administering authority. The Pension Board was insured separately as it was not covered by the Council. 

 

RESOLVED:

 

The Committee agreed to note the Key Performance Indicators and the performance against these indicators set out in Appendix A in the report.

35/22

Risk Register Review pdf icon PDF 83 KB

It is recommended best practice for the Pension Committee to maintain a risk register covering the most significant risks faced by the Fund. This report presents the current register (Appendix A) for the Committee’s consideration. 

Additional documents:

Minutes:

The Acting Head of Pensions and Treasury introduced the item and presented the report to the Committee and explained that best practice recommended that a risk register was maintained by the Pension Committee. The risk register would record relevant risk scenarios, together with an assessment of their likelihood and impact and appropriate mitigations.

 

RESOLVED:

 

·       The Committee agreed to note the contents of the Pension Fund Risk Register.

36/22

Update on LCIV pdf icon PDF 118 KB

This report advises the Committee of the extent to which the Fund is complying with the pooling requirements of Guidance issued by the, then, Department for Communities & Local Government (DCLG) in 2015, the savings made through pooling in 2021/22 and the governance structure of the London Collective Investment Vehicle (LCIV).

Minutes:

The Acting Head of Pensions and Treasury introduced the item and explained that the report advised the Committee on the extent to which the pension fund complied with the guidance and provided an outline of the savings made in the year 2021-22.

 

In response to a question from Members, officers informed the Committee that:

 

·       It would cost more money to transition the alternative portfolio into the CIV.

·       Officers would look to move their bond portfolio into the CIV as this would be relatively simple. In terms of transferring property funds, selling a property fund would incur a minimum 5% exit fee from the value and so liquidating property assets would have to be done over time. Infrastructure funds were close-ended funds, so members would have to wait for them to mature before deciding whether to re-invest in the CIV products. The CIV tend to base the savings reported on savings made from the standard rate card. If the Fund were investing outside of the CIV they would probably not pay the standard rate. 

·       The two mandates within the CIV are the PIMCO Global Bond Fund and the RBC Sustainable Global Equity Exclusion Fund.

 

RESOLVED:

 

·       The Committee agreed to note the contents of this report.

37/22

Update on SAB and TPR news pdf icon PDF 124 KB

This report advises the Committee of the matters currently being considered by the Local Government Pension Scheme Advisory Board and The Pensions Regulator which are relevant to the Fund. Any implications for the Fund have been noted and are being addressed in consultation with Fund advisors.

 

Minutes:

The Acting Head of Pensions and Treasury introduced the item and presented the report and informed the committee that there had been letters written by the Chair of the Scheme Advisory Board to the minister regarding the Council’s issues with the audit of the accounts as well as the separation of the Local Government Pension Scheme from the Council accounts. 

 

RESOLVED:

 

·       The Committee agreed to note the contents of this report.

38/22

Progress report for quarter ending June 2022 pdf icon PDF 192 KB

This report provides an update on the Fund’s performance for the quarter to 30 June 2022.  The report falls into four parts.  Section 1 addresses performance against strategic goals.  The second section considers the asset allocation strategy and how that is being applied, specifically current and planned investments.  The third section deals with risk management and the fourth and final section summarises the recent investment manager site visit. 

 

Minutes:

The Acting Head of Pensions and Treasury introduced the item and presented the report to the Committee.

 

The Committee considered the Part A report, which gave introduction to the commercially sensitive context to the performance of the Pension Fund over the most recent quarter.

 

In response to questions from Members, officers informed the Committee that:

 

·       The valuation of the bonds had decreased, equities had steadied, and the LGIM Passive fund had performed negatively throughout the quarter.

·       The triennial valuation was a snapshot of a point in time since which the value of the Fund had dropped.

 

RESOLVED:

 

·       To note the performance of the Fund for the quarter ended 30 June 2022.

39/22

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 Young and seconded by Councillor Fraser 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.

 

40/22

Progress report for quarter ending June 2022

This report provides the commercially sensitive context to the performance of the Pension Fund over the most recent quarter.

 

Minutes:

RESOLVED that members of the Press and Public be excluded from the

remainder of the meeting under Section 100A(4) of the Local Government Act

1972 on the grounds that: (i) it involved the likely disclosure of exempt

information as defined in Paragraph 3 (Information relating to the financial or

business affairs of any particular person (including the authority holding that

information)) of Part 1 of Schedule 12A of the Act: and (ii) that the public

interest in maintaining the exemption outweighed the public interest in

disclosing the information.