Agenda item

For the Committee to consider the decision to in principle allow the future transfer of properties leased to Croydon Affordable Homes and Croydon Affordable Tenures.

The Chair began by referring to the recommendations in the report and that the discussions regarding section 3 in the report be minuted.

Officers then presented the report and advised Members that the situation had created an unusual set of circumstances. Both Members and the external auditor had raised concerns at the delay in the transfer taking place. It had since been considered as to whether the transfer would be in the best interests of the Pension Fund. As a result, it was now being recommended to rescind the decisions made in 2018 and 2019 to transfer funds from Croydon Affordable Homes and Croydon Affordable Tenures to the Pension Fund.

Members commented whether valuation of the properties had been undertaken for the Pension Fund and emphasised the importance of this being undertaken. Members sought the reasons that had led to the delay in the transfer.  The lack of property valuations would mean that the Pension Fund would be missing out on future increases in property prices. Confirmation was sought that no completions in respect of any properties had been made. Members commented that more information on the properties concerned would be useful. It was queried whether it would be more beneficial to invest in carbon neutral schemes as opposed to properties as such actions would provide a longer-term asset, notwithstanding the benefit to the Pension Fund of any uplift in value of the properties concerned. Members also asked whether the Council’s actuary had expressed any comments about this property investment. Some Members felt that the recommendations in the report to rescind the decisions made in 2018 and 2019 be agreed without delay. It was also queried as to whether a risk assessment had been undertaken in respect of the decisions and recommendations made.

In response to comments and questions from Members, officers confirmed that no transfers of properties had been completed. A risk assessment had been undertaken on the matter and consideration was being given as to the balance of asset allocations for the Pension Fund. The Committee heard that investing more in carbon neutral assets rather than properties may be more beneficial for the Pension Fund and there would be further consideration of this.

The Head of Treasury and Pensions advised Members that an updated valuation of the properties was awaited and this would be comprehensive. There were several complex technical issues that had contributed to the delay in the transfers. The Head of Treasury and Pensions stated that circumstances had changed significantly since the original decisions had been made in 2018 and 2019. Consideration needed to be given as to whether the properties in question would provide best value for the Pension Fund in future years. It was also important that actions taken were in accordance with the actuarial valuation.

The Council’s actuary was then invited to comment. The actuary representative recommended that any assets taken on should be evaluated regularly to ensure appropriate safeguarding being taken. The actuary had reservations about the property transfer. Whilst a desk top valuation of the properties had been undertaken earlier, it was important to ensure valuations were up to date.

The Chair acknowledged the difficulties in considering this matter. He felt that more information was needed before any decisions could be made. He requested that further details of the valuation of properties at the time of the proposed transfer be provided. More information was needed in respect of the financial flows and structure concerning the scheme in order to provide Members with a greater understanding of the situation. In addition, officers were asked to explore other ways of investing cash in properties and other investment alternatives in order to seek better options. Further details of the risks involved in the property transfer and clarification on the contract between the Pension Fund and the Council was also sought.

In response, the Head of Treasury and Pensions advised that the information requested would be available in time for the 14 September 2021 Pension Committee meeting at the earliest.

Prior to a motion to this effect being proposed, a Member requested that it be noted that the Minority Party was in favour of the recommendations in the report to rescind the decision to transfer the properties concerned.

The motion with regard to defer any decision pending further information was moved by the Vice-Chair, Councillor Clive Fraser and seconded by the Chair, Councillor Andrew Pelling.

RESOLVED: That decisions regarding the transfer of Transfer Property from Croydon Affordable Homes and Croydon Affordable Tenures to the Pension Fund be deferred, pending further information being provided in respect of:

1.     Details of the valuation of properties at the time of the proposed transfer

2.     The financial flows and structure concerning the scheme

3.     Other ways of investing cash in properties and other investment alternatives in order to seek better options

4.     The risks involved in the property transfer

5.     Clarification on the contract between the Pension Fund and the Council.