Agenda item

This report presents to the Committee a draft Business Plan for the Fund for financial years 2024/25 to 2026/27 attached as Appendix A. It invites their comments and requests their agreement to the Plan.

The Head of Pensions and Treasury introduced the item and explained that the business plan 2024-27 was taken to the April pension board meeting for comment and they agreed for the business plan to be presented to the Committee.

The Head of Pensions and Treasury informed the committee that the business plan contained a review of what the Pensions team had achieved over the past year, the introduction of the conflict-of-interest policy, responsible investment policy and the cyber security strategy were the highlights of the previous year. The Head of Pensions and Treasury explained that the key items which needed to be covered during the current municipal year were the transfer of assets to the London CIV, more training for Members of the committee and board, cyber security, bringing the accounts and annual reports up to date, Mc cloud remedy, pensions dashboard, compliance with the Pension Regulator Code and resourcing for the department at the council.

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

• Officers were working with governance advisors at Aon on the mapping document etc.
• The PSAA handle the contract arrangement for external audit. The contracts across local government went up by 50% in the last year. The amount of audit given the recent financial history of Croydon required auditors to go back to accounts across a longer period.
• The increase in fees were not to do with the level of work and had more to do with the re-tendering process. Officers thought that the fees agreed under the previous tender may have been too low as auditors may have been focused on winning the contracts.
• Investment management services we’re billed separately and as the assets grew the management expenses increased as well. The assets outside of the fund were the fees presented in the report.
• This was part of the reason why officers were trying to transfer more assets to the London CIV as they were able to negotiate better fee discounts.
• In terms of investment fees, a comparison was done with other councils, the council fared quite well. The council was at the bottom end of the London CIV in terms of service costs.
• There was an increase in fees due to covid as the work had to be done remotely. However, the recent increase was due to the re-tendering process.
• There was an additional risk factor built into the calculation on costs.
• The fees were forecast increases; a lot of the income was re-invested. There was the ability to take income if the Fund required more cash. The council was not currently drawing down on the income from a range of assets such as bond and property investments.
• Private credit was a cash generative investment.
• The Legal and General investment was an index tracking fund and  although it was managed outside of the CIV, it was designated as being pooled. It was the largest part of the fund’s equity investment portfolio.
• The Head of Pensions & Treasury stated that he was happy to bring back the visits to investment managers.

Peter Howard commended officers on the increase in the value of the Pension Fund over the past year.

Councillor Hopley congratulated officers and believed that a lot of ground work had been completed with the policies and processes that had been implemented.

Councillor Brew congratulated the entire pension team on their hard work and for the performance of the Fund over the past year. Councillor Brew also noted that continuity would be important moving forward as Members had been used to working together and already had an understanding of the pensions service.

Councillor Fraser thanked all the officers who had worked on the business plan and believed that the Fund was in a better place financially and the Fund’s governance had also improved. Councillor Fraser acknowledged that the work done by the Committee was just the tip of the iceberg and there was a vast amount of work carried out by officers behind the scenes.

Councillor Hay-Justice asked for the investigation into the risk factors to the pension fund were documented for future reference.

Resolved:

1.1    To comment on and agree to the recommended Medium Term Business Plan 2024/27.