Agenda item

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.

The Chair agreed to take an update on the governance review as an item of urgent business. Mary Lambe, Senior Benefits & Governance Consultant, Aon, was invited to provide the Board with an update report in anticipation of the final report of the governance review coming to the Board’s meeting in March 2019. The Board was informed that Aon had been commissioned last year to undertake work in three key areas:

·        Compliance with the Pensions Regulator’s code of practice;

·        A review of governance arrangements (and to compare this with the review conducted three years ago); and

·        Look at the activity being conducted with the London CIV.

It was explained that all Board Members were to receive an effectiveness questionnaire as part of the review process. This would also be sent to Pension Committee Members and used to understand how Members feel about the effectiveness of meetings, the relevance of the training etc. It was highlighted that this would be provided electronically with all responses remaining anonymous. It was agreed that the questionnaire would come to the Board first and then go to the Committee. Members of the Pension Committee would receive a reminder that the questionnaire was to be provided.

The Board was reminded that it had been established for three years and that its terms of reference were focused on compliance and regulation; the review and resulting report were to enable prioritisation and areas for focus going forward. It was noted that the Board acts as a critical friend of the scheme administrator; the benefits of the relationship had become increasingly obvious.

Whilst the role of the Regulator was defined in legislation and the code of practice, there was increasing evidence of activity happening locally through the work of Pension Boards. The focus was on enabling and educating to ensure fund administrators were carrying out their work adequately. Where this work was not taking place the Regulator wanted to know what had happened, what was going to be done to address any issues and then would be active in ensuring that this happened.  For example, through regular telephone calls regarding the implementation of any improvement plan. It was noted that whilst reference was made to the Regulator being able to issue fines these were yet to be seen. Impact was being achieved through the desire to avoid reputational damage.

In response to comments and questions from Board Members it was noted that:

·        Administration of schemes was often the poor relation of the fund. Whilst resources might be limited, administration could not slip and this would be highlighted in the report;

·        Findings were emerging from the compliance review being conducted by the Pension Regulator;

·        The governance review was about 90% complete with findings positive. However, it had been found that there was still a need to focus in some areas. For example, training and ensuring conflict of interest policies were in place. These needed to be maintained and reviewed on a regular basis (every three years). How the Board’s training needs were assessed needed to be considered. It was noted that there was a legislative requirement for knowledge and understanding. It also had to be considered how this knowledge base could be demonstrated to the Regulator;

·        Aon had its own governance framework tool which could be used to measure and undertake the governance review;

·        Assessing progress against the recommendations made as part of the last review was in hand; it had been established that items such as putting in place the risk register and expanding the terms of reference of the Pension Committee had been completed; and

·        The information gathered would be used to benchmark the effectiveness of Croydon’s Pension Board against others allowing learning to take place.