Agenda item
Pensions Committee Agenda_13MAR2019
Minutes:
The Board then asked a number of questions about the proposals and the points raised are summarised below:
The Board noted with regard to the:
- Staffing levels of the scheme’s administration and performance metrics (as referred to in Page 239 of the Pensions Committee agenda); Board was informed that currently there are 4 permanent posts, 1 agency, 1 seconded from another role. The new structure has scope for 8 full-time positions. The requirement is to find someone with pension related experience. Currently, there is 1 pension accountant and one investment manager. Board suggested that the Pensions Team report should show numbers rather than percentages to provide a better picture of the performance of the Administration team.
- Capturing of correct death records, the Board was informed that this information is captured through the national fraud database. Every beneficiary receives a life certificate every year. The beneficiary is to respond within an allocated time frame and failure to respond would put a halt to the funds being released. The certificate is to be signed and witnessed. The Board was also informed about the importance by regulators on data quality and that the board needs to perform a data quality assessment annually.
- Statutory interest charges for breaches, the Board was informed that there are statutory interest charges but they are nominal charges, although the amount of work to charge that is more than the benefit of the actual charges. The alternative mechanism is to report the breaches to regulators who can then choose to fine repeat offenders.
- Topic of data quality, it was noted that there are 5 target areas. The data quality looks at whether the National Insurance numbers are correct, the addresses are complete with the correct postcodes, that the correct prefixes are used for the beneficiaries. There is a requirement by regulators to record breaches, e.g. breaches in the conditions of payment. These need to be reported up. Information on breaches is available, as the Pensions Team sends out an email when a reconciliation report is done. The Team would be able to use this information to add a column about breaches in their report.
ACTIONS:
- Tim to amend report to reflect numbers rather than percentages on the activity and performance report.
- The report is to also include breaches-the information can be collected from the reconciliation report produced by Lisa.
The Board was presented with the Performance of the Fund Report-Quarter ending Dec 2018 in the Pensions Committee Agenda. The following points were highlighted and summarised as listed below:
- There was £75.9 million which is an unrealised loss but had recovered in February at £85 Million.
- Concerns were raised about the performance of the fund at the end of March given the impact of Brexit.
- It was noted that six of the fund managers had not performed well in the last quarter.
- At the last meeting, Pensions Committee had requested to see the fund managers. Officers had met with the Fund managers ahead of the Pensions Board. Insight and GSAM had then attended the pensions committee meeting the following week presenting on the reasons for why the fund has been underperforming. Following the meeting, a decision regarding the continuation of relationship with the funds is to be made by the Committee.
- The equity protection that is in place is helping protect the fund. Page 26 of the report before the Board highlighted the impact of the equity protection on the funds.
- Low carbon equity resulted in unrealised loss as Council did not sell any of the portfolios, so it remains as unrealised loss
The Board was presented with the LGPS Current issues and update as detailed in the report on the Pensions Committee Agenda. The following points were highlighted and summarised as listed below:
- The report provides some guidance on Pooling.
- The guidance is an informal consultation which is asking all funds need to adhere to investing within the pool. The officers felt this is not right. Pools are meant to help save money, but if the pools are performing badly then it is counter-productive.
- Kensington and Westminster have declared they will not be investing with Pools.
- Counter arguments to investing solely in pools is that, if the pools are government regulated, then it removes competition between pools and also removes the motivation for active management of the pools to make the most money from investments.
- By investing in Pools, the Council fund is still left with meeting the most liability.
- A LGPS Employer cost cap is also being introduced as presented in the report on page 249 of the report on the Committee agenda. The Council is waiting on the approval of the Treasury.
- There is also a review of the Academies Pension cost as outlined on page 252 of the Committee agenda.
- On the topic of good governance in the LGPS, it was noted by the Chair that this is a topic under debate within the LGPS.
- On the topic of Employee Exit credits: there is a 3 months deadline timeline to settle the exit credits for employees.
ACTIONS:
- The Investment and Treasury Manager to draft a response to the consultation and circulate to the Board members for input.
The Board was presented with the Update and Further Implementation considerations on Sustainable and Low Carbon investments for Tower Hamlets Pension Fund in the Pensions Committee Agenda. The following points were highlighted and summarised as listed below:
- The new Pensions Committee members are keen to divest from all fossil fuels. A report is in the process of being developed of the decisions by the previous Pensions Committee to advise the current Members as to how the decisions had been reached.
- The Investment and Treasury Manager highlighted that the Mercer’s ESG Rating scale on page 228 of the report. In addition, based on the Mercer ESG Rating scale, the new multi-asset managers seems to have a poor rating.
- The issue with selling off and completely divesting from fossil fuels is that Council would have to divest from all Oil and Gas, and that would impact on the level of revenue/dividends earned from Oil and Gas.
- The Council is instead proposing to sell its L&G Passive Global Equities which has the highest weighted average of Carbon Intensity at 199 investments with and reinvest that money into the L&G Passive Low carbon equities.
Supporting documents: