Members are reminded to consider the categories of interest, identified in the Code of Conduct for Members to determine: whether they have an interest in any agenda item and any action they should take. For further details, see the attached note from the Monitoring Officer.

Members are also reminded to declare the nature of the interest at the earliest opportunity and the agenda item it relates to. Please note that ultimately it is the Members’ responsibility to identify any interests and also update their register of interest form as required by the Code.

If in doubt as to the nature of an interest, you are advised to seek advice prior the meeting by contacting the Monitoring Officer or Democratic Services.

There were no pecuniary declarations of interest declared at the meeting by members.

To confirm as a correct record the unrestricted minutes of the meeting of the Committee held on 25^th November 2021.

The unrestricted minutes from the meeting of 25^th November 2021 were agreed to be an accurate record of the meeting and were approved by the Committee.

No Petitions relating to the matters for which the Pensions Committee is responsible had been received by the Officer.

Mr John Jones, Independent Chair of the Pensions Board presented his report on behalf of the Pensions Board.

Mr Jones stated the Board received a useful presentation on GDPR regulations and said it was important to ensure the Fund had strong data security and privacy features, which were compliant with the regulations. He said there were financial penalties for serious breaches as well as reputational risk and damage associated with breaches.

Mr Jones said several reports being presented to the Committee were also discussed at the Board and said the Board had had a full discussion in relation to the audit of the accounts and annual report. Mr Jones said the implementation of the Pension Dashboard was a concern, owing to the resources required and said the Pensions Board would be keep a close eye on the progress made.

With regards to Pension Administration, Mr Jones said it was evident good progress had been made, with performance data and key indicators showing an improvement and reduction in the backlog. However, it was important this progress did not slip especially considering the Pension Dashboard project. Mr Jones said the Board also looked at the Risk Register and said the total of 19 risks remaining amber were too large and said action was required to reduce the number.

In response to comments and questions for members the following was noted:

• Members of the Committee had no questions for Mr Jones.

The Chair, Councillor Kyrsten Perry thanked Mr Jones for his update report and the points highlighted.

The Pensions Committee RESOLVED to:

1. Note the report of the Pensions Board and the issues raised therein. 

Ms Miriam Adams, Interim Head of Pensions and Treasury introduced the report and stated this was a government backed initiative which required the pensions industry to design and own the dashboard. She said the Pension Scheme Act 2021 received Royal Assent on the 11^th February 2021, and provided the legal framework to support pension dashboards, including powers to compel schemes to provide member information.

Ms Adams drew particular attention to paragraphs 3.5 and 3.6, which set out the requirements for the Pensions Dashboard as well as the risks associated with the project, such as who will be responsible for hosting the dashboard plus the impact of the McCloud judgment, referred to at paragraph 3.14.

In response to comments and questions from members the following was noted:

• Ms Adams said the actuary had made the appropriate adjustments to the Pension Scheme, however the cost of McCloud would not be known until the LGPS regulations had been issued.
• In reference to paragraph 3.16 and the external support required, Ms Adams said it was too early to assess exactly what support would be required. She said this was a big project, with a considerable amount of data implications.

The Pensions Committee RESOVLED to:

1. Note the requirement to improve the reliability of data in accordance with the Pensions Dashboards Programme data standards guide in order to supply the correct information to the dashboards and ensure compliance with the statutory staging timeline to onboard schemes.
2. Note the critical bottleneck the scheme faces in respect of council employee data.

Ms Miriam Adams, Interim Head of Pensions and Treasury introduced the report and stated this was the draft unaudited Statement of Accounts and Annual Report for the LBTH Pension Fund for year ending 31^st March 2021. She said the report was attached at appendix A.

Ms Adams referred to several sections within the report such as paragraph 3.1 and 3.3 and said the audit for 2021/22 had commenced. She said there were no outstanding queries in relation to this audit and previous years. 

In response to comments and questions from members the following was noted:

• Councillor Edgar said he had several questions in relation to accounts, however he would send these to Ms Adams directly.

The Pensions Committee RESOVLED to:

1. Note the contents of this report;
2. Approve the Pension Fund Annual Report and Accounts (Appendix 1); and
3. Note that the 2018/19 and 2019/20 audit will not be concluded until the council’s main accounts audit have been concluded.

Ms Miriam Adams, Interim Head of Pensions and Treasury presented the GDPR report. She said the Pension Board had received a presentation at its meeting. The GDPR regulation had come into effect in 2018 and the report and the appendices set out how the Pension Scheme would adhere to the regulation. Ms Adams said this would be circulated to all employers within the scheme. She said the Council’s Information and Governance team would have oversight for this and all staff are expected to complete the mandatory course available on the Learning Hub. She said workshops would also be held in addition to the e-learning course.

In response to comments and questions from members the following was noted:

• Councillor Edgar said it was important to ensure there were clear lines of responsibility in terms of the Pensions Dashboard, discussed earlier and where information is held. He said it was vital the personal information of Scheme Members was protected and compliant with GDPR regulations.

The Pensions Committee RESOLVED to:

1. Note the content of this report
2. Note the updated Full GDPR Privacy Notices and Employer’s Memorandum of Understanding issued by the LGA (Appendices 1-5).

Ms Miriam Adams, Interim Head of Pensions and Treasury stated the report provided the Officers response to the 2018/19 and 2019/20 Pensions Fund ISA260 as well as an update on the 2020/21 audit.

Ms Adams referred members to appendix 1 of the report which set out the two reports. She said the responses to the observations made by Deloitte were set out on page 289 of the agenda. Ms Adams said that for the comparative figures for the 2017/18, it should be noted the accounts were audited by KPMG and therefore officers when preparing the revised 2018/19 pension fund accounts did not consider the 2017/18 accounts.

In response to comments and questions from members the following was noted:

• Councillor Edgar asked if any steps had been taken regarding the differing views of the actuaries. Ms Adams responded stating it was a matter of wording. Deloitte had initially quoted £7m but had revised their estimate down to £1.8m. She said she had asked for the working papers referred to by Deloitte’s and said she’d be happy to make an adjustment if this was material. Ms Adams said it had to be remembered that when Hymans issued their valuation estimate, McCloud remedies was yet to be enacted because there was no judgement on the Government’s appeal. Hence any adjustment now would need to be justified. 
• In respect to page 290, monthly salary expectation report, Councillor Edgar asked for clarity in relation to the thresholds used. Ms Adams responded stating there was a finance working group Chaired by the Director of Finance Procurement and Audit looking at this, however for every Pensions Scheme the primary source of information is from the employer. She said there were issues with the biggest employer within the scheme and the uploading of data as well as the quality of the data which the working group was looking into. Ms Adams said she hoped this would be resolved soon.

The Pensions Committee RESOLVED to:

1. Note the content of this report and updated ISA 260 reports.
2. Note that Deloitte have yet to issue the audit plan for 2020/21 although the audit has since commenced.

In view of the contents of the remaining items on the agenda the Committee is recommended to adopt the following motion: “That, under the provisions of Section 100A of the Local Government Act 1972, as amended by the Local Government (Access to Information) Act 1985, the press and public be excluded from the remainder of the meeting for the consideration of the Section Two business on the grounds that it contains information defined as Exempt in Part 1 of Schedule 12A to the Local Government Act,1972.”

EXEMPT SECTION (Pink Papers)

The exempt committee papers in the agenda will contain information, which is commercially, legally or personally sensitive and should not be divulged to third parties. If you do not wish to retain these papers after the meeting, please post them to the Democratic Service Office, 1st Floor, Mulberry Place London E14 3BG or hold onto the papers until such time you can return to the Town Hall and dispose of the papers in the confidential bins.

The Chair MOVED and it was

RESOLVED

“That, under the provisions of Section 100A of the Local Government Act 1972, as amended by the Local Government (Access to Information) Act 1985, the press and public be excluded from the remainder of the meeting for the consideration of the Section Two business on the grounds that it contains information defined as Exempt in Part 1 of Schedule 12A to the Local Government Act,1972.”

To confirm as a correct record the restricted minutes of the meeting of the Committee held on 25^th November 2021.

The restricted minutes from the meeting of 25^th November 2021were agreed to be an accurate record of the meeting and were approved by the Committee.

The minute for this item is restricted.

The minute for this item is restricted.

The minute for this item is restricted.

The minute for this item is restricted.

The minute for this item is restricted.

The minute for this item is restricted.

Ms Miriam Adams, Interim Head of Pensions and Treasury reminded members the Pension Governance Review was still open and asked members to complete the questionnaires sent to them. She said responses would be treated confidentially.

She also reminded members of the Hymans Training Portal and encouraged members to complete the bite-size training sessions. She said they had paid for the user licenses and therefore it was vital members completed this training.

Russia/Ukraine War

Ms Miriam Adams, Interim Head of Pensions and Treasury stated that an email had been sent to members of the Committee outlining the status of investments in Russia and Ukraine. She said they had no direct investments exposed through LGIM. The London CIV had also confirmed they had written down values to zero. She said both managers were now working on any estimating indirect impact.

The Committee then heard from Mr Colin Robertson, the independent adviser to the committee. Mr Robertson said the direct investments in Russian companies had been reduced but in any case were financially not important. There was a lot of talk about divestment but this was rather academic as the stocks could not actually be sold. He said the indirect investments, such as European banks holding stakes in Russian banks were important owing to their earnings and to investors’ attitudes to the principles and morals of the companies concerned. However the biggest impact was on the global economy and inflation. He said this would have a knock-on effect on commodity prices and growth. Otherwise, the focus should be on multi-national companies and their holdings and sales in Russia/Ukraine.

Mr Turner agreed with Mr Robertson and said the big risks were the macro risks that were not Russia specific. He said the risk of escalation was something to bear in mind. Mr Turner said the Committee had reviewed its risks as part of the investment strategy review and therefore it would be good to remind the new committee of the risks the Fund is exposed to.

He said progress to net zero would slow in the near term, because of the rise in energy and commodity prices, however medium to long term, with less dependency on gas and Russia, the progress would recover. He said this needed to be taken into consideration. Mr Turner said it was important to stay focussed on long term strategy and not to make kneejerk reactions. Mr Turner also said the Fund had Equity Protection and therefore it was important to consider if this needed to be renewed.

In answer to comments and questions from members the following was noted:

• Councillor Blake asked if the oil and gas situation in Europe had accelerated investments in renewables? Mr Robertson said there had been no big change in the behaviour of fund managers who continued to be enthusiastic about investing in renewables.
• Mr Robertson was asked to explain the impact of the war on the German economy. He said the Germany economy was exposed as 40% of its gas came from Russia, potentially through two pipelines, one of which was now not going ahead. He said the German government had to review its energy policy, but this was not having a big impact on a macro-economic level at this time.
• Ms Miriam Adams said the situation was changing rapidly day by day. The Pensions Scheme Advisory Board had issued a statement making clear their stand on this. She said LGPS’s were advised  ...  view the full minutes text for item 8.