Members are reminded to consider the categories of interest 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, please see the attached note from the Monitoring Officer.

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

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

There were no declarations of pecuniary interests made by members at the meeting.

To confirm as a correct record the minutes of the meeting of the Committee held on 18 June 2020.

The minutes of the meeting held on the 18^th June 2020 were agreed and approved to be an accurate record of the meeting.

The amendments put forward by Mr Colin Robertson were noted and the minutes were updated accordingly.

Ms Adams put forward an amendment to item 5.2 Triennial Valuation report. She said the bullet point on page 14 of the agenda pack should be amended to state Hymans managed over 50 LGPS schemes.

Matters Arising

Cllr Blake asked if the action point relating to item 5.5 ‘Divestment Strategy Implementation Considerations & Sustainable Equities Investment Options’ had been followed through and requested that an update report be presented, at the next meeting of the Pensions Committee.

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

Mr John Jones, Chair of the Pensions Board presented his report stating the Pensions Board met on 21^st July 2020 and considered some of the report which were being considered by the Pensions Committee at this meeting. Mr Jones said the Board supported the Hymans Robertson proposals for training and development, which both CIPFA and the Pensions Regulator continue to emphasise as important. Mr Jones said he would encourage Members of the Pensions Committee to complete the questionnaire that had been circulated to them.

Mr Jones said the work of the Pensions Administration Service was commendable especially the effort made in reducing the work outstanding between March to June. Mr Jones recommended that in future the service should work with Trade Union representatives to encourage staff to join and continue their membership of the LGPS.

Mr Jones informed the Committee the Pensions Administration Remedial plan was also discussed at length in private session and he hoped the appointment of the new Pensions Communication Officer would assist in identifying risks associated with fraud. Mr Jones advised a post implementation review of the remedial action plan be undertaken approximately eighteen months after implementation.

In response to questions from Members the following was noted:

·       Mr Jones said the Board felt it had seen mild improvements in the performance of Pensions Administration especially given the effort made between March and June to reduce the backlog of work. However, he was mindful of the fact that the remedial action plan depended on the recruitment of staff and said the Board felt reassured steps were being taken to recruit the necessary staff, albeit a difficult task in this specialism. Mr Kevin Bartle, Interim Divisional Director for Finance, Procurement and Audit agreed with Mr Jones analysis.

·       Ms Miriam Adams, Interim Pensions and Investments Manager confirmed both the Pensions Board and the Committee, would receive quarterly updates on the implementation of the plan and the progress made.

The Pensions Committee RESOLVED to:

1.    Note the update from the Pensions Board.

Mr Andrew McKearns, from Hymans Robertson LLP presented the report. He said the report detailed the results of the National Knowledge Assessment undertaken to assess the level of knowledge of members of the Pension Board and Pensions Committee. He said this was a requirement/ recommended by legislation changes and CIPFA. Mr McKearns said Members were tested in eight areas to assess their level of knowledge. Mr McKearns said overall Tower Hamlets ranked 6^th out of 18 Funds with the Board having a higher average than the Pensions Committee. However, the expectation now was to devise and deliver a training programme to assist members further. Mr McKearns said discussion had taken place with Ms Adams, the Interim Pension and Investments Manager and in light of COVID19, the plan was to deliver the training via bitesize video clips, either before meetings or facilitate this online.

In response to questions from members the following was noted.

·       Members queried the number of respondents from the Pensions Committee and said they believed more than two members had responded to the questionnaire. Mr McKearns said he would confirm this.

·       Members also commented that some of the questions, especially regarding procurement did not relate to them, as this function was undertaken by the London CIV.

The Pensions Committee RESOLVED to:

a)    Note the assessment report (Appendix 1);

b)    Note the results including the overall ranking of the Board and Pensions Committee against other participating LGPS funds;

c)    Note the suggested training plan picking out the key areas for development based on participants assessment results and the training requests; and

d)    Agree the suggested training plan.

Mr Douglas Green, from Hymans Robertson LLP presented this report and stated the draft policy outlined on how Admitted Employers exit the fund so to ensure its determination was consistent between employers over time.

Mr Green said the pension fund had three responsibilities, as far as its finances were concerned. (1) to collect contributions from members i.e. the employers (2) to invest the monies and get a decent rate of return and (3) to pay the beneficiaries i.e. the pension holders. Mr Green said the Exit Credit Policy related to the first step.

He said changes in legislation meant an Exit Credit Policy was required. An employer may leave the fund at any time and prior to the May 2018 and March 2020 regulations, when the employer left the Fund, the Fund remained responsible for paying out to the beneficiaries. If the employer’s contribution was in deficit when they left the Fund, they were required to make good the debt and if their contribution was in surplus, they would leave this behind. The new regulations mean the surplus must be paid back and as such it was important to have a risk sharing arrangement on how this is to be paid.

In response to questions from members the following was noted:

o   ACTION: Members welcomed the draft policy but requested named individuals be removed from the policy, which should only state the job title of the role.

·       In response to if the Fund had an understanding of the different employers within the Fund and their individual contribution, Mr Green said this information was readily available. If an employer ceased to be a member of the fund, they were able to tell how much they had contributed. Ms Miriam Adams added that Hymans Robertson LLP had been asked to review the current list of employers to identify who might be high risk and might potentially default on contributions. Ms Adams said they monitor cash flows and hoped to get all employers to sign up to using the IConnect database to enable better monitoring.

o   ACTION: Councillor Blake requested the policy be rebranded with the Council logo to show it was owned by the Fund and to make clear Hymans was commissioned by the Local Authority to draft the policy. Mr Kevin Bartle, Interim Divisional Director acknowledged the observation and said this would indeed be done.

The Pensions Committee RESOLVED to:

1.    Note and approve the draft admission employer exit credit policy in principle pending finalised guidance from MHCLG.

Mr Douglas Green, from Hymans Robertson LLP presented the Contribution Deferral Policy Statement. Mr Green said the draft policy outlined how it will make its determination in respect of deferral of employer contributions during COVID-19 lockdown and the gradual unwinding of social distancing and related restrictions.

Mr Green said the deferral policy was to assist those employers who may struggle to make contributions during this uncertain time. He said the deferral would be up to a maximum of three months, however employers were expected to ensure all contributions were made by the end of the financial year, 31^st March 2021. Mr Green referred Members to pages 61 and 62 of the agenda pack and said the criteria for allowing a deferral were outlined in the policy.

In response to questions from Members the following was noted.

·       It was suggested the penultimate paragraph of the policy on page 62 be rewritten to future proof the policy, especially if the pandemic continues beyond 31^st March 2021. Mr Green said the policy was a temporary solution for the Covid19 emergency, however he concurred it could be proofed to say ‘and beyond’ so long as government policy permitted.

o   ACTION: the draft policy to be revised to future proof it should the pandemic last beyond the 31^st March 2021.

The Pensions Committee RESOLVED to:

1.    Note and approve the draft admission contribution deferral policy;

2.    Agree that the period of deferral should be limited to 3 months after which extensions may be granted on a monthly basis;

3.    That the total annual contributions must be paid by 31^st March of the applicable year and interest may apply;

4.    Delegate the decision to consider and approve requests to the S151 Officer;

5.    The Committee is informed of any employer deferrals (those considered, accepted or rejected) at the earliest opportunity; and

6.    For the draft policy to be updated to state ‘and beyond’ should the pandemic last beyond the 31^st March 2021.

Ms Miriam Adams, Interim Pensions and Investments Manager introduced the report and said the report provided an illustration of the estimated development of the funding position from 31^st March to 17^th June 2020, as well as an understanding of the funding impact, risks and mitigation that are associated with the on-going COVID-19 pandemic.

Ms Adams referred Members to the table on page 72 of the agenda and said this gave a snapshot of how the fund was performing. The table on page 73 outlined the various assumptions and estimates which applied. Ms Adams said the quarterly monitoring of the fund served to mitigate the risks to the fund. Ms Adams cited an example of funds with university contributors and said those funds were looking to mitigate risks due to the loss of university income. The Tower Hamlets fund consisted mainly of the Council as an employer and academies however the Fund needed to be aware of contractors - such as catering and cleaning contractors - and the impact they may have on the fund.

Mr Douglas Green from Hymans Robertson LLP then provided a detailed explanation of the funding level and the snapshot taken on the 17^th June 2020. He said the funding level remained unchanged at 102%. Mr Green referred to paragraph 3.5 and the graph which showed the impact Covid-19 had on the fund and said whilst there was a dip in performance, the markets had recovered. He also referred to the Risk Mitigation measures outlines at paragraph 4.1 and talked at length about how the longevity of beneficiaries is monitored. He said this was done by a third-party organisation called Club Vita. He said there had been a 10% increase in the number of deaths in England and Wales compared with the average for previous years, which they would continue to monitor. Mr Green said the long-term impact of Covid19 may have a positive impact on longevity such as improved air pollution and improved awareness of viruses as opposed to short-term impact where a global recession could lead to more deaths.

In response to questions from members the following was noted:

·       Ms Adams confirmed she was aware of approximately 3-4 deaths of pension beneficiaries who were members of the Fund. She said data was being cross referenced with data held by the Department of Works and Pensions, who had delayed the release of figures in order to capture the number of deaths due to the pandemic.

The Pensions Committee RESOLVED to:

1.    Note the whole Fund actuarial update at 31^st March 2020 and 17^th June 2020;

2.    Note the impact of COVID-19 and funding risk; and

3.    Note the risk mitigating measures.

Ms Miriam Adams, Interim Pensions and Investment Manager presented the Pensions Administration and LGPS quarterly update.

Ms Adams referred Members to the tables on page 80 of the agenda and said this summarised the progression of the fund over the last quarter. Ms Adams said she hoped to reduce the number of ‘undecided’ members by the next report to the Committee and said the ‘frozen’ cases would be looked at as part of the remedial action plan.

Ms Adams informed the Committee her team would take ownership for sending the starter packs to employees relating to their pensions rather than rely on the HR department. She said it would be compulsory for members to inform the Pensions Team of changes in their circumstances.

Ms Adams referred to the table at 3.2 which provided a list of the current Scheduled and Admitted bodies within the Fund and the activities undertaken by referencing the table at 3.3.

Ms Adams said the Council had signed an updated management agreement with Tower Hamlets Home, which meant the Council had agreed to cover the cost arising from pension liabilities. Ms Adams continued stating the impact of COVID19 initially gave the team an opportunity to clear some of the backlog in pension queries, although these were beginning to rise again.

In response to questions from Members the following was noted:

·       In reference to paragraph 6.7 and what is done to ensure members are aware of fraud and scams, Ms Adams said the Fund could not stop people from withdrawing or transferring their pensions to another company. However, when such requests are received, the Pensions Team ensure the member is fully aware of the pension regulations and pitfalls. She said whilst her team are not financial advisors, they follow the Regulators checklist and make clear the LGPS is not liable for the loss of benefits if the company the pension has been transferred to does not fulfil its promises.

The Pensions Committee RESOLVED to:

1.    Note the report contents.

Ms Miriam Adams, Interim Pensions and Investments Manager presented the Fund Liquidity and Cash Flow forecast. Ms Adams stated the report provided an update on the Pension Funds projected cash flow forecast for 2020/21 to 2022/23. Ms Adams referred members to the table appended to the report, at page 91 and said due to a short fall a request for cash draw down had been made. She said the estimated cash drawdown of £20m from Equity Protection proceeds was being requested.

In response to questions from members the following was noted.

·       Ms Adams confirmed the monies £20m would be held in money market funds, like the day to day cash of the Council. She said a further report would be presented to the Committee once the funds had been selected. Ms Adams said they did not wish to create another asset class and would look at existing funds. Mr Kevin Bartle, Interim Divisional Director for Finance, Procurement and Audit added the funds would be vetted in line with the Treasury Management Strategy.

The Pensions Committee RESOVLED to:

1.    Note the cash flow forecast from operational activities (appendix A); and

2.    Agree to fund the projected 2021/22 and 2022/23 cash flow deficit from Equity Protection proceeds.

To consider the work plan and any other relevant matters.

Ms Miriam Adams, Interim Pensions and Investments Manager presented the Committee’s work plan. She said the plan outlined the items that were forthcoming to the Committee. She said the work plan was fluid and subject to change depending upon items of importance. Ms Adams said actions arising from meetings were also incorporated within the plan.

The Pensions Committee RESOLVED to:

1.    Note the work plan for the Pensions Committee.

The Chair Moved and it was:

RESOLVED:

That in accordance with 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 contained information defined as exempt or confidential in Part 1 of Schedule 12A to the Local Government, Act 1972.

The minute for this item is restricted.

The minute for this item is restricted.

Members of the Committee stated they had not attended any training events.

No other urgent business was discussed.