Agenda and minutes
Venue: Room MP702, 7th Floor, Town Hall, Mulberry Place, 5 Clove Crescent, London E14 2BG
Contact: David Knight, Democratic Services. Tel: 020 7364 4878 E-mail: david.knight@towerhamlets.gov.uk
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DECLARATIONS OF DISCLOSABLE PECUNIARY INTEREST PDF 67 KB To note any declarations of interest made by Members, including those restricting Members from voting on the questions detailed in Section 106 of the Local Government Finance Act, 1992. See attached note from the Monitoring Officer.
Minutes: Cllr. Mufeedah-ah Bustin informed the Committee that she had a meeting with Adam Schneider from Divest Tower Hamlets during his visit at her surgery in February and spoke to her about the campaign that Divest Tower Hamlets is currently running for divestment on pension funds.
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PETITIONS To receive any petitions relating to matters for which the Committee is responsible. Minutes: None received.
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MINUTES OF THE PREVIOUS MEETING To confirm as a correct record the minutes of the meeting of the Committee held on 29th November, 2019
Minutes: The minutes of the meeting held on 29th November, 2018 were agreed as a correct record with a few amendments outlined below. Chair be authorised to sign them accordingly.
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SUBMISSIONS / REFERRALS FROM PENSION BOARD PDF 55 KB Minutes: The Committee received an update from John Jones, Chair of the Local Pensions Board (“the Board”) meeting held on the 7th of March 2019.
The Committee noted the circulated report which outlined the following:
1. The Board received a presentation from the Local Authority Pension Fund Forum (“LAPFF”) on the latest developments and recent activity. This followed on from a discussion at the previous Board meeting on how LAPFF influence company decision making and measure their effectiveness. During 2018, LAPFF issued 14 voting alerts on a range of issues covering remuneration, climate change and governance. Climate action is a high priority for 2019. LAPFF continue to engage with companies and the benefits of their approach accrue over several years. It was a very helpful presentation and reassured the Board on the work and benefits of the LAPFF; 2. The Board considered and welcomed the approach to Training and Development over the coming year, including holding further joint training sessions for both Board and Committee members. It was noted that this was a key area of interest for the Pensions Regulator in promoting effective governance and decision making; 3. The Board also agreed its work plan for the year ahead. New changes include considering the risk register every 6 months and a monitoring report annually on investment, custodian and transaction costs. These costs have been the subject of attention nationally in recent years and a new framework for analysis and reporting has now been introduced. It was also agreed that the Board should have a separate budget to cover its annual running costs; 4. A notable amendment was the need to look at the cost of investment managers and custodian transactions. There has been a lot of national publicity on these costs and a framework is being developed for LGPS funds; 5. An update had been received on the performance of the Pensions Administration Team. The Pensions Regulator has identified data quality and record keeping as a key area of performance as it can impact directly on member benefits. The current reporting arrangements covering percentage activity need further development to include data activity, information on backlogs of work and the move to paperless reporting. Data quality is something the Pensions Regulators is very keen on. With these inclusions the report would provide more robust and complete information for the Board and Committee. It is important that the administration function is properly resourced to meet service demands and this should also be reported on a regular basis; 6. Regular reports should also be submitted to the Board on any breaches that may occur in record keeping, calculating benefits, internal controls and investment related activity. Many of these may not be material but do assist in giving a complete picture of the overall management of the Fund; and 7. Finally, 2 items were raised at the meeting to be referred onto the Committee for its attention. (i) Whether there are any implications for the Fund arising from the current review of terms ... view the full minutes text for item 4. |
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Presentations |
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Presentation-Baillie Gifford on Performance, ESG and Sustainability by Baillie Gifford-20 Minutes Minutes: The Committee noted:
Following concerns were raised by the Committee:
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Presentation: Insight on Performance & Strategy of BNY Mellon ARB Fund by Andrew Wickham, 15 Minutes Minutes: The Committee considered the Insight presentation in detail and noted:
Insight then responded to questions by the Committee about the underperformance of the fund:
Action:
Committee to look at Insight’s presentation in detail and to consider making a decision on it’s the future role in the portfolio.
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Presentation: Goldman Sachs on Performance & Strategy of STAR II BY Iain Lindsay, 15 Minutes Minutes: The Committee considered the Goldman Sachs presentation in detail and noted:
o Significant strides to improve interest rate management, especially with the promotion of Jonathan Bayliss as Head of Duration Team, which has been a key in improvement. o Currency management process has been improved, by tightening risk controls and appointing Arnab Nilim as Head of the Currency Team who joins in May of 2019. o The recruitment of Ashish Shah as head of the Sector allocation team.
Goldman Sachs then responded to questions by the Committee about the underperformance of the fund whether the recent performance upturn is sustainable:
RESOLVED
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REPORTS FOR CONSIDERATION PDF 146 KB Additional documents: |
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Investment and Fund Managers Performance Review for Quarter Ending 31st December 2018 PDF 263 KB Additional documents:
Minutes: The Committee was presented with the Performance of the Fund Report-Quarter ending December 2018. The following points were highlighted and summarised as listed below:
RESOLVED
To note the report.
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Minutes: Colin Robertson, Independent Adviser presented the Market Outlook Update in respect of the performance of the markets and the Pension Fund investment managers for the third quarter of 2018/19.
The only update to note was that:
In response to concerns about Baillie Gifford’s report, the following points were raised:
o The Diversified Growth Fund (DGF) is a cash plus strategy but invests in equities whilst the Multi-Asset Fund (MAC) fund also underperformed, and the Committee was advised that all 5 funds should be considered together as cash plus funds and one of them also has an equity type exposure; o The Chair inquired about the two Absolute Return Bonds funds which had lost money and it was pointed out that these could be considered a suitable source of cash to finance a potential investment in infrastructure due to the lower performance prospects of these funds
RESOLVED
To note the Update Report.
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Additional documents: Minutes: Bola Tobun, Investment & Treasury Manager presented the report that outlined the Funds current position on responsible investments, and considers the Environmental, Social and Governance (ESG) issues currently dominating Pension Fund investment debate. The report also considered what other LGPS funds are doing and recommends alternative ways in which the London Borough of Tower Hamlets Pension Fund can further promote the integration of ESG issues into its investment decision making and reduce carbon intensity of the fund.
It was noted that the Committee has a fiduciary duty to act in the best long-term interest of the fund members and for the Committee to do it properly, they need to recognise governance issues which the Committee had been doing for the past two years. This will could an impact on the financial performance on the Fund, and the Council are not the only employer in the fund. Therefore, whatever decision the Committee makes, some of the other employers like the academies might consider that their deficit contribution is too high and must this must be taken into consideration when considering the return from investment and is very important on balancing the liabilities, in order for LBTH to have a sustainable fund to pay the pensioners.
The following recommendations were noted:
In response to the Committee questions:
· It was noted that it would take 3 to 4 years to build up a target allocation to Infrastructure; · There is a new guidance on LGPS asset pooling on page 246 of the report. Points to think about being how much choice you would have within the CIV, as this guidance is also statutory; · In response to understanding the process, and whether the Fund has no choice but to invest within the CIV, the Committee was informed that in order to get the right products from the CIV, the Committee needs to know its own direction and strategy and if not investing in the CIV, then the Committee is ignoring statutory government guidance. The best way to do this is within the CIV by convincing the CIV to make available funds that suit its long-term strategy.
RESOLVED:
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Pension Scheme Administration Update PDF 82 KB Additional documents: Minutes: Tim Dean, Pensions Team Leader presented a report that covered the activities and performance of the Pensions administration team.
The Committee noted that:
RESOLVED
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LGPS (Local Government Pension Scheme) Current Issues and Updates PDF 148 KB Minutes: The Committee received a report that provided an update on general developments in LGPS arena and also the Scheme Advisory Board’s Key projects relating to the governance and administration of the LGPS scheme.
The Committee was informed that:
ACTIONS
RESOLVED
To note the report.
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Pensions Committee Work Plan, Pension Fund Business Plan and Budget for 2019/20 Minutes: The Committee indicated that it was interested in understanding the variance of £300,000 and asked for an update.
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Minutes:
The Committee received a report that provided an update on the Training and Development Plan for 2019/20.
RESOLVED
To note the report and that the Committee provide the Investment & Treasury Manager with a list of their training needs.
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ANY OTHER BUSINESS CONSIDERED TO BE URGENT Minutes: Nil Items |
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EXCLUSION OF THE PRESS AND PUBLIC Minutes: The Chair moved and it was
RESOLVED
That press and public be excluded from the remainder of the meeting in that under the provisions of section 100 of the Local Government (Access to Information) Act 1985 the press and public should be excluded the remainder of the meeting for the consideration of Section Two business on the grounds it contains information defined as exempt in Part One, Paragraph 3, Schedule 12 A to the Local Government Act 1972, which relates to information relating to the financial or business affairs of any particular person including the authority holding the information.
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INVESTMENT AND FUND MANAGERS PERFORMANCE REVIEW FOR QUARTER ENDING 31ST DEC 2018 Minutes: The Committee considered the Investment and Fund Managers Performance in closed session.
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