Agenda and minutes

There were none.

For transparency it was noted that two Members of the Pension Board were also members of the pension scheme. One Member had participation in the fund as an employer and the fourth was a Member of the Council which was a major employer of the scheme. They were not however, required to declare this as an interest.

The Head of Treasury & Financial Transactions informed the Board that they would have received an email which set out the conflict policy, employee code of conduct and the IT code of conduct, it was requested that all Board Members read, sign and return them as soon as possible.

There was no urgent business.

To approve as a correct record the minutes of the meeting held on 8^th July 2015

RESOLVED –

THAT the minutes of the meeting held on 8^th July 2015 be approved and signed as a correct record.

Report of the Director of Finance

The Pension Board has responsibility for assisting the Pension Committee in ensuring compliance with the Scheme Regulations, other legislation relating to governance and administration, and the requirements of the Pension Regulator. The Pension Board must also ensure the effective and efficient governance and administration of the scheme. The Pension Fund is required to produce an Annual Report under the Local Government Pension Scheme Regulations 2013. This report presents the 2014/15 Annual Report to the Pension Committee.

Consideration was given to a report of the Director of Finance.

The Head of Treasury & Financial Transactions presented the report and outlined the key aspects. 

With regards to page 24 of the report a question was raised in relation to why the number of people with enhanced benefits was reducing when the number of people taking voluntary retirement was increasing. The Head of Treasury and Financial Transactions stated that he would clarify this point and email the Board after the meeting.

ACTION BY:             Head of Treasury and Financial Transactions (NM)

Discussion took place in relation to funds being held and concerns were shared in relation to Aberdeen’s performance. The Board noted that £140m had been transferred from Aberdeen and invested in Harris. The international financial situation and the IMF announcement was discussed. The Board also noted that individual investments were not monitored by the officers on a daily basis but that rather this was the chief responsibility of the investment managers. There was however a legal duty to review the performance quarterly. If, however, there was a big shock with a company or country, for example with China in August, this was monitored by officers, and the fund was well served by advisors including an investment consultant, actuary and independent investment adviser.

In response to questions and concerns the Head of Treasury and Financial Transactions remarked that liabilities were currently 75.6% funded as of March 2013 and the ultimate aim was to be 100% funded. A proxy estimation of liabilities currently indicated 79% funding. In relation to the deficit recovery period, Camden’s was 17.5 years. Some funds had a recovery period as long as 25 years. Camden had always accepted the Actuary’s recommendations on the deficit recovery period and the discount rate (for liabilities). The results of the next triennial valuation would be presented to the Pension Committee in November 2016.

Further discussion took place in relation to page 18 of the report relating to previous internal audits. Clarification was sought in relation to the terms ‘moderate’ and ‘substantial’. The Head of Treasury and Financial Transactions explained that the internal audit grading system had changed and that these were the same ranked level (second to highest) of assurance internal audit can give, but he would confirm post meeting.

ACTION BY:             Head of Treasury and Financial Transactions (NM)

The Board asked questions in relation to the experience of the Members on the Pensions Committee. Questions were posed on what training was in place for them and what assurances could be given so that they would be able to undertake their roles adequately. In response The Head of Treasury and Financial Transactions remarked that a programme of training had been put together for the Committee Members. The training would also be extended to the Board to attend too. Just in time training was also offered on specific topics prior to certain impending decisions.

The Board asked about advice to the Committee and the performance review processes. The Committee is also supported by  ...  view the full minutes text for item 6.

Report of the Director of Finance

The Pension Board has responsibility for assisting the Pension Committee in ensuring compliance with the Scheme Regulations, other legislation relating to governance and administration, and the requirements of the Pension Regulator. The Pension Board must also ensure the effective and efficient governance and administration of the scheme. This report reviews the Investment Strategy for the Pension Fund.

Consideration was given to a report of the Director of Finance.

The Head of Treasury and Financial Transactions outlined the key aspects of the report. The Board raised concerns in relation to Aberdeen’s performance but were assured the Committee were taking the necessary steps to understand the reasons for underperformance and preparing themselves to make appropriate decisions to amend the portfolio’s investments. The London Collective Investment Vehicle (CIV) was close to launching. The report sought agreement for delegated authority to the Director of Finance to enter into the CIV and shareholder agreements.

The Board noted that the hedge funds had under-performed and raised concerns in regards to what the Pension Committee had done to scrutinise hedge fund managers. In response the Head of Treasury and Financial Transactions agreed that the hedge fund managers had under-performed and that they also charge high fees. However, an element of these fees related to performance which was charged only when the fund achieved returns above a “high watermark”. Additionally, as these were funds that only invested in “internal” or in-house funds the Camden Pension Fund is only charged from the primary funds and there was no “fund of fund” charge on top which is typical of the industry and construction of fund of hedge funds mandates. Also of note is that the performance of hedge funds is measured and reported to Committee after fees.

Further discussion took place in relation to the CIV and how it will offer sub funds for investment in the future. Whilst the ethos is to offer London Pension Funds investment vehicles with attractive terms, this may not be the case for all London funds, and will depend on how funds initially negotiated terms when funding mandates. This may mean it was not financially beneficial for Camden to enter the CIV for a given sub fund.  It may be that Camden would not be amongst the LGPS in the first wave of the CIV roll out.

The Chair concluded that the Board had no overall concerns with the contents of the report.

RESOLVED –

THAT the report be noted.

                        TO NOTE:                 All

Pension Board Update Report

The Pension Board has responsibility for assisting the Pension Committee in ensuring compliance with the Scheme Regulations, other legislation relating to governance and administration, and the requirements of the Pension Regulator. The Pension Board must also ensure the effective and efficient governance and administration of the scheme. This report summarises the items presented and decisions made at the Pension Committee meetings on 17^th June and 17^th September 2015.

Consideration was given to a report of the Director of Finance.

The Head of Treasury and Financial Transactions outlined the key aspects of the report and in response to questions about what had happened with Aberdeen’s poor performance, remarked that this investment manager had been scrutinised extensively by officers, advisers and members of the Pension Committee. The first three years’ performance was in-line with performance expectations (meeting target) and at times above that target. After the first three years, poor performance had been experienced. A meeting was taking place with the most senior officer at Aberdeen in November to discuss what had happened and the future of the mandate. The Board acknowledged that the poor performance had been given adequate attention and due diligence was being applied.

Discussion took place and the Board were in consensus that the risk register should be something they should keep in mind and or refer to. it was requested that the Board Members be added to the distribution list for the Pensions Committee.

Further discussion took place in relation to the function of the Board and that it was the role of the Board to interrogate the governance information presented, rather than review the detail.

RESOLVED –

THAT the report be noted.

                        TO NOTE:                 All

The next meeting of the Pension Board will be held on Wednesday 16^th March 2016

It was noted that the next meeting of the Board would take place on Wednesday 16^th March 2016.

There was none.