Agenda and minutes

There were no apologies.

There were no declarations.

There were no announcements.

There was no urgent business.

To approve and sign the minutes of the meeting held on 7^th October 2015.

RESOLVED –

THAT the minutes of the meeting held on 7^th October 2015 were 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. This report updates the employer register of all the admitted bodies in the Pension Fund and relevant data for the Committee to review in light of their funding positions and scheme status.

This report has an appendix which contains information exempt within the meaning of Schedule 12A to the Local Government Act 1972 and is not for publication. The appendix has therefore been circulated to Board Members only.

If the Board wishes to discuss the contents of a closed exempt appendix it may pass the proposed resolution identified at the end of the document to exclude members of the public and the press from the proceedings for that discussion. 

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

It was noted that there was a confidential appendix to this report containing confidential information relating to this item, which Board Members had read and would take into account when making the decision.

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

It was felt that the importance of the Employer Register was highlighted by the British Association for Adoption & Fostering (BAAF) going into administration in July 2015. The fund was BAAF’s largest creditor and unfortunately, the administrators (Smith & Williamson) advised it was likely that Camden would only recover approximately £100k of the £10m estimated deficit (1p in £1). The administrators attended the November Pension Committee meeting and highlighted that in hindsight, there were signs that BAAF were in difficulty, however, these were not necessarily visible or easily accessible to the Pension fund or other creditors from the financial statements.

Camden had the highest number of employers within London LGPS, which was down to high number of charities located in Camden who have chosen to offer LGPS historically. The Pension Committee had indicated that they would not accept any new body open in the fund.

The Pension Board noted that Hymans had felt that Camden’s database was very good particularly compared to other LGPS. It was recognised that combing financial statements would not necessary capture the forward look, and new data had been added that attempted to capture this in addition to taking information from companies house.

As part of a review in 2012, officers had committed to meeting all employers face-to-face to find out their own experience with contributions and discussing their own financial position. Officers had met with most employers and would be meeting the remaining 5 in the near future. The Board noted that everyone had welcomed the discussion, which included discussions around day to day employment issues and discussion would be ongoing.

Liz Barclay (employer representative) declared an interest as her organisation was one of the employers listed on the register. Speaking as an employer, she said that she felt that the discussion was extremely useful so would like to see it rolled out and would welcome ongoing discussion.

Councillor Madlani, Chair of the Pension Committee, advised the Board that the Committee had taken a bespoke approach to this and was unlikely to admit any further bodies given the risk. This information was useful and officers had had a good dialogue with organisations, but he stressed that the Fund could not behave punitively like a bank. He recognised that these organisations were an important part of Camden and a balance had to be reached. A review would be undertaken by officers on an annual basis.

Vinothan Sangarapillai (employee representation) said that one admitted body, which was a national rather than local organisation, had a great number of liabilities. It seemed that it had joined the LGPS as its main office was located in Camden but he was concerned  ...  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 summarises the decision made by Hedge Fund Manager Bluecrest, to close client funds and return third party investor capital and outlines the options available to the fund in reallocating these proceeds.

This report has an appendix which contains information exempt within the meaning of Schedule 12A to the Local Government Act 1972 and is not for publication. The appendix has therefore been circulated to Board Members only.

If the Board wishes to discuss the contents of a closed exempt appendix it may pass the proposed resolution identified at the end of the document to exclude members of the public and the press from the proceedings for that discussion. 

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

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

Councillor Jones stated that this was an unusual situation and asked if officers were confident that they reacted to an unprecedented event quickly and whether or not it was a process was robust.  Councillor Madlani advised the Board that it was not just a rubber-stamping process and the case of taking the first option presented, the process represented the robustness of the governance/decision making. The Head of Treasury and Financial Transactions added officers maintain a risk register which was presented to the Pension Committee and reviewed annually. Also there were some issues that officers would initially consider outside the Committee process, for instance the potential implications of Brexit on the Fund.

In response to a question about the type of expertise, particularly advice received from independent consultants, it was noted that Camden’s Independent Advisor Karen Shakleton, would challenge and scrutinise investment managers. She could also draw upon a number of experts in her company who advised a number of LGP Schemes across the country. In addition, officers also drew upon their network across the industry to access expertise on any given issue. Seminars and a training log was maintained allowing Members & officers to ensure their level of knowledge was appropriate, reviewed and developed.

Following the discussion, Councillor Jones felt that this had been handled appropriately.

RESOLVED –

THAT the report be noted

TO NOTE: Director of Finance

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 catalogues the items considered at Pension Committee over the last year and explains the decision making process by which the respective decisions were made.

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

Councillor Madlani, Chair of the Pension informed the Board about the work of the Committee. He said that he became Chair in May 2015 following the death of the previous chair, Councillor Peter Brayshaw, prior to that he had held the position of Vice Chair. He tried to emulate Councillor Brayshaw’s collaborative approach to leadership. The Committee was not political and the membership had a good variety of skills and experience. It was able to draw on advice and experience from different sources, such as officers, independent advisors, committee members, LAPFF and CIV.  The Board noted that an SRI conference was held for Councillors which was well attended, as were the training events. The Committee was hardworking and he was pleased with the engagement of its members who attended numerous meetings including quarterly IM meetings outside of the formal Committee process.

In response to a number of questions from Members, the Head of Treasury and Financial Transactions responded as follows:

 –   with regard to the rationale behind the move out of passive equity, he said that market capitalisation of UK listed shares represents 8% of global listed shares, Camden’s allocation was a much higher %, and its overweight to UK through the £300m UK passive investment had been a detracting factor on overall fund performance. Hewitt Aon had said that it was not sensible to overweight to UK to this extent, for a number of reasons. The Committee asked for extra work following Hewitt’s Aon’s initial paper and recommendation and officers ensured sufficient detail was given to provide the right assurances.

-        With regard to the preparations for Brexit, there was a narrower point on the move from UK to Global: gilt prices and rates had been impacted by volatility around the uncertainty of Brexit and might take 2 years to unstitch all that even if there was a “No” vote on Brexit. Also there had been a sterling depreciation, volatility was likely to be good for triennial valuation, but deficit recovery should still continue. The Fund was diversified from equities, which gave protection in this volatile environment.

-        In the event of a change in the markets, Camden was agile in terms of making decisions when they needed to be made. It was in DGF and part of the rationale was to delegate asset allocation decision to manager level and let them move quickly between markets when they see the need. Camden’s Chief Executive had the power to take any decision in cases of emergency if required and the Director of Finance had delegated authority within his remit for emergency investment decisions.

Councillor Jones said that the role of the Pension Board was not to second guess, just to ensure things had been done efficiently. He asked if there was anything else required to ensure that both the Board and the Committee fulfil their combined responsibilities. Councillor Madlani replied that the Committee had engaged trade union  ...  view the full minutes text for item 8.

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 summarises the items presented and decisions made at the Pension Committee meetings on 25^th November 2015 and 2^nd March 2016.

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

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

Councillor Jones commented that the performance of Aberdeen was a common theme across the year of committee reports, and asked where the Committee was going in terms of a decision. Councillor Madlani replied that the London Collective Investment Vehicle (CIV) provided an option and the timing of its availability was key, as it would be the lowest cost solution. Also a fee reduction had now been secured. It did not make sense to take interim actions if there was an opportunity to find a permanent solution, or to have an intermittent solution and end up paying two sets of fees. The Board noted that WM in their annual report for 2014/15, stated that Camden’s fund returns against LGPS average result (-2.2/-2.6) attributed to the performance of Aberdeen.  This resulted in the Committee moving £140m away from Aberdeen in May 2015 and agreeing to delegate authority to the Director of Finance to move away from Aberdeen if emergency action was necessary, for example following severe outflows.

It was intended to submit a report to the June Committee meeting on a best value alternative, which might also seek agreement on a disinvestment. Having said that, depending on the timing, the report might just be an update for information. It was noted that the timelines of the CIV availability has slipped slightly.

In response to a question regarding whether or not Brevan Howard had been considered for disinvestment, it was noted that their underperformance had not reached the same extent as experienced with Aberdeen and BlueCrest’s decision to wind-down. Officers and Members had, however, met with Brevan Howard to ensure that they were aware of Camden’s concern on their performance.

RESOLVED –

THAT the report be noted

TO NOTE: Director of Finance

To be confirmed.

It was noted that the dates of meetings for 2016/17 were to be confirmed.

There was no urgent business.