Agenda and minutes

There were no apologies.

There were no declarations.

(a)          Liz Barclay

The Pension Board noted that Liz Barclay, Employer representative, had stood down as Chair of Citizens Advice Camden at the end of July and was therefore no longer a member of the Pension Board. The Chair thanked her for her service on the Board and wished her well for the future.

The Head of Treasury and Financial Transactions informed the Board that the process for selecting a replacement for Liz Barclay would commence in the near future, which would include an election amongst employers to choose a successor from a list of potential candidates.

(b)          Councillor Jones

Councillor Jones informed the Board that this would be his last meeting as he would also be standing down as a member of the Board. Councillor Richard Olszewski would be appointed in his place by the Council on 23^rd October 2017.

It was noted that a new Chair would need to be appointed by the Board at its meeting in March 2018.

There was no urgent business.

To approve and sign the minutes of the meeting held on 15^th March 2017.

RESOLVED –

THAT the minutes of the meeting held on 15^th March 2017 be approved and signed as a correct record.

Report of the Executive Director Corporate Services

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 presents an update to the risk register associated with the Camden Pension Fund, with an action plan stating how they will be managed.

Consideration was given to a report of the Executive Director Corporate Services.

The Head of Treasury and Financial Transactions presented the report highlighting the key points associated with an update to the risk register associated with the Camden Pension Fund, with an action plan stating how they would be managed.

It was noted that the risks had been reviewed by the independent investment adviser and officers. Last year there was only one new risk identified in the risk register. This risk (50) in the governance section reflected the changing environment with pools becoming the driving force behind funds’ strategy. The risk was that Fund attention was diverted from investment strategy whilst appropriate vehicles were established, which was probably more of a risk for other pools.

New risks this year were that sub-funds of the London CIV might fail to perform (51 in Financial risks) and the risk that high transition costs would be incurred when moving sub-funds within the London CIV (52 in Governance risks). These changes had been ‘tracked’ and new text or risks were shown underlined. Scores that had changed were also shown with tracked changes which helped to identify new changes and showed old text crossed through.

The Board noted that, at its meeting on 30^th August, the Pension Committee received and considered a deputation from Camden Divest and supported by the Local Authority Pension Fund Forum (LAPFF) who collectively lobby companies on behalf of the 72 member local government pension funds and others on Environmental, Social and Governance issues. Based on the deputation discussion it was agreed to separately identify climate change as a risk on the risk register so that it could be tracked as follows:

“53.     Fossil Fuel linked investments suffer losses due to stranded assets and reputational damage.”

The mitigation for this included:

·         participation with LAPFF to engage with fossil fuel companies and boards and continue work in this area including ‘aiming for A’, strategic resilience resolutions, and managed decline of fossil fuel extraction

·         continued engagement with Fund managers to ensure climate change and stranded asset issues are acknowledged and dealt with by boards.

·         Continued use of Voting policy to support strategic resilience resolutions (with LAPFF voting alerts) and appropriate measures with respect to climate change

·         The Fund conduct a carbon footprint to better understand its exposure to fossil fuels.

Board Members welcomed this new risk as they were concerned about climate change and wished to encourage companies to diversify away from fossil fuels. They noted that monitoring would not just include fossil fuels but would also consider carbon resilience. With regard to Brexit, most of the LGP schemes had UK based equity, but Camden’s Fund only had 4% with the rest being global based, so Brexit would not affect the Fund in the same way as it would the UK economy.

Paul Dunphy referred to risk 21 “Deteriorating active membership (due to employer savings programmes) and suggested that mapping should follow each MTFS round in order to monitor  ...  view the full minutes text for item 6.

Report of the Executive Director Corporate Services

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 details the pension fund cash flow and membership statistics for the previous year and over the longer term.

Consideration was given to a report of the Executive Director Corporate Services.

The Head of Treasury and Financial Transactions summarised the key aspects including details of the cash flow for the pension fund during the last quarter, and over the longer term, and an analysis of the movement in scheme membership. This report was received annually by the Pension Committee.

Vinothan Sangrapillai, employee representative, said that he had been disappointed that all eligible staff who had previously chosen to defer enrolment into the Local Government Pension Scheme were opted in to it this month.  He was concerned that this could cause financial issues for some staff. Staff might also choose to opt out again which would create extra work for the Shared Service and would affect cashflow as it would result in a peak in contributions during the opt in period and a fall during opt out.

The Head of Treasury and Transactions explained that in March 2013 the Government introduced Automatic Enrolment. At the time, Camden applied a transitional period which meant that certain staff were deferred from enrolment into the pension scheme until 30 September 2017. In accordance with the Pension Regulation all eligible staff who were subject to postponement had now been enrolled in the pension scheme. This had impacted on 737 members of staff, the average pay of whom was circa £30,000, so the financial implications amounted to only a relatively small amount. HR did recognise that more engagement should have taken place with staff, but given the timescales, it was not possible to write to staff notifying them of the change individually. Communications were issued via Essential news, Management Matters and Yammer. As required all eligible staff would be written to within six weeks after the enrolment date

RESOLVED –

THAT the report be noted

Report of the Executive Director Corporate Services

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 2013/2356. This report presents the 2016/17 Annual Report to the Pension Committee.

Consideration was given to a report of the Executive Director Corporate Services.

The Head of Treasury and Financial Transactions introduced the 2016/17 Pension Fund Annual Report. It was noted that the Annual report pulled together many of the reports and statements the Fund currently produced, and was a single publication showing a good source of information on key matters about the Fund. The individual statements included in the Annual Report had been revised where appropriate, and the versions in this Annual Report would be adopted and taken forward as the current version. These include:

Councillor Jones said that he felt that the Annual report should be debated by full Council given that it was an important activity and due to the size of the Fund, and not just considered by the Pension Committee and Pension Board.

The Head of Treasury and Financial Transactions suggested that a summary of the report could be uploaded onto Essentials and possibly be included in the newsletter produced by the Shared Service.

Councillor Jones referring to pages 66 and 67 of the agenda asked why there was a delay in implementing the ORACLE fusion system. The Head of Treasury and Financial Transactions replied that the HR part of the system needed to go live first which made payments to employees and suppliers was working satisfactory. The whole system was scheduled to go live in April 2018, before which all key users would have training.

RESOLVED –

THAT the report be noted.

Report of the Executive Director Corporate Services

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 Government has made it clear that it expects Local Government Pension Scheme (LGPS) Funds to make significant progress towards pooling. The London Collective Investment Vehicle (LCIV) was established in November 2015. The 33 London Pension Funds are expected to ensure the major proportion of their assets are managed by LCIV on their behalf. This report will report quarterly developments at the London CIV in creating sub funds for the spectrum of asset classes, on-boarding of assets and development of the CIV’s staff resource.

Consideration was given to a report of the Executive Director Corporate Services.

The Head of Treasury and Financial Transactions presented the report and outlined the key aspects. The Board noted that the London Collective Investment Vehicle (LCIV) was established in November 2015 and all 33 of the London Boroughs had committed to it with the major proportion of their assets being managed by LCIV on their behalf. This report presented recent developments on a quarterly basis and covered establishment and procurement of new sub-classes, launches of new sub-funds, assets under management and resource build out at the LCIV. It was noted that this would assist in the Fund’s responsibility of asset allocation whilst future procurement of funds and day to day management was now the responsibility of the LCIV.

With regard to governance, it was noted that a governance review of the LCIV would be carried out to look at structures and decision making for LCIV. The Board also noted that the Investment Advisory Committee had been formed of officers from London Funds. The membership of that Committee was reviewed on an annual basis with Directors of Finance asked for nominations either for themselves or for their pension managers. This year’s request for membership nominations had again received a very strong response and all nominations had been accepted. In total 28 nominations were received representing 29 Funds. Camden was represented by the Head of Treasury and Financial Transactions who was a member of three working groups on stewardship, low carbon and Infrastructure.

RESOLVED –

THAT the report be noted.

Report of Executive Director Corporate Services

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 30 August 2017 and 12 September 2017.

Consideration was given to a report of the Executive Director Corporate Services.

The Head of Treasury and Financial Transactions presented the report which summarised the items presented and decisions made at the Pension Committee meetings on 30^th August 2017 and 12^th September 2017 and outlined the key aspects.

With reference to paragraphs 2.16 – 2.21, Councillor Jones welcomed the Stewardship Code and that the Financial Reporting Council had confirmed that the Fund would be a tier one signatory, as it had judged that the Fund provided good quality and transparent description of its approach to stewardship with explanations of an alternative approach where necessary. In response to a question, the Head of Treasury and Financial Transactions agreed to write to Board Members with details of the frequency that this would be reviewed and the mechanism for doing so.

            ACTION BY: Executive Director Corporate Services

It was noted that some Funds had been taken down to tier two, the common causes for which were conflict of interest and the relationship with fund managers.

RESOLVED –

THAT the report be noted.

There was no urgent business.