Agenda and minutes

To appoint a chair of the Pension Board for 2018 - 2022.

The Committee Officer confirmed that the meeting was quorate with two Members present, one Employer representative and one Employee representative. She then invited nominations for the election of a Chair for the 2018-2022 term.

RESOLVED –

THAT Councillor Richard Olszewski be appointed as Chair of the Pension Board for the 2018-2022 term.

Apologies for absence were received from Paul Dunphy (Employee Representative).

Vinothan Sangarapillai, Employee representative, declared for the sake of transparency that he was a member of the pension scheme.

To note the Terms of Reference of the Pension Board

Councillor Olszewski referred to page 13 of the agenda and the paragraph relating to the training policy. The Head of Treasury and Financial Services said that Board Members should undertake a personal training analysis and regularly review their skills, competences and knowledge to identify gaps or weaknesses, take relevant training and keep their knowledge up to date to enable them to properly exercise their functions as a member of the Pension Board. He agreed to circulate the self-assessment form devised to help Members demonstrate compliance with the CIPFA Knowledge and Experience framework.

ACTION BY: Executive Director Corporate Services

RESOLVED –

THAT the Terms of Reference be noted.

It was noted that Councillor Madlani, Chair of the Pension Committee was in attendance at the meeting to present and answer questions in respect of item 10 “Pension Fund Annual Report”. The Chair proposed and it was agreed, that item 10 should be taken after item 6 to allow Councillor Madlani to leave the meeting early in order to attend another engagement.

The remaining items were considered in the order in which they appeared on the agenda.

There was no urgent business.

To approve and sign the Part I minutes of the meeting held on 14^th March 2018.

RESOLVED –

THAT the Part I minutes of the meeting held on 14^th March 2018 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 summarises the items presented and decisions made at the Pension Committee meetings on 30 July and 13 September 2018.

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 Committee 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 Executive Director Corporate Services.

The Head of Treasury and Financial Services presented the report which summarised the items presented and decisions made at the Pension Committee meetings on 30^th July 2018 and 13^th September 2018 and outlined the key aspects.

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 considering this item.

Councillor Olszewski expressed concern in respect of the underperformance of Insight, Partners Group 2009 and Standard Life and asked about the size of the percentage of the Pension Fund each held. The Head of Treasury and Financial Services replied that the Pension Committee received a report at every meeting regarding the performance of the pension fund investment portfolio and the individual investment managers for each quarter. He felt that it was important to look at the performance over the long term period rather than just one quarter. All managers had periods of poor performance but they usually recovered. It was not feasible to terminate their contract when their performance was poor as the Pension Fund would incur losses. In these circumstances officers would meet with the investment managers and CEOs to discuss the situation and their proposals for improvement. In the light of this, the Board recognised that officers and the Pension Committee would investigate poor performance and would take any necessary action required.

The Pension Board noted that the Pension Committee, at its meeting on 30^th July 2018, had received an engagement report which set out the engagement activity undertaken by Camden and LAPFF (the Local Authority Pension Fund Forum) in the quarter ending 31^st March 2018. The report detailed many engagement meetings between LAPFF and the management of companies on topics, such as climate change.

The Pension Board was pleased to note that Camden had won the LAPF Award for Best approach to Environmental Social and Governance (ESG) which was a reflection of all the hard work on engagement the Fund carried out with LAPFF, fund managers and interested parties to further its work in this important area of Investment Management.

In the quarter ending 31^st March 2018, there were 1391 votes and Camden voted against motions 21% of the time. It was also noted that most votes were of a governance nature (appointments of board members, remuneration etc) rather than environmental or social issues as motions on these are rarely tabled.

RESOLVED –

THAT the contents of the report be noted.

Report of the Executive Director Corporate Services

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 Services presented the report which summarised the pension fund cash flow and membership statistics for the previous year and over the longer term. It was noted that the report was received annually by the Pension Committee. He highlighted the main points and answered questions as follows:

·         Cash in-flows in 2017/18 were £59.8m, a £2.3m increase on the previous financial year. Both employer and employee contributions received during the year were greater than in the previous year. There was also a decrease in pension strain contributions (early retirement charges) from services and other employers of £0.6m following a £0.7m increase the year before.

·         The increase in cash inflows was negated by a £3.0m increase in cash outflows for the year compared to 2016/17. Cash outflows before transfers were £61.6m in 2017/18. Payments associated with the payment of pension benefits all increased.

·         The Fund experienced a significant increase in the amount of cash coming into the Fund as a result of members transferring their pension assets into the Fund from other funds. Transfer values received totalled £8.4m in 2017/18 compared to £2.4m the year before. Similarly, transfer values paid totalled £5.1m which compared to £4.0m the year before.

·         Cash received from investment income had decreased by £2.7m on the previous financial year to £5.8m. This reflected a change in the Pension Fund’s global equities manager arrangements over the same time, whereby the Fund moved most of its assets held with Aberdeen Asset Management to the Baillie Gifford Global Alpha Growth Fund – a pooled investment vehicle under the London CIV umbrella.

·         After investment income, the overall total net in-flow to the Pension Fund in 2017/18 was £7.4m, an increase of £1.5m on 2016/17.

·         Cash outflows associated with investment manager fees increased by £0.5m to £2.3m in cash terms, although accruals at year end were £0.4m lower than the previous year.

·         There was a significant increase in the number of new entrants into the Fund and a small reduction in leavers and retirements. Much of the expansion was due to the implementation of the Council’s deferred auto-enrolment in October 2017. Although there was a notable increase in active members “opting out” of the scheme last year, a net increase in the overall number of active members of 341 marked a significant increase compared to the two previous years.

·         There were fewer new deferred members compared to last year, and a small reduction in the number of deferred members leaving the scheme to join another or retiring.  Deferred membership still made up the largest proportion of fund membership at 42.99%.

·         Pensioner membership also continued to rise throughout 2017/18 with an increase of 205. The number of retirees had gradually increased over the last three years. Total scheme membership was now 21,456.

It was noted that the Fund was not always notified of the death of scheme members. The Pension Shared Service did cross check data held  ...  view the full minutes text for item 9.

Report of the Executive Director Corporate Services

The Pension Fund is required to produce an Annual Report under the Local Government Pension Scheme Regulations 2013/2356. This report presents the 2017/18 Annual Report to the Pension Board as considered and approved by Pension Committee. Members are asked in particular to consider the audited accounts and risk register within the Annual report.

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

Councillor Madlani, Chair of the Pension Committee introduced the 2017/18 Pension Fund Annual Report and highlighted the following points:

·         The Pension Committee membership had changed following local elections in May, with three new members joining the committee and the loss of some very experienced members namely Councillors Tom Currie, Roger Freeman and James Yarde. Camden was fortunate to have so many talented and committed Members who gave freely of their time and experience. The report included information on attendance, training, seminars, etc. for the Members.

·         The Fund grew by £64m to a net asset value of £1,580m during the year. The Fund’s investment approach remained well diversified, which would help to avoid the adverse impacts of volatility in particular asset classes.

·         He was encouraged by growth in the Fund’s membership, with an additional 713 members joining the Fund in the year, bringing to total membership to 21,456.

·         The Pension Committee took its asset stewardship responsibilities very seriously and he was pleased that the Fund’s achievements had been recognised by receiving the LAPF “Best Approach to ESG” award for 2018. The Committee believed in shareholder value and that the value of the portfolio could be protected or enhanced by corporate engagement activity and continued to play an active role in the Local Authority Pension Fund Forum (LAPFF).

·         In recognition of the importance of climate change, the Committee had added a standalone risk for fossil fuel linked investments to its risk register. This helped to continue to engage with fossil fuel companies and fund managers to ensure the transition from fossil fuels to renewable sources was well-managed.

·         Progress had been made to map the Fund’s carbon footprint. In November the Committee received a report on the carbon footprint of the Fund’s equity holdings (about 60% of the Fund’s assets) and in January, Members met with the three equity manages to discuss the report’s findings. This tool would be used to explore the impact of the Fund’s investment activity on the environment and to measure the Fund’s progress in managing the risk climate change poses.

It was noted that the Annual report pulled together many of the reports and statements the Fund currently produced, and was a single publication providing 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 included:

The Risk Register was also included which was reviewed by the Pension Committee in July 2018. It was noted, however, that the version included in the agenda did not show track changes and a corrected version was circulated at the meeting, as attached at APPENDIX A.

The report also included the 2017/18 Pension Fund Accounts which had been audited by KPMG, who were currently in the  ...  view the full minutes text for item 10.

There was no urgent business.

Should the Board wish to go into closed session, it will take the following resolution:-

THAT the press and public be excluded from the proceedings of the Pension Board on 15^th October 2018 during consideration of Item 13 on the agenda on the grounds that it is likely, in view of the nature of the business to be transacted, that were members of the public to be present, there would be disclosure of exempt information as defined in Schedule 12A to the Local Government Act 1972 (as amended) and that the public interest in maintaining the exemption outweighs the public interest in disclosing the information.

Specifically –

Publicity in respect of Item 13 would be likely to lead to the disclosure of information relating to the financial or business affairs of any particular person (including the authority holding that information) by virtue of Category 3 of Schedule 12A of the Local government Act 1972 (as amended).

THAT the press and public be excluded from the proceedings of the Pension Board on 15^th October 2018 during consideration of item 13 on the agenda on the grounds that it is likely, in view of the nature of the business to be transacted, that were members of the public to be present, there would be disclosure of exempt information as defined in Schedule 12A to the Local Government Act 1972 and that the public interest in maintaining the exemption outweighs the public interest in disclosing the information.

Specifically -

Publicity in respect of item 13 would be likely to lead to the disclosure of information relating to the financial or business affairs of any particular person (including the authority holding that information) by virtue of Category 3 of Schedule 12A of the Local Government Act 1972.

To approve and sign the Part II minutes of the meeting held on 14^th March 2018.

PART II

The Pension Board discussed the contents of the confidential discussion as detailed in the restricted part of these minutes.

PART I

Having discussed the content of the confidential minute, the Pension Board returned to open session.

RESOLVED –

THAT the Part II minutes of the meeting held on 14^th March 2018 be approved and signed as a correct record.