Agenda and minutes

To approve as correct the minutes of the meeting held on 14 September 2011 and authorise the Chairman to sign them.

The minutes of the meeting held on 14 September 2011 were agreed as a correct record and signed by te Chairman.

Report attached.

Officers informed the Committee that they had carried out the annual review of the whistle blowing obligations. The Committee noted the report which advised that no breaches had been reported.

Report attached.

Report attached.

In line with the Local Government Pensions Scheme Regulations and good practice the London Borough of Havering as an administrating authority undertook an annual review of the Statement of Investment Principles (SIP). Since January 2010 the administering authority must publish the compliance against a revised set of six principles. The Committee’s attention was drawn to 2 areas were the Pension Fund did not fully comply with the principles.

• Principle No. 3 – Risk and Liabilities.
  • Point 12 – The annual report should include an overall risk assessment in relation to the funds activities.  This could be done by summarising the contents of a regularly updated risk register, of which an analysis of the risks should be reported periodically to the committee. As the Pension Fund currently do not have an overall risk register officers were proposing that a Risk register be developed in 2011/12.
• Principle No. 4 – Performance Assessment
  • Point 19 (Under Decision making bodies) – The Committee were required to set out its expectations of its own performance in its business plan. This should include standards relating to the administration of the committee’s business such as: attainment of standards set down in CIPFA’s knowledge and skills framework; achievement of required training outcomes; etc.
  • Officers advised that the Committee was in the process of completing the Knowledge and Skills framework self assessment forms, as produced by CIPFA. The results would feed into the training plan.

The Committee expressed there concern that nearly two years in to the life of the Committee not all Councillors had undertaken the necessary training. Although members had been asked to complete the Skills and Knowledge framework had completed the questionnaire and the Committee urged members to complete these as a matter of priority. The Committee had appreciated the training provided by Fund Managers in the past but would welcome training on the mechanics of administrating the Pension Fund not just on the state of the market.

The Committee AGREED that all members of the Committee should receive training and that Group Leaders be invited to nominate substitutes to receive training.

The Committee further AGREED that the Governance Committee be requested to amend the Terms of Reference to require all members of the Pensions Committee to avail themselves of suitable training within 6 months of their appointment to serve on the Committee. Failure to avail themselves of the training would disbar them from membership until such time as they undertake the training.

The Committee AGREED

1. the proposed amendments to the Statement of Investment Principals; and
2. that officers develop a risk register during 2011/12 to ensure compliance with Principle No.3 – Point 12 and action be taken re training as set out above.

Report attached.

As required by Regulation 31 of the Local Government Pension Scheme (Administration) Regulations 2008 officers had undertaken a review of the Pension Fund’s Governance Compliance Statement. The Committee’s attention was directed to two key points.

a)     Section 2. Constitutional arrangements

The Pensions Committee current duties and terms of reference included in the Governance Compliance Statement were as stated in the current Council’s constitution as follows:

i)    “To consider and agree the investment strategy and statement of investment principles for the pension fund and subsequently monitor and review performance”. 

ii)   “Where appropriate and above staff delegation levels to recommend staff to invite tenders and award contracts for actuaries, advisers and fund managers or other related investment matters”. 

iii)  “To appoint and review the performance of advisers and investment managers for Council and pension fund investments”.

iv)  “To take decisions on those matters not to be the responsibility of the Cabinet under the Local Authorities (Functions and Responsibilities) (England) Regulations 2000 relating to those matters concerning the Local Government Pension Scheme”

The Committee AGREED to recommend the Governance Committee to amend the wording of ii) & iii) as follows:

1.      Item ii) Change to “Recommend the authorisation of staff to invite tenders and to award contracts to actuaries, advisers and fund managers and other related investment matters”;

2.      Item iii) – Change to “To appoint and review the performance of advisers and investment managers for pension fund investments.”

b)      Appendix A sets out the authority’s position on compliance against the set of best practice principles. The Committee’s attention was drawn to two principals where the authority was not fully compliant. Officers did inform the Committee that it did not have to be fully compliant, but where it was not compliant it had to state why.

                                      i.      Principle B Representation Item (a)(iii) - To meet the required standards all stakeholders are afforded the opportunity to be represented by, where appropriate, appointing independent observers. Members reaffirmed their decision not to employ the services of an independent professional observer to participate in the governance arrangements on the basis that the current monitoring arrangements were sufficient for the size of the fund.

                                    ii.      Principle D Voting – To meet the required standards a declaration should be included in the governance policy statement on the justification for not extending voting rights to each body or group represented on the committee. The Committee agreed to extend voting rights to the representative or representatives of the scheduled and/or admitted bodies.

Report attached.

The Committee were advised that the Pension Fund Annual Report for the year ended 31 March 2011 had been prepared in accordance with Regulation 34 of the Local Government Pension Scheme (Administration) Regulations 2008.  In accordance with the Regulations the annual report must contain the following:

a)     Management and Financial Report

b)     Investment Policy and Performance Report

c)      Scheme Administration Report

d)     Actuarial Report

e)     Governance Compliance Statement

f)        Fund Account and Net Asset Statement (including Audit opinion)

g)     Benchmarking Report

h)      Funding strategy Statement

i)        Statement of Investment Principles

j)        Communication Strategy

k)      Any Other Material

Officers answered all questions raised by the Committee and the Committee:

Agreed that

1. The Pension Fund Annual Report be published electronically; and
2. The Chairman and Group Director, Finance & Commerce formally sign off the Annual Report.

Report attached.

Officers informed the Committee that on 7 October 2011 the Department of Communities and Local Government (DCLG) had issued a consultation document with proposals to deliver short term savings in the Local Government Pension Scheme of £900m per annum nationally by 2014-15, equivalent to a 3.2% increase in employee contributions. Further proposals were expected to follow on the longer term changes by Lord Hutton as part of his review in to public sector pension schemes.

The DCLG had indicated that it did not propose to achieve its target solely from increased contributions, but was looking to combine these with reductions in benefits.  Details of the options proposed by the DCLG were provided to the Committee. That had indicated that they were prepared to consider other options which deliver the same level of savings, although these fully costed proposals would need to be submitted by 6 January 2012.

On 2 November 2010 the Government had published a further document “Public Service Pensions: good pensions that last”. This document sets out recommendations for Public Sector Pensions from April 2015. The key points from the proposals were:

• Benefits already earned were protected.

• For those in final salary schemes, those past benefits would be linked to their final salary when they leave the scheme or retire.

• For those public service workers who, as of 1 April 2012, had ten years or less to their current pension age, the Government’s objective was that they would see no change in when they could retire, nor any decrease in the amount of pension they would receive at their current Normal Pension Age.

• Government would continue to pay more overall toward pension benefits than the workforce.

The Committee had a full and frank discussion on the two proposals and AGREED that officers should prepare an Executive Decision for sign of by the Lead member for Vaue.