Agenda and minutes

Pension Fund Sub-Committee
Tuesday, 20th January, 2015 7.00 pm

Venue: Committee Room 3 - Hammersmith Town Hall. View directions

Contact: Ibrahim Ibrahim  020 8753 2075

Items
No. Item

1.

CHAIR AND VICE CHAIR OF SUB-COMMITTEE

To note that Councillor Iain Cassidy was appointed the Chair and Councillor Michael Adam Vice-Chair of the Pensions Sub-Committee at the Audit, Pensions and Standards Committee on Tuesday 2nd December 2014.

 

Minutes:

The Sub-Committee noted that Councillor Iain Cassidy was appointed the Chair and Councillor Michael Adam Vice-Chair of the Pensions Sub-Committee at the Audit, Pensions and Standards Committee on 2 December 2014.

 

RESOLVED –

 

THAT the report be noted.

2.

TERMS OF REFERENCE OF THE PENSIONS SUB-COMMITTEE pdf icon PDF 71 KB

To note the terms of reference agreed at the Audit, Pensions and Standards Committee on 2 December 2014.

Minutes:

Jonathan Hunt (Tri-Borough Director for Pensions & Treasury) explained that the Terms of Reference were presented and agreed at the Audit, Pensions and Standards Committee on 2 December 2014.

 

The Terms of Reference does not change the remit of Pensions involvement with Committee Members as it set out written responsibilities, which were not explicit before.

 

Jonathan Hunt explained that the Pensions Sub-Committee would be responsible for all Pension matters that the Audit, Pensions and Standards Committee previously dealt with although the Pensions Sub-Committee would report back to the Audit, Pensions and Standards Committee once a year.

 

RESOLVED –

 

THAT the report be noted.

3.

Apologies for absence

Minutes:

Apologies for lateness were received from Councillors Michael Adam and Guy Vincent.

 

4.

Declarations of interest

If a Committee member has any prejudicial or personal interest in a particular item they should declare the existence and nature of the interest at the commencement of the consideration of that item or as soon as it becomes apparent.

 

At meetings where members of the public are allowed to be in attendance and speak, any Councillor with a prejudicial interest may also make representations, give evidence or answer questions about the matter. The Councillor must then withdraw immediately from the meeting before the matter is discussed and any vote taken unless a dispensation has been obtained from the Standards Committee.

 

Where Members of the public are not allowed to be in attendance, then

the Councillor with a prejudicial interest should withdraw from the meeting whilst the matter is under consideration unless the disability has been removed by the Standards Committee.

 

Minutes:

There were no declarations of interest.

5.

BI-BOROUGH LGPS PENSION ADMINISTRATION SERVICES FROM 1ST APRIL 2015 pdf icon PDF 211 KB

This report was approved by Cabinet on 1 December 2014. It agreed to terminate our current contract with Capita early and to appoint a new contractor Surrey County Council to provide the Local Government Pension Administration Service.

Minutes:

Debbie Morris (Bi-Borough Director of HR) introduced the report, which was approved by Cabinet on 1 December 2014. The report agreed to terminate the Council’s current contract with Capita and to appoint Surrey County Council (SCC) as the Local Government Pension Administration Service provider. Debbie Morris provided Sub-Committee Members a detailed version of events.

 

On 1 October 2011 the Local Government Pension Scheme Administration Service for H&F was outsourced to Capita via a four-year framework agreement. It was noted that the Council went through a full procurement process where six providers were shortlisted. During the procurement process, only two providers were deemed suitable; which were the Council’s current provider, London Pensions Fund Authority (LPFA) and Capita.

 

Sub-Committee Members were concerned that other organisations such as SCC and the London Borough of Wandsworth did not take part in the procurement process but David Coates (Interim Payroll Manager) explained that they were not pitching for business at that time and those organisations that did express an interest such as LPFA and Capita were considered as major providers in the market.

 

The tender appraisal panel included officers from the Royal Borough of Kensington and Chelsea (RBK&C), Westminster City Council (WCC) and the London Borough of Hillingdon. Officers went through a rigorous process and the tender appraisal panel evaluated the quality of tenders using a weighted model where quality accounted for 50 per cent of the overall evaluation process and price the remaining 50 per cent.

 

Capita successfully secured the contract and during their first year, their performance was satisfactory as whilst there were some teething issues, it was felt that these were expected in any new contract. In response, David Coates confirmed that the Council saved £130,000 per year from moving to Capita from LPFA.

 

Debbie Morris and David Coates explained that approximately two years ago, they noticed a significant decline in Capita’s Key Performance Indicators (KPI), and monthly meetings were then established. Capita’s poor performance was attributed to the lack of IT enhancements to their systems and the Council had served the maximum penalties on Capita and since June 2014, the Council were only paying 50 per cent of the monthly value of the contract.

 

Debbie Morris explained that she had met with beneficiaries where their Pension  was calculated incorrectly. In addition, Sub-Committee Members were advised that there was a Pensions Client Team based at RBK&C who were able to check the accuracy of figures, as they had access to Capita’s IT systems.

 

Sub-Committee Members requested assurance that there would be no other underpayments or overpayments. David Coates explained that every year in April, there had been a pensions uplift, the last of which was in April 2014. Since April 2014, the client team had checked any new pensions that had come online.

 

SCC were approved as the Council’s new provider of pension administration services and payroll services for H&F and RBK&C from 1 April 2015. Sub-Committee Members were keen to understand what percentage of their business  ...  view the full minutes text for item 5.

6.

BACKGROUND AND PROPOSALS AROUND THE ESTABLISHMENT OF A PENSIONS BOARD pdf icon PDF 181 KB

The Sub-Committee is asked for its views on the proposed terms of reference for the Pension Board.

 

Minutes:

Jonathan Hunt referred Sub-Committee Members to page 16; Appendix 1 of the report, which set out the proposed terms of reference. The Sub-Committee noted that the Pensions Board would have no powers to overturn or make decisions and there would be no monetary allowances. In addition, Pension Board Members would receive papers from officers detailing the performance of the Pensions Sub-Committee for noting only.

 

Jonathan Hunt noted that there was nothing within the legislation about whether  Pension Board Members were allowed to attend closed and exempt Sub-Committee Meetings. Further guidance would be sought from Governance and Scrutiny, Committee Services.

 

ACTION: Committee Services

 

 

Sub-Committee Members considered that it would be appropriate for Pension Board Members to attend future Pensions Sub-Committee meetings to be able to effectively scrutinise as set out in the proposed terms of reference.

 

Sub-Committee Members queried the value of having a Pensions Board where Nicola Webb (Tri-Borough Pension Fund Officer) explained that the Pensions Board would have the ability to report to Full Council on its activities.

 

Jonathan Hunt explained that there was a requirement for an equal number of employee and employer representatives and it was agreed that there would be no automatic right for anyone to join the board. The process for selecting members of the Pension Board would be set out in a separate document ‘selection of pension board members’ in time for the Full Council Meeting on 25 February 2015.

 

ACTION: Jonathan Hunt

 

Sub-Committee Members welcomed the report and noted the potential benefits of working on a tri-borough basis with a common approach. Jonathan Hunt noted that the draft terms of reference were similar to what had been agreed by WCC and RBK&C. However, it was unlikely that the regulator would permit a single Pension Board across all three funds, as the individual funds were not closely aligned enough to allow that to happen.

 

 

RESOLVED –

 

THAT the report be noted.

7.

PENSION FUND ADMINISTRATION AND GOVERNANCE pdf icon PDF 239 KB

This report proposes a quarterly update pack is provided at each future meeting of the Sub-Committee.  It also provides the Pension Fund risk register for the Sub-Committee’s information.

Minutes:

Jonathan Hunt drew Sub-Committee Members attention to the following sections of the report.

 

Section 5.5 – 5.8, page 22: Risk Register

The risk register, which was further illustrated on appendix 2, page 27 – 35, represented good practice and information for Sub-Committee Members. Due to the level of finances involved, it was considered best practice for the Pension Fund to maintain a risk register to ensure that the risks the Fund faces are properly understood and where appropriate, action was taken to mitigate them.

 

Debbie Morris noted that the mitigating actions and risk ratings on pages 34 and 35 of the report would be completed.

 

ACTION: Debbie Morris

 

Section 5.9 – 5.12, page 22: Class Actions

 

Jonathan Hunt explained that where it was believed that director/s of a company had acted fraudulently or negligently, shareholders that invested in the company might have case to sue to try to get some money back via a Class Action.

 

The Pensions Fund uses Northern Trust to file claims on the Funds behalf on a retrospective basis rather than a proactive basis. It was noted that the Fund was missing out on any actions brought in countries outside of North America, where Class Actions had originated.

 

WCC and RBK&C utilise companies that look across the world where claims could be filed and it was noted that the cost of the contract was estimated at £3-5,000 per year plus 10 per cent of any claim. It was noted that WCC and RBKC had recovered £120,000 from Class Actions.

 

Sub-Committee Members agreed that Fund officers should pursue Class Actions where possible.

 

Section 5.13 – 5.15, page 23: Tax Recovery

 

Jonathan Hunt reminded members that some countries were withholding taxes and in the case of Switzerland, this had increased significantly.

 

Many of the counties who pay tax reclaims had convoluted processes, which led to it taking many months and in some cases years for reclaims to be paid. Jonathan Hunt noted that this was an ongoing process and was being monitored accordingly.

 

Appendix 1, page 26: Draft Scorecard for Quarterly Update Pack

 

Sub-Committee Members asked whether any benchmark data was available which would allow Members to determine how well the Fund was performing compared to other Funds.

 

Jonathan Hunt agreed to report back with his findings.

 

ACTION: Jonathan Hunt

 

RESOLVED –

 

THAT the sub-committee delegate the procurement of a firm to manage class actions on behalf of the Pension Fund to officers.

8.

Date of the next meeting

To approve the future meeting dates of the Pensions Sub-Committee for 2014/15 municipal year.

 

·         17 March 2015

·         14 May 2015

Minutes:

The Sub-Committee noted that the next meeting of the Pensions Sub-Committee would take place on 17 March 2015.

9.

Exclusion of the public and press

The Committee is invited to resolve, under Section 100A (4) of the Local Government Act 1972, that the public and press be excluded from the meeting during the consideration of the following items of business, on the grounds that they contain the likely disclosure of exempt information, as defined in of Schedule 12A of the said Act, and that the public interest in maintaining the exemption currently outweighs the public interest in disclosing the information.

Minutes:

The Chair requested for any members of the public and press to leave the meeting room, as all the public reports had been heard and the Committee were then moving onto exempt items.

 

RESOLVED –

 

THAT under section 100A (4) of the Local Government Act 1972, the public and press be excluded from the meeting during the consideration of the following items of business, on the grounds that they contain the likely disclosure of exempt information, as defined by paragraph 3 of Schedule 12A of the said Act and that the public interest in maintaining the exemption outweighs the public interest in disclosing the information.

10.

INVESTMENT STRATEGY REVIEW

To receive a report on the Investment Strategy Review.

 

 

Minutes:

RESOLVED –

 

(a)  THAT the Sub-Committee approve the recommendations in the report.

 

11.

APPOINTMENT OF FUND MANAGERS

To receive a report on the Appointment of Fund Managers.

Minutes:

RESOLVED –

 

(a)          THAT the Sub-Committee approve the recommendations in the report.

 

(b)          THAT the Sub-Committee approve the recommendations in the report.