Agenda and minutes

To note the attendance at this meeting of any duly appointed Reserve Members.

RESOLVED:  To note that there were no Reserve Members in attendance at this meeting.

To receive declarations of disclosable pecuniary or non pecuniary interests, arising from business to be transacted at this meeting, from all Members present.

RESOLVED:  To note that Councillor Norman Stevenson declared a non-pecuniary interest in that he was a Director of Cathedral Independent Financial Planning Limited and had clients who were past and present members of the Harrow Pension Scheme.  Furthermore, he declared that his wife was a member of Harrow Council’s Pension Scheme.  He would remain in the room whilst the matters were considered and voted upon.

That the minutes of the meeting held on 9 September 2024 be taken as read and signed as a correct record.

RESOLVED:  That the minutes of the meeting held on 9 September 2024, be taken as read and signed as a correct record.

To note any public questions received.

Questions will be asked in the order in which they were received.  There will be a time limit of 15 minutes for the asking and answering of public questions.

[The deadline for receipt of public questions is 3.00 pm, 18 November 2024.  Questions should be sent to publicquestions@harrow.gov.uk  

No person may submit more than one question].

RESOLVED:  To note that no public questions were received at the meeting.

To receive petitions (if any) submitted by members of the public/Councillors.

RESOLVED:  To note that no petitions were received at the meeting.

To receive deputations (if any).

RESOLVED:  To note that no deputations were received at the meeting.

Report of the Strategic Director of Finance and Assurance

The Committee received the Draft Pension Fund Annual Report and Accounts for 2023-24.  The report updated the Committee on the audit of the Pension Fund Annual Report and Accounts for the year ended 31 March 2023, and the draft Annual report and accounts for 2023-24. 

The audit fee had increased significantly following the awarding of new contracts for local authority audits by PSAA Ltd.  The previous levels were unsustainably low and had undoubtedly contributed to the national backlog of these audits.

The Committee queried whether the Pension Fund accounts for 2023-24 would be audited in full, whilst the Council’s main accounts would not be. Officers confirmed that position. 

The Committee also asked about the negative cash flow in the year, and officers advised that this had been expected as a result of the reductions in employer contribution rates following the 2022 triennial valuation and the inflation linked pensions increase in April 2023 (10.1%).  Officers advised that the cash flow was being managed using the capital redemptions from LaSalle as that Fund is wound up.  Having considered a cash flow forecast in March 2023, the Committee had agreed that if necessary, withdrawals as part of a rebalancing of assets back to benchmark, would also be used.

The trade union representative for UNISON expressed concern that some retired pension scheme members were not receiving their P60 forms especially those with no access to computers.  Officers advised that P60s were sent out by mail to retired members.  Nonetheless, if there were any that were not receiving them, the trade unions were advised to contact officers.

RESOLVED:  That

(1)            the position in respect of the 2022-23 audit be noted; and

(2)            the draft Pension Fund Annual report and Accounts for 2023-24 for publication be approved.

Report of the Strategic Director of Finance and Assurance

The Committee received the Quarterly Actuarial Funding Position Update.  The report set out the interim funding level update as at 30 September 2024 and showed how it had changed since the 2022 triennial valuation.  The last formal valuation was 31 March 2022. 

RESOLVED:  That the 30 September 2024 estimated improved funding position of 128% (as at March 2022 96%) be noted.

Report of the Strategic Director of Finance and Assurance

The Committee received the Update on London CIV and Investment Pooling Arrangements Report, with a confidential appendix, and additional appendices published in the supplemental agenda.

This report updated the Committee on the current position of the Fund’s investments in context of the Government’s requirements for pooling and on current developments within the London CIV.

The Committee were updated on the implications for the Fund following the Budget, including mandatory asset pooling and “Investment in UK Growth”.

The Local Government Pension Scheme (LGPS) consultation document “Fit for the Future” was discussed.  An Independent Adviser welcomed clarity over the process.  In future Funds could determine their Strategic Asset allocations, but that the pools would select and appoint the managers to implement those strategies.  However, he expressed concern about some of the practicalities in the consultation proposals, including that the proposed timescale for the required skills at the pools to be built up and the proposed process to be in place was unrealistic.  In particular, depending on the definition of “local investment”, these constraints would impact on the pools’ ability to undertake due diligence required on such investments, and that existing arrangements for passive investments had such low fee levels that there is no point in pools taking over management of these investments.

It was also pointed out that three of the pools were not yet Financial Conduct Authority (FCA) regulated, and that together with the existing capacity constraints of the existing pools (including LCIV), this would make progress more challenging.

Both Mercer and the Independent Adviser highlighted the inherent conflicts of interest in the proposals, including the proposal that the pools would provide the main advice on strategic asset allocation.  They also highlighted that the question of how and by whom the pools would be held to account was not covered in the paper.

The Committee expressed concern that the Council’s response should be consistent with other London boroughs’ responses.  Officers advised that responses would be produced in conjunction with other authorities.

RESOLVED:  That

(1)            the report and non-confidential appendices be noted; and

(2)            the Strategic Director of Finance and Assurance, in consultation with the Chair and the Independent Advisors, be authorised to submit a response on the “Fit for the Future” LGPS consultation document to the Government on behalf of the Council in its role as the Administering Authority for the Pension Fund.

Report of the Strategic Director of Finance and Assurance

The Committee received the Investments and Managers Performance Review, which contained two confidential appendices.

The report updated Members on the investment and managers performance for the quarter ending 30 September 2024.  The Fund had returned 2.5% net of fees over the quarter to 30 September 2024, underperforming the benchmark by 0.1%.  The market value of investments had increased by £23.9m to £1.091bn in the quarter.

RESOLVED:  That

(1)            the performance of the investments at 30 September 2024 be noted;

(2)            the Pensions and Investment Research Consultants (PIRC) Limited summary performance report June 2024 contained in Appendix 2 to the officer report be noted;

(3)            the Independent Adviser report for quarter ending June contained in Appendix 3 to the officer report be noted;

(4)            the Mercer report on performance of the investments and managers contained in Appendix 4 to the officer be noted; and

(5)            the Strategic Director of Finance and Assurance be authorised, following consultation with the Chair and Vice Chair of the Committee, to carry out tactical rebalancing of the Fund’s investments when appropriate, and that this would be achieved by following the protocol set out in paragraphs 22 to 30 of the officer report.

To resolve that the press and public be excluded from the meeting for the following item of business for the reasons stated.

RESOLVED:  That in accordance with Part I of Schedule 12A to the Local Government Act 1972, the press and public be excluded from the meeting for the following item(s) for the reasons set out below:

The Committee considered one confidential appendix to the Update on London CIV and Investment Pooling Arrangements report.

RESOLVED:  That the appendix be noted.

Report of the Strategic Director of Finance and Assurance

The Committee received two confidential appendices to the Investments and Managers Performance Review report.

RESOLVED:  That the appendices be noted.

Report of the Pension Fund's Actuary

The Committee received a confidential report on the Triennial Valuation 2025 - Funding Review.

RESOLVED: That

(1)            the report and appendices be noted; and

(2)            option 2 detailed in the officer report be used.

Report of the Investment Management Consultant

The Committee received a confidential report on the Investment Strategy Review.

RESOLVED:  That

(1)            priorities in reviewing its investment strategy be agreed;

(2)            arrangements to set dates for two half day sessions in January and February 2025 be agreed; and

(3)            Mercers’ recommendation to rebalance the Fund’s passive equity holdings back to the benchmark be approved.

The Committee thanked the Interim Treasury and Pensions Manager, Jeremy Randall, for his professional work, guidance and dedication during his time managing the fund, as this would be his last meeting.