Agenda and minutes

The Clerk to the Panel opened the meeting and informed Panel Members of changes to the membership which had been confirmed at a meeting of the Licensing and General Purposes Committee on the previous evening; namely that:

·                     Councillor Idaikkadar had stood down from the Panel;

·                     Councillor Ferry had become a full Panel member and had been appointed Chairman for the remainder of the 2012-13 municipal year;

·                     Councillor Dharmarajah remained a full member of the Panel;

·                     Councillor Stephenson had joined the Panel as a Reserve Member.

Councillor Ferry took the Chair and the meeting continued.

To consider the appointment of a Vice-Chairman to the Pension Fund Investment Panel for the remainder of the Municipal Year 2012-2013.

Councillor Mano Dharmarajah was nominated, seconded and duly appointed as vice-Chairman of the Pension Fund Investment Panel for the remainder of the 2012-13 municipal year.

A Member asked that it be placed on record that Councillor Dharmarajah, in his previous capacity as Chairman of the Panel, had fulfilled the role diligently, diplomatically, and with courtesy and integrity.  He had allowed Panel Members to express their views freely and openly and had encouraged constructive debate, to the benefit of the Panel and the decisions made.

RESOLVED:  To appoint Councillor Mano Dharmarajah as Vice-Chairman of the Pension Fund Investment Panel for the remainder of the 2012-2013 Municipal Year.

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

Reserve Members may attend meetings:-

(i)                 to take the place of an ordinary Member for whom they are a reserve;

(ii)               where the ordinary Member will be absent for the whole of the meeting; and

(iii)             the meeting notes at the start of the meeting at the item ‘Reserves’ that the Reserve Member is or will be attending as a reserve;

(iv)              if a Reserve Member whose intention to attend has been noted arrives after the commencement of the meeting, then that Reserve Member can only act as a Member from the start of the next item of business on the agenda after his/her arrival.

RESOLVED:  To note the attendance at this meeting of the following duly appointed Reserve Members:-

To receive declarations of disclosable pecuniary or non pecuniary interests, arising from business to be transacted at this meeting, from:

(a)               all Members of the Panel;

(b)               all other Members present.

RESOLVED:  To note that no Declarations of Interest were registered.

That the minutes of the meeting held on 20 September 2012 be taken as read and signed as a correct record.

RESOLVED:  That the minutes of the meeting held on 20 September 2012 be taken as read and signed as a correct record.

To receive questions (if any) from local residents/organisations under the provisions of Committee Procedure Rule 17 (Part 4B of the Constitution).

RESOLVED:  To note that no petitions were received, questions put, or deputations received under the provisions of the Committee Procedure Rules 17, 15 and 16.

Report of the Corporate Director of Resources

In accordance with the Local Government (Access to Information) Act 1985, this item was submitted late to the agenda for the reasons given on the supplemental agenda.

The Panel received a report of the Corporate Director of Resources setting out proposed changes to the governance and terms of reference of the Pension Fund Investment Panel.

The Chairman explained that the administration, in attempting to reduce the number of committees and meetings, was looking to simplify the committee structure, and considered that the Pension Fund Investment Panel would work more efficiently as a ‘stand alone’ committee (similar to Planning Committee), rather than under the umbrella of the Licensing and General Purposes Committee (L&GP).  He suggested that the Panel’s proposals be considered by the Constitution Review Working Group.

In drafting the proposals, it was intended that the complex and technical decisions required in managing the Council’s Pension Fund should be taken by an appropriately appointed and trained body, and remain the sole responsibility of that body, rather than progress to another decision making body for ratification, whose members may not possess the knowledge, expertise or background to fully consider the issues and the impact of decisions.  In addition, further changes in Regulations were expected from government, and a stand alone body was believed to be best placed to respond to these and implement measures as necessary.

Members concurred, and observed that it was unusual among authorities for a Pension Fund Panel to report to a parent committee, although one Member stated that in respect of an earlier decision on Academy contributions, he believed a better decision had been made as a result of the two-tier process, but he also acknowledged that this was an unusual occurrence.  An officer confirmed that many authorities preferred a stand alone committee to consider Pension Fund matters, and informed the Panel that very few matters had gone forward to L&GP for consideration in the last two years.

Members broadly agreed with the overall purpose of the proposals, although no conclusion was reached on the optimum composition and desired expertise of Panel members at this early stage.  They were of the opinion that the Panel would benefit from the participation and advice of independent, co-opted members, ideally two, but did not conclude whether renumeration should be provided. 

In response to the suggestion that the Early Retirement Sub-Panel be merged with the Pension Fund Investment Panel, Members agreed that the Sub-Panel should remain separate and continue to review individual cases, within the policy set by the Pension Fund Investment Panel.

John Harrison of Aon Hewitt commented on possible changes to regulation and management of funds, including the merger of London-wide funds.  A Member responded that a merger of all London authority funds would be unworkable and highly unlikely to happen, although a smaller merger, for example among the West London Alliance authorities, might have merit.

An officer reminded Members that the Council’s Actuary would be attending the January meeting, and that it was planned to hold a  ...  view the full minutes text for item 186.

Report of the Corporate Director of Resources

In accordance with the Local Government (Access to Information) Act 1985, a revised appendix to the report was submitted following agenda publication to enable the Panel to take into account the most up-to-date information.

The Panel received a report of the Corporate Director of Resources, which outlined the options for a revised investment strategy.

John Harrison of Aon Hewitt introduced his colleague, Sion Cole, to the Panel and explained that Mr Cole would take over his role as principal adviser to the Panel, supported by another colleague, Tony Bailey, as he was moving into a new role.  Members expressed their deep concern and disappointment at the news.  Two Members who had been involved in the appointment of Aon Hewitt as advisers to the Panel reminded Mr Harrison that his involvement had been crucial in the selection of Aon Hewitt, and stated that, notwithstanding his absolute right to manage his own career as he wished, his departure was a matter of grave concern and they were surprised and disappointed that Panel Members had not been briefed in advance of the change.

The Corporate Director of Resources explained that officers had been made aware of the change some weeks ago and that the failure to inform Panel Members had arisen through miscommunication. She apologised for the oversight.

Mr Harrison and Mr Cole withdrew from the meeting at this point so that Members could discuss the situation in private.

In response to two Members’ expressed opinion that the appointment of Aon Hewitt had been conditional on the continued involvement of John Harrison, the Corporate Director of Resources advised the Panel that the contract was with Aon Hewitt and those persons key to the delivery of services could only be changed in agreement with the Council.  Another Member stated that it was entirely correct to contract with a company, and that the company should be trusted to provide suitably senior and qualified personnel to manage and maintain the working relationship.

An officer advised that the Panel could vary the contract if they were unhappy with performance.  Two Members reiterated their unhappiness that they had been presented with a ‘fait accompli’, with no opportunity to challenge or comment on the situation.

The Panel then considered the nature of the Investment Strategy Review and its authorship, and were advised that the report had been produced following discussions between officers and advisers.  The Panel were invited to approve, amend or reject the proposals as they wished.

Members discussed whether proposals within the strategy constrained the Panel’s capacity to commit resources and maximise returns, and whether agreement on strategy should precede decisions on governance mechanisms.  An officer stated that the Panel could agree to the strategy, with specific mandate details to be added at a later stage.

The Aon Hewitt representatives returned to the meeting and John Harrison outlined the principal elements of the strategy in balancing returns against contributions, and how this impacted on performance and the actuarial valuation.  He described asset categories, risk and  ...  view the full minutes text for item 187.

Report of the Corporate Director of Resources

The Panel received a report of the Corporate Director of Resources which provided an update on actions taken since the last meeting.

A Member requested that a report on ‘ethical investments’ be submitted to a future meeting.  Members considered whether ‘responsible investments’ was a more appropriate terminology for the issue, and noted that regardless of ethical considerations, the prime factor in investment for the fund was to generate sufficient return to meet liabilities.

Another Member re-iterated his comments that the Update Report was of great benefit in allowing Members to track officer actions and was a useful aid to background knowledge and continuity of purpose.

RESOLVED:  That the report be noted.

To resolve that the press and public be excluded from the meeting for the following item of business, on the grounds that it involves the likely disclosure of confidential information in breach of an obligation of confidence, or of exempt information as defined in Part I of Schedule 12A to the Local Government Act 1972:

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 items for the reasons set out below:

Report of the Corporate Director of Resources

In accordance with the Local Government (Access to Information) Act 1985, a revised appendix to this report was submitted following agenda publication to enable the Panel to take into account the most up-to-date information.

The Panel received Aon Hewitt’s quarterly report on Harrow’s Fund managers, detailing strengths and weaknesses and overall ratings, and noted that the ratings remained unchanged from the September report.

RESOLVED:  That the report be noted.

Report of the Corporate Director of Resources

The Panel received a report which set out the performance of the investment managers and of the overall Fund for the quarter, year and three years ending 30 September 2012.

The Fund had increased in value from 31 October 2012 to June 2012, and had marginally outperformed the benchmark over three years, although the one year and quarterly figures were slightly under the benchmark.

RESOLVED:  That the report be noted.