Agenda and minutes

To note any changes to the Membership.

1.1       There were no changes to the Membership.

To receive declarations by Members and Officers of the existence and nature of any personal or prejudicial interests in matters on this agenda.

2.1       There were no declarations of interest.

To approve the Minutes of the Pension Board meeting held on 19 October 2015.

3.1       RESOLVED:

That the Minutes of the meeting held on 19 October 2015 be signed by the Chairman as a correct record of proceedings.

3.2      Members noted the Director of Human Resource’s advice following the previous meeting that Councillor Adnan Mohammed’s position as Deputy Cabinet Member for Finance and Corporate Services did not constitute a conflict of interest with his membership of the Board.

3.3      Trevor Webster (Senior Human Resources Manager) advised that further results were awaited in respect of the Public Service Governance and Administration Survey and that once these had been received, the data would be collated and reported back to the next meeting of the Board.

To note the minutes of the Pension Fund Committee meeting held on 16 November 2015.

Minutes to follow.

4.1       The Board noted that the Minutes of the last Pension Fund Committee meeting held on 16 November 2015 would be circulated separately.

Report of the City Treasurer.

5.1       Neil Sellstrom (Finance Consultant) presented the report which focused on the risk relating to operational administration – failure of financial system.  A tri-borough contract for a new financial system with BT had gone live in April 2015, however a number of challenges had arisen during its implementation, both in terms of Finance and Human Resources (HR) functions. The main issues had been concerning problems experienced in respect of payment of lump sum payments for Pension Scheme members and payment to suppliers for services provided. These issues were particularly apparent in April and May 2015 when the new financial system had just gone live. Neil Sellstrom advised that there had not been a failure of a financial system, but the risk posed was the possibility of not being able to use the financial system which also impacted upon a number of other financial functions beyond pensions. He stated that initially costs had not been seen to be coming in, which also raised issues in respect of completing end of year accounts. Since then, a comprehensive testing of information had been undertaken and significant progress had been made in resolving issues on the financial side.

5.2       Nikki Parsons (Pension Fund Officer) advised that a ‘workaround’ solution had been put in place to ensure that payments to Pension Scheme Members and suppliers were being made as steps were being taken to resolve the issue.

5.3       Trevor Webster (Senior Human Resources Manager) added that officers’ functionality at the Council had improved since the introduction of the new financial system, however the pension administrator, Surrey County Council, was still experiencing problems as a result of the continuing issues with the functionality of the BT interface. As a result, Council officers were having to provide Surrey County Council with information on matters such as leavers and new employees.

5.4       Members enquired about the cost implications of the additional work being undertaken by the Council because of the problems encountered and whether the Council would be compensated. Members also asked whether additional work would be required in terms of completing annual accounts. In terms of risk rating, it was queried whether this took account of the mitigating actions being taken, or whether these mitigating actions were put in place in response to the risk rating.

5.5       In reply to issues raised by the Board, Nikki Parsons advised that the problems experienced had meant more work for the Council in completing end of year accounts. She advised that the auditors were analysing the accounts more thoroughly than last year and were looking at areas such as contributions, payments and reconciliations, however they had been satisfied with what they had looked at so far. Nikki Parsons informed Members that she had visited the BT offices in Jarrow with Finance colleagues to discuss the issues involved and although there had already been some significant improvements, the Council was still taking on more work and two contractors had been brought in to assist in data testing. Weekly conference calls with  ...  view the full minutes text for item 5.

Report of the Director of Human Resources.

6.1       The Board considered a confidential report providing an update on pension administration costs.

Report of the Director of Human Resources.

7.1       The Board considered a confidential report on training to date and future training that would be available to Members.

The Board to receive a verbal update.

8.1       Neil Sellstrom gave a verbal update on this item whilst further data was awaited to enable a report to be produced and considered at a future meeting. He advised that the Pension Fund sustained costs both in terms of investments and in administration.  The brunt of the costs were on the investment side and it was important that local authorities identified all of these in order to be able to make meaningful comparisons with each other. Neil Sellstrom stated that the Scheme Advisory Board had provided guidance on what data to provide, however whilst some local authorities had provided comprehensive information on investment costs, other had not done so. As a result, some funds had appeared more costly than others because they had included more costs, such as transactional costs. Neil Sellstrom confirmed that all tri-boroughs had fully complied in providing cost details.

8.2       Members asked if any meaningful comparisons with other funds could be made at this stage and whether there would be sufficient information by April to undertake a more comprehensive analysis comparing funds.

8.3       In reply, Neil Sellstrom advised that the size of funds varied considerably, with some such as Greater Manchester and West Midlands local authorities’ funds huge by comparison with others. As a result, costs would be much greater for such funds and so this complicated the ability to make direct comparisons. The Board noted that the Council appointed a Performance Manager to monitor performance of its Fund, although not every local authority used one. Neil Sellstrom advised that there would be more information available to compare funds in April, although possibly not enough to undertake a thorough comparison. He added that data from 2014-15 could be used for the comparison analysis. Members noted that Finance would also be under pressure to complete accounts for 2015-16 that closed on 31 March 2016.

8.4       The Chairman welcomed the opportunity at the next meeting to consider a report comparing data from 2014-15 which would provide a bigger picture in providing comparisons of costs with other funds and allow for some interim conclusions to be drawn. Neil Sellstrom added that the report would also include details of the London Collective Investment Vehicle’s (CIV) response to the consultation on asset pooling.

8.5       Members raised the issue of local authorities investing in local regeneration schemes and the risks that can be associated with it. Members asked whether investing in infrastructure stock was rising and was this becoming a more attractive investment.

8.6       In reply, Neil Sellstrom advised that providing there was a sound business case in investing in local regeneration and infrastructure schemes, there was no harm in doing so, however careful consideration was needed in respect of issues such as potential conflict of interest. He added that infrastructure stocks would rise if local authorities found such investments easier to access and the London CIV may consider such investments in the future.

Report of the City Treasurer.

9.1       Neil Sellstrom presented the report and advised that the Board’s Terms of Reference stated that a key element of its role was to ensure effective and efficient governance and administration of the pension scheme. Both internal and external auditing played a key role in providing assurance that the Fund operated soundly. Members heard that an internal audit had been carried out in October 2014 which had resulted in five recommendations being made. A follow up review in June 2015 had concluded that four of these recommendations had been fully addressed and the other one was in progress. The Board noted that the pension administrative arrangements were due to be internally audited as part of the 2016/2017 Audit Plan.

Report to follow.

10.1    Members considered a confidential paper on the triennial valuation update. The Board noted that it would receive an update on this item at the next meeting.

To consider the Pension Board Forward Plan 2016-2017.

11.1    Nikki Parsons presented a suggested Forward Plan 2016-17 for the Board that included items Members may wish to consider. Members noted that the Risk Register was a standing item and that a report showing comparisons of costs with other local authorities and including the London CIV’s response to the asset pooling consultation would be considered at the next meeting. It was also noted that the next meeting of the Pension Fund Committee would take place on 22 March, and not 16 March as listed on the Forward Plan. Nikki Parsons suggested that the Board next meet in early May to ensure that the relevant data was available to consider the items suggested and also taking into account the dates for the Pension Fund Committee. The Chairman added that other items would be added during the course of the year.

To consider the date of the next Pension Board meeting.

12.1    Members agreed that the next meeting of the Board take place on   Tuesday, 10 May 2016 at 6.30pm.

13.1    There was no additional business for the Board to consider.

To approve the confidential minutes of the Pension Board meeting held on 19 October 2015.

14.1    RESOLVED:

That the confidential Minutes of the meeting held on 19 October 2015 be signed by the Chairman as a correct record of proceedings.

To note the confidential minutes of the Pension Fund Committee meeting held on 16 November 2015.

Minutes to follow.

15.1    The Board noted that the confidential Minutes of the last Pension Fund Committee meeting held on 16 November 2015 would be circulated separately.