Agenda and minutes

Pension Committee
Monday, 18th December, 2017 7.00 pm

Venue: Civic Offices, St Nicholas Way, Sutton SM1 1EA

Contact: Davena Palmer, Committee Services Team Leader (Interim)  Tel: 020 8770 4990 | Email:  committeeservices@sutton.gov.uk

Items
No. Item

29.

Welcome and Introductions

Minutes:

The Chair welcomed all those present.

 

30.

Apologies for Absence

Minutes:

Apologies were received from Councillor Hamish Pollock.

 

31.

Declarations of Interest

Minutes:

There were no declarations of interest made.

 

32.

Minutes of the Previous Meeting pdf icon PDF 135 KB

To approve as a correct record the Minutes of the meeting held on 4 September 2017.

Minutes:

RESOLVED: that the minutes of the meeting held on 4 September 2017 be agreed as an accurate record.

 

Members asked if information regarding how other London Boroughs approach committee composition, had been circulated to the Committee as requested at minute 23 at the last meeting. Lyndsey Gamble, Head of Investment, Risk and Commercial Finance confirmed that it had been circulated and that the format of the Pension Board would be looked at, at the same time as the Pension Committee next year.

 

33.

Order of Items

Minutes:

The Chair announced that Item 7 on the agenda would now follow Item 5.

 

34.

Member Training

The proposed topic for this member development session is ‘Myners Principles.’

Minutes:

A member development session was delivered on the subject of Myners Compliance and focussed on:

  • Background and development of the Myners Code
  • The Myner Principles
  • How the Fund addresses and approaches the Principles
  • Potential next steps for development of areas around the Fund objectives and beliefs, risk monitoring frequency, performance monitoring and review of the Fund’s ESG policy

 

Members raised queries regarding the performance assessments and reviews of pension fund managers and requested the Committee allocate time for performance monitoring.

 

Officers present explained that conversations take place between David Walker of Hyman Robertson and Fund Managers in the background as well as quarterly monitoring and strategic reviewing. When necessary matters are referred to the Committee.

 

Members suggested the Committee revisited responsible investments next municipal year, to which the Chair was in agreement.

 

David Walker of Hyman Robertson explained that at a basic level, one should check the company is acting responsibly and being well run and well governed. At a next level you could then look at sustainable investment and ethical standards.

 

35.

Presentation by the London CIV for the investment performance results to September 2017

Presentation by the London Collective Investment Vehicle (CIV).

Minutes:

Kevin Cullen, Client Relations Director and Rob Hall, Head of Equities gave a presentation on The London Collective Investment Vehicle (CIV). The presentation focused on:

  • An update on, assets held by the CIV, breakdown of the funds and streamlining of reporting
  • Quarter 3 Investment Report (Page 7 - Error on the page re BG performance)
  • LCIV BG Diversified Growth Fund performance, positioning and outlook
  • LCIV PY Global Total Return Fund performance, positioning and outlook
  • LCIV NW Global Equity Fund performance, positioning and outlook

 

Members questioned whether the London CIV was looking at infrastructure and potential pressures on the Local Government Pension Scheme. The Client Relations Director explained that they were speaking to other pools and looking at the situation on a global level non-politically. He reported that there had not been any pressure from Government to invest in the UK.

 

Members queried whether Partners Group had an advantage by investing globally. The Head of Equities said they were a good manager with access to a wide range of funds but advised investment houses may struggle more than in the past.

 

Members asked whether tobacco come under the ESG code as an appropriate sector/stock to invest in. The Head of Equities explained that tobacco was a large sector and to not hold stock would be an unusual position for a global equity fund to take.

 

Members raised concerns regarding how well Newton were performing in their role as they were holding falling stocks in Teva. The Head of Equities responded that the fund managers had not changed their process and there was no rationale why they kept on holding onto to stock, which the London CIV did raise. He explained further that at the review stage they had not reached the point of underperforming, they didn’t have the right catalysts in place and hadn't reviewed next stage of growth resulting in their passive holding.

 

The Strategic Director for Resources, Gerald Almeroth, requested the presenters take back the question of  ‘How do we know the CIV is performing well’ to the London CIV. He explained to the Committee a  report  of the governance review of the CIV report had now been completed, the Governance Steering Committee will look at the report and make recommendations regarding the CIV. The CIV was not working as well as it should do and some authorities not engaging as they should be.

 

36.

Interim Actuarial Valuation of the Pension Fund as at 31 March 2017 pdf icon PDF 109 KB

This report outlines the results of the interim valuation of the Council’s Pension Fund as at 31 March 2017 carried out by the Fund’s Actuary, Barnett Waddingham.

Additional documents:

Minutes:

Alison Hamilton, from the Actuary, Barnett Waddingham presented the report.

 

Members commented that the funding level had increased to 88% and questioned why contributions had not subsequently decreased . Alison Hamilton explained that in considering funding future contributions, the Council made a decision to keep things stable, and not reduce contributions just because the situation appeared to be getting better.

 

The Strategic Director for Resources told the Committee that the ideal would be for the fund to be 100% funded, taking into account contributions into the fund made by employers.

 

The Committee congratulated the fund on its growth.

 

RESOLVED: that the interim valuation outcome be noted.

 

37.

Quarterly Investment Performance to September 2017 pdf icon PDF 274 KB

This report shows the performance of the Pension Fund Investment Managers for the quarter ending 30 September 2017.

Additional documents:

Minutes:

Lyndsey Gamble, Head of Investment, Risk and Commercial Finance, presented the report.
 
Members commented that funds in the CIV were doing poorly but ones outside were not, and asked whether there were some pressures on the CIV funds to only invest in the UK. The Head of Investment, Risk and Commercial Finance said it was just a coincidence with the funds in the CIV.

 

Members noted that at 6.3 of the report, in the 3rd line, the wording could have been clearer and at 8.3 of the report it should have showed Baillie Gifford is out performing.


RESOLVED: that the performance of the Pension Fund Investment Managers be noted.

38.

Investment Strategy Review

This report provides an overview of the findings and recommendations which have been presented by Hymans Robertson, following their review of the London Borough of Sutton Pension Fund current investment strategy.

Additional documents:

Minutes:

RESOLVED: That the public be excluded from the meeting for the following items of business on the grounds that they involve the likely disclosure of exempt information as defined in paragraph 3 Schedule 12A of the Local Government Act 1972.

 

RESOLVED: that the Investment Strategy be reviewed and recommendations agreed

 

39.

Governance Review Action Plan Progress Report pdf icon PDF 122 KB

This report provides an update for the Committee on the progress against the action plan arising from the governance review recommendations agreed by the Pension Committee on 5 September 2016.

Additional documents:

Minutes:

Lyndsey Gamble, Head of Investment, Risk and Commercial Finance, presented the report.

 

Members queried whether point 10 of the Governance Review Action Plan had been agreed by the Committee. The Head of Investment, Risk and Commercial Finance explained that having both the Pension Committee and Board reviewing the risk register every quarter was overkill, and Members therefore agreed, on recommendation from officer, that the register should be reviewed every 6 months by one body.

 

Members requested that the point be raised with John Raisin at a later date. The Chair reminded the Committee that the risk register is maintained in real time and the Head of Investment, Risk and Commercial Finance confirmed they would look into sharing it with members

 

Members felt that point 15 of the Governance Review Action Plan didn’t mention what was actually happening in the narrative. Sarah Spence, Sutton & Kingston Shared Pension Service Project Manager said that her team had begun to look at the performance measures  against performance measures included in the Pension Administration Strategy, and more detail would be provided at the next committee.

 

Members pointed out that point 16 was marked as completed, despite the Committee only considering the strategy in December and that for point 18 completion should be put as January. Officer’s confirmed that the amendments would be made

 

RESOLVED: that the updated governance action plan as set out at Appendix A be noted.

 

40.

Independent Advisor pdf icon PDF 145 KB

This report advises the Committee of the recommendation of Mr John Raisin in his report entitled “A review of the Governance arrangements relating to the London Borough of Sutton Pension Scheme” that it considers “the appointment of an Independent Advisor with a broad remit across areas of responsibility of the Committee.”

Minutes:

Ian Talbot, Investments, Insurance & Commercial Manager, presented the report.

 

Members discussed the option of not appointing an Independent Advisor and requested that the Committee discuss the matter with John Raisin, and ask him to clarify his recommendation to appoint one. Some members expressed that they were happy to not appoint for the moment but did want to look at this again at a later date. Other members said that  a view from a different perspective is welcomed.

 

Chair commented that they were already supported solidly by Hyman Robertson and was totally in favour at this point, of the recommendation.

 

The Strategic Director for Resources told the Committee that they can take comfort in that Officers have sufficient advice, and that regular administration reports and performance data are received. The Strategic Director said further that there can be conflict between the investment and independent advisor and the issue should kept under review.

 

RESOLVED: that it be agreed the Pension Committee should not engage an independent advisor at this time

 

41.

Pension Administration Strategy pdf icon PDF 106 KB

This report presents the final draft of Pension Administration Strategy (PAS).

Additional documents:

Minutes:

Sarah Spence, Sarah Spence, Sutton & Kingston Shared Pension Service Project Manager presented the report.

 

Members asked for clarification on what had changed in the strategy since the earlier draft was presented to the committee in June 2017.

The Shared Pension Service Project Manager explained that the wording in the strategy had been made clearer to emphasise that the strategy came from Sutton Council and not just the Pension Administration Team.

RESOLVED: that the final version of the pension administration strategy be signed off

42.

Pension Administration Update pdf icon PDF 124 KB

This report provides an update on the main work streams impacting pension administration for the period of September 2017 to November 2017.

Additional documents:

Minutes:

Sarah Spence, Sutton & Kingston Shared Pension Service Project Manager presented the report.

 

The Chair made the Committee aware of a non-pecuniary interest in one of the academy schools mentioned in the report. Councillor Edward Joyce disclosed that previously he was a teacher at 3 of the schools mentioned in the report.

 

Members noted that a lot of P1 cases, outlined in appendix A, had gone up. The Shared Pension Service Project Manager said this was mainly due to deaths in retirement and cases that can stay open a lot longer. The Strategic Director added that it was not an issue to see a jump in one month and that they are going to bring in some extra resources to assist the team in getting the backlog down in the next the 3 months.

 

RESOLVED: that the report be noted

 

43.

Review of Work Programme pdf icon PDF 91 KB

Minutes:

The Committee noted that John Raisin would be attending the Committee in June 2018.

 

44.

Any Urgent Business

The Chair must approve the reason for urgency.

Minutes:

There were no urgent items.