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Good evening, everyone, and welcome to the function subcommittee meeting. My name is Councillor Ananya. I'm in the chair of the meeting. Please note that following meeting procedure, meeting procedure, this meeting being hold person, committee member, and key person present in the meeting room, only the committee member present in this meeting room will be to vote. Other person may be also attending remotely, committee member and others who have chosen to attend remotely have been advised by the committee officer. That should technology difficulty person to full participation in the meeting in May present in the position of field of the necessary. Like member on the meeting to only ask on my direction and to speak clearly into the microphone to ensure the contribution can be properly record. Can everyone share the mobile phone and switch off on the silent mode? I will now ask the committee member present to introduce yourself. Please, can you do so? Sorry, could you also declare if you have any declarations of interest? >> No, no. Councilor Campbell, lead member for culture and recreation, nothing to declare. >> Nothing to declare. Good evening. I have nothing to declare. Thank you. >> Jane, employee representative, thank you. >> I am Steve Turner, investment consultant from MRSA. >> I am Colin Robertson, independent advisor to the fund. I have a declaration to make that is I am going to start consulting to a fund manager, which is one of the fund managers in the London service private debt fund. I don't think it is a conflict at this stage, but I am declaring it as a matter of transparency. I don't think it should cause any problems, certainly at this meeting. I am Abdul Raza Qasim, director of finance procurement and audit. >> I am committee officer for pensions committee. >> Councilor Abdullah. Good evening. Apologies for not being able to introduce yourself. >> Thank you. An apology, sorry, nothing to declare. Hello, I am the principal lawyer for the civil government. Is there any apology or absence? >> Chair, I think we have left Paul a due out. >> Thank you, chair. Paul Aoude, interim head of pensions and treasury. We are unable to receive the item and do it just. It is not acceptable and as a chair I am. Now, publishing timeline, agenda number two. As the first meeting of 2020/2025, I would like to ask the committee member of the vice chair. Thank you, chair. I would like to formally nominate the vice chair. >> Any other nominations? Okay. >> All those in favour of the council being approved as a vice chair. Please raise your hand. All those in favour? All those in favour? All those in favour? All those in favour of the council being approved as a vice chair. Please raise your hand. Those in favour of the council being approved as a vice chair. Please raise your hand. All those in favour of the council being approved as a vice chair. Please raise your hand. All those in favour of the council being approved as a vice chair. Please raise your hand. All those in favour of the council being approved as a vice chair. Please raise your hand. All those in favour of the council being approved as a vice chair. Please raise your hand. Okay. So for the last meeting, which was on the 25th of March some time ago, I think it was yourself, Councillor Di Ciano, who approved the minutes per se. Yes. I do. >> I also confirm the accuracy, thank you. Thank you. You have received any petitions? Microphone. No petitions received, Chair. All those in favour of the council being approved as a vice chair. Please raise your hand. All those in favour of the council being approved as a vice chair. Please raise your hand. All those in favour of the council being approved as a vice chair. Please raise your hand. All those in favour of the council being approved as a vice chair. Please raise your hand. This report basically sets out your terms of reference, and it's not necessarily decided by council at their meeting on the 15th of May. It's for the members to approve and also agree that your start time for your meetings is 6.2. Does the committee have any questions? Can the report and record be noted? Can I invite Paul to present your report, please? Thank you, Chair. This report is for noting, and the committee is asked to note the report and the audited statement of accounts included in the council's draft financial report 2023/24, which you will find in pages 110 to 136, which is appended to this report. And the key points of this report, Chair, is that the pension fund statement of accounts is a summary of the fund's transaction for 2023/24 financial year, and its financial position at 31st of March 2024, and the accounts have been prepared in accordance with the code of practice on local authority accounting in the United Kingdom 2023/24, which is the latest version, and that's commonly referred to as the code, which is based upon the international financial reporting standards, IFRS, as recommended for the UK public sector. And offices are currently working with EY to do the pre-audit walkthroughs ahead of the main audit, commencing later this month and possibly next month, and then with a sign-off due in the very near future. And the committee will also have another opportunity to review the accounts once they've been audited and signed off before publication. And legally, the annual report and accounts for the pension fund, which is a standalone document, will follow as well, and the committee will be provided with that document once it's ready for publication, and the publication date is by no later than 1st of December this year. EY are yet to clarify the key audit risk in terms of the main areas of focus for the specific audit work, but offices are working closely with them, and as soon as the document is issued to offices, then offices will engage EY to ensure that the necessary work takes place in the best with a view to completing the audit for sign-off in the earliest possible time. Thank you, Chair. I have no further comment to make. Thank you, Paul. Does the committee have any question or comment to ask? Thank you, Chair. Just at this stage, I just wanted to understand where we are with EY and if there's any contentious issues raised so far that may cause any issues with the pension fund, given the history that we had getting the pension fund signed off with Deloitte and KPMG. Thank you, Chair. No, it's early days yet. We're still going through pre-audit queries with EY before the substantive audit work kicks in, and as yet they haven't raised any questions of substance other than just for us to provide information to enable them to give clearance for the audit to commence. Perhaps a bit closer to you so people can hear you. Can the report and record be noted? Thank you. Thank you, Chair. This report is also for noting, and the committee is asked to note the report and the current Tower Hamlets pension fund governance and compliance statement and policy thereof, which requires updating and offices are working collaboratively with the appropriate advisors to give input into the document. The aim is to ensure that the document is in line with the regulation, which is regulation 55 of the local government pension scheme regulations 2013, the TPR as the pensions regulation, the pensions regulator general code of practice, and also the scheme advisory board guidance. And the pension board received training recently, I think that was back in March, on the TPR, that's the pensions regulator general code of practice, as recently issued, and although there is no explicit requirement for the LGPS to establish an effective governance arrangement, however, it is deemed best practice to have good governance structures and mechanisms in place. I think the other points just worth mentioning, Chair, is that offices are developing the governance compliance statement, as I said, that will obviously replace the outdated version that we currently have, and the draft statement will be provided to the next board and the committee in September for consideration and approval respectively to ensure that it is relevant and effective. Thank you, Chair. Thank you, Paul. Does the member have any question or comment which to speak? Yes, Councillor Seydin. Thank you, Chair. Just a question around the governance compliance statement, which is outdated and obviously it needs to be renewed as outlined in 3.5. I just wanted to understand how outdated was the statement and is there a statutory regulation that we need to follow to update that at a certain time, and why wasn't it updated up until now? Thank you, Chair. Outdated simply means that it requires updating, but it shouldn't be seen as overly controversial. I think it was the clauses in a document, relevant as they can be, but of course in an environment like the LGPS, where small changes just need to be picked up and refined, and to the extent that we need to ensure that the document is always bang up to date, so that it's really fine-tuning it to make sure that it is fit for purpose for today. But it's not to alarm anybody to say that the document was only usable. It was still a complete document, but of course like any living document, you always have to make sure that it's 100% up to date. It can be something to do with, for example, references to officers' names and so on. So obviously these are changes that happen frequently. Just make sure that there is a mechanism for bringing these documents up to date as quickly as possible. Thank you. Can the report and recommendation be noted? Agenda number 6.4. Can I invite Paul to present your report, please? Thank you, Chair. This report is again for noting, and it sets out various elements around the admissions policy. The admissions policy is one of the key documents that the pension funds use in terms of admitting new employers to the scheme. And broadly, the LGPS regulations sets out different types of employer that can be admitted or that can participate in the scheme. And in broad terms, they will fall into three categories. One being scheduled bodies, that would be local authorities in all its description, and colleges and academies and other institutions like the police and the fire service. You've got the next category, the designated employees, and broadly those will be the next category down at the town and parish councils. And then the third category broadly will be your admission bodies. These will be either not-for-profit or commercial organisations that happen to provide services to any employer in the two higher categories, and they too can be admitted subject to an admission agreement. So the admissions policy is a key document, and obviously to admit any employer, an admission agreement is required, and there is an example admission agreement in your PAC. It is a confidential document, but it is included in the PAC for you to actually see what it is. And the aim of the agreement, there can be two types to it. There is one version for pass-through arrangements and another version that is for non-pass-through. Typically a pass-through arrangement is where one party, i.e. the seating party could be the local authority, agreeing to guarantee the debt of the employer, but it is an established policy of Tower Hamlets not to guarantee the debt of admission bodies. So the admission policy is effective from the date it is approved by the committee, and the policy will be reviewed at least once every three years upon a significant event. And there is the triennial actual evaluation upon us next year, 31st of March. So officers will be reviewing the admission policy to ensure that it is consistent. The admission agreement and the admission policy are consistent together to ensure that any new admissions are done with the right agreement. And officers have got a number of agreements that have been identified which require some work done to them, because they are in the works and officers will be working closely with the lawyers and the actuary to ensure that the outstanding agreements are duly completed and of course to be included in the upcoming evaluation. I'd like to just pause the chair in case there are any questions. Thank you. Does the committee have any question or comment on which to speak? Chair, I've got one. Paul, so 3.11 says officers have identified 10 outstanding legacy cases of unfinished employer admission. How did you go about that process and where are you in line with that? That's my first question and also it seems that you haven't actually finished this admission policy. It's coming back to us in the September committee meeting. So how will you consult us on that policy going forward? Thank you. Thank you, chair. The cases that have been identified came to light through various channels, if you will. One being that employers concerned contacted us wanting to establish the status of the work that began in some cases a number of years ago. And so through some investigation, so we've been able to pull together a list of outstanding cases that have not been done or they were in the process of being done and they are at various stages. Some are going through actuarial assessment, i.e. before the agreements are negotiated, et cetera. So through just contacting various internal stakeholders and, of course, from approaches we've received from external parties, i.e. the prospective employees, so we're able to determine that there are about 10 outstanding cases and we are taking active steps to rectify that. So broadly, we need the legal support and the actuarial support to make sure that matters like contributions and so on are captured correctly and, of course, woven into the agreement. So that work is happening at PACE and once it's completed, then, of course, the committee and the board will be further updated in due course. And as to your second question, or the second part of your question, the committee and the board will inevitably be updated as to what happens with the admissions policy because the admissions policy will need to be considered and reviewed once the draft is provided to the board and to the committee for approval. So the policy itself will only take effect upon approval, so it will not be adopted without receiving approval from the committee. Thanks for that. And I've got one more question. So part of the policy is for us to be able to ensure that we minimize risk and mitigate risk to the fund. So if we've got 10 employers that we weren't aware of that were part of our fund, how are we in future going to secure that we are mitigating against any risk to the fund in future? Thank you, Chair. Well, until an employer is admitted to the fund, they are not an employer in the fund. So they have to go through a process of applying to be admitted to the fund and then subject to them meeting the criteria. So they have to be eligible and so that the actually and the lawyers will have to check them out to make sure that they do qualify. So it's not every prospective employer is granted membership. So it's a process that they go through and upon deciding that they meet the criteria, then they will be admitted. And then, of course, the flip side of that is that they are at liberty once they've been admitted to exit if they so wish. So that we cannot do anything about. But in terms of admitting them, we have to make sure that from a risk management perspective that they will not create problems for other employers. Because if they were admitted without proper checks, i.e. to make sure that they've got the ability to pay their contributions and if they were to exit the fund, leaving behind debts that they couldn't pay, then by law, those debts would then have to be picked up by the other employees, which would be unfair. Hence, they need to be checked out before they get admitted. Thank you. Thank you. Can the report recommendation be noted? Agenda number 6.5. Can invite Paul to present your report, please. Thank you, Chair. This report is also for noting broadly, and it sets out the scope of the proposed draft training strategy to be provided to the next board and the committee in September for consideration and approval, respectively. Now, the training is absolutely, you know, key to ensuring that both the board and the committee are able to dispense of their duties and the obligation upon them to be knowledgeable and skilled in areas that they have, you know, such important. You know, in the case of the committee, decision making obligations and, of course, in the case of the board, to be able to scrutinize the committee and, of course, the administration authority in their role in making sure that the governance of the pension fund is as it should be. So what this report is, in effect, doing is setting out the areas that any strategy will cover. And it is, you know, quite broad, but, you know, in a nutshell, it has to be consistent with, you know, things like the Chartered Institute of Public Finance and Accountancy, CIPFA, knowledge and skills framework. There is also the Scheme Advisory Board guidance also covering, you know, knowledge and skills of the board. And there is also the remnants of the European directive, commonly known by the acronym MIFID2, which is the Markets in Financial Instruments Directive 2014. And that is still a very important piece of regulation in so far as it is what determines the status of a pension fund, whether it is considered a professional investor or not. And, of course, it's important that we, as a pension fund, retain professional investor status. And that is contingent upon being able to demonstrate that the board, the committee and offices as well have people who have the right caliber. In other words, they are adequately trained, they are knowledgeable and they are skilled. So the strategy will ensure that the fund is well managed and that its services are delivered by people with the appropriate knowledge and skills. And so this document, once drafted and prepared, will be brought back to this committee in September once the board has had the opportunity to consider it for the committee to approve. And if I can pause again there, Chair, for any questions. Thank you. Does the committee have any question or comment wish to speak? Yes, thank you, Chair. I remember the last committee, we requested for adequate training for them, especially the member, because some of the, you know, I work there because I'm not from the financial background, so some of the world I don't understand. So on that, we requested some training, but this year we haven't seen any structured training offered for any pension committee meeting. So my suggestion is if you make a mandatory for the committee members, they will attend. Another point we raised during last year that, you know, can you arrange a visit to see how the investor works in their environment for the committee members to see. Have you done anything on that as well? Thank you, Chair. Well, the delivery of training will come in different forms. For example, for new committee and board members, generally there will be an induction training. And then there's also a platform, there's one called the LGPS Online Learning Academy, LOLA. And there's also the pensions regulator online learning tool and members of this committee and board members will have, they'll be signed up to these portals. If members are not currently signed up, then I'd be happy to ensure that that is the case. And I will liaise with Democratic Services to ensure that all members have got access to these portals where they can do training at their own pace in a very structured way, because the regulators portal is a very useful learning tool. And then, in addition to all of that, there are opportunities for courses and seminars and conferences. And as you mentioned, Councillor Giles, offices will be able to arrange for training opportunities by fund managers, for example, the London CIV will be able to add to that. And of course, we also utilise training opportunities by the advisors and the actuaries and all the service providers on the investment programme are able to deliver tailored training. And this training can be online, they can be in person training, and for example, just like the training that was delivered in March by Hyman's, so that was done online, but it was done for the pension board, and it was done as a sort of pre meeting training. So a similar thing can be done for the committee, whereby, subject to the committee agreeing, a training session can be done just before the meeting begins. So if that is agreed by the committee, then that can always be done. Thank you. Thank you, Chair. To be honest, it's not a question, it's just a recommendation, it's not a recommendation, just my feelings. I think Councillor Chaudry was right, and it's a very good initiative. I think in terms of finance, knowledge is the key, and unlike Saeed, I'm not a finance man, he's educated on finance, so he knows these things, and I'm sitting in here, officers have devoted their life into these sort of things and they know better. So it's very important to understand things as a member before making any recommendation or anything, so I think this is a very good proposal for the training, and you emphasise how it's going to be done. So really glad to hear this is going to be provided with the trainings are needed. Thank you. One more. My final point, do you remember, I think Steve, you probably remember that we requested that we visit the investor to see how our fund is invested. Have you done anything on that? The main manager, I think they are managing the London CIV, and it is on officers radar to arrange periodic visits by the London CIV to actually attend this meeting. And then to do it in turns, take it in turns with the other managers, Schroders and Elgin, to attend the meeting, to do training sessions before each meeting, and say that during the course of the year, then even beginning with investment 101, things to do with risk and return, and then investment strategy setting and all that. So you can have, for example, the advisors doing a double act with a fund manager, just to give proper context to the training. But offices will be arranging for meetings with some training content to it. Yes, that has not happened yet, because I think that requires coordination on both sides in terms of coordinating diaries on this side and agreeing dates with fund managers. So I think officers will be happy to arrange via democratic services to identify dates that might work, and then we'll arrange that. Can the report and recommendation be noted? And the agenda number 6.6 can invite Paul to present your report, please. Thank you, Chair. This report is for noting, and every year the pension funds are obliged to provide annual benefit statements to active and deferred members by no later than 31st of August. So the purpose of this report is to inform the committee of the work being carried out by the pensions admin team, in terms of providing the members that's active and deferred members with their annual benefit statement for 2024 by no later than 31st of August this year. And the team has been very busy in this regard, and basically is all data driven, making sure that we have the data and the addresses and so on, to ensure that those who have elected to receive their annual benefit statements in the post will receive their statements in time, and those that are able to log on to the portal, the self portal, to access their statements can do similar before or on the 31st of August this year. And I think the process of producing the annual benefit statement is broadly the same every year, and that is by looking at the previous years and then reviewing and then resetting a template to basically catch or populate the required data, and then working with our comms teams and other service providers to ensure that both the design of the statement is suitable, and that the statements are printed and posted by the external contractor that is selected, and to ensure that the recipients actually get their statements by no later than the 31st of August deadline. And we are aiming to reach 99%, we don't say 100%, 99%, because that's sort of 1% is to allow for whatever reason, there are issues with a member's data that require additional work to ascertain the correct information, so that would sort of fall into that category. So for this year, we are expecting to issue approximately 8,000 statements to active members, and then about 8,400 statements to deferred members, and all of this will be done in-house, so it is quite a big project, and my team are already reviewing the processes and making sure that everything that we need is in place, and the last year's statement, we've been reviewing that, and so we are confident that we'll be able to not just meet the deadlines, but we'll be able to produce the statements to be error-free as much as possible, and so in a nutshell, templates being reviewed, amended by design team, and we are also in the data cleansing mode, we've engaged a couple of third parties, one called Zelis and others to help us to ensure that our data is up to scratch, and we've got good quality data, then going into the upcoming actuarial valuation exercise in March next year. So once we've gone past 31st of August this year, then we are forcing ahead towards the upcoming actuarial valuation, so data quality is absolutely paramount, so we need to ensure that we've got the good data to support all this work on the horizon, and then once the statements have been printed, again an external printing company will shortly be selected by the communication team to ensure that all the printing work is done promptly, and the data and the template are securely delivered to the printing firm, and then a sample of the statements are then looked at by the admin team to make sure that it's just like quality assurance process that we have to do to ensure that the statements are as they should be before we instruct for the statements to be sent out. So we are working collaboratively with a couple of specialist firms to help us, both on the data cleanse side of things and also for the other tasks involved in the logistics side of things to get the printed statements to the right people. Thank you chair. Sorry chair, I've got a question regarding statements. It doesn't directly relate to the work that you're doing, but I recall in our December meeting there were some anomalies with some members that we had either overpaid or underpaid, and because they didn't get the right pension statements, I just wanted to find out where you are with that work, Paul. Thank you chair. That's all part of the big data cleanse exercise that we are undertaking, and actually that has been progressing at pace, and we are continuing that, and of course we will keep the momentum going. But to your point, Deloitte in their audit previously, last audit, unearthed queries to do with data quality, and so officers have been working through those in collaboration with third party firms like Celis, as I said. This is our payroll systems provider. So the whole exercise is about reconciling the data we hold on our payroll systems with the data we hold on our pension system, the system called Altair, and the mechanism of transferring data from A to B, making sure that that mechanism is working well, and so the data that is taken from the source is delivered to the destination without any damage to the data. And so what we're trying to do is to reconcile that to make sure that the data actually match, upon which we can then further do additional testing with the actuary ahead of the upcoming evaluation. So that sampling exercise will be programmed in shortly, and then just to make sure that if there are any data issues, then those can be picked up in time and then addressed comprehensively before the exercise, because we want to go into the evaluation exercise confident in the knowledge that we've got quality data. And, of course, it's not a one-off thing. It should be and will be an ongoing exercise to ensure data quality, because that's what drives pension service. Thank you, Chair. But what's happened with the anomaly? Have you fixed it? Have you not fixed it? Do we owe people? So has anybody suffered a loss as you not having the correct data at that point? Or have we overpaid people that we need to recover to the fund? Thank you, Chair. As a matter of course, where an overpayment has occurred or a member is underpaid, then of course we have to move to rectify that. So any historical cases where we found to have overpaid anybody, we take the required steps in line with the regulation, which is to ascertain exactly what was overpaid. And then we then open dialogue with the recipient and then to act to recoup whatever was overpaid. And it can be in one fair swoop or it can be by means of resetting whatever the benefits of those individuals are to make sure that over a period that the money is clawed back. So any historical cases which we find as we sort of go through the data cleanse process, because it is something you do patiently because obviously the numbers, the thousands of members. So but we sort of go through things in a very clinical manner and then to identify exactly what, if any, has been overpaid or underpaid. By law, if we've underpaid any member, then we have to rectify that. But where we've overpaid, then there is discretion as to where you sort of set a threshold. I mean, if you've overpaid somebody by a pound, then is it worth your while chasing them for a pound? But of course, it'd be a different matter if you've paid, if you've overpaid by, say, you know, thousands of pounds. Then, of course, in that case, then appropriate measures are taken to get that money back. Well, it is an ongoing process, but we're not, I wouldn't say we've done it 100% yet because we're dealing with, you know, we're just going through with a fine to have come to see where, you know, where we've overpaid and if so, to correct it. Thank you. [Inaudible] Thank you, Chair. Yes, the contractor or third party provider that is selected, there is a very clear process for selecting a provider. Normally, there will be a pre-vetted firm that can provide services in this sort of environment so they understand the need to have secure systems and we will not transfer sensitive data to third parties. So there will be, you know, carefully selected providers. Thank you. Can the report and recommendation be noted? Agenda number seven. To assist you, Paul, it's a standing item on the agenda. Thank you. Thank you, Chair. I think with that, as was discussed earlier, any upcoming training events information will be provided. We are running into the sort of summer holidays now and training events tend to be very limited if they exist at all. But I think things will tend to pick up again in September. So officers will be providing information to the committee and board members via democratic services once suitable training opportunities have been identified. Thank you. Does the committee have any questions or comments on which to speak? Can the report and recommendation be noted? Agenda number eight. Thank you, Chair. The work plan is in a pack and officers will endeavour to adhere to it, but in a dynamic environment such as this, it is not always possible to adhere strictly to the work programme. So there will be small variations depending on whether there are other pressing matters to bring to the committee and to the board's attention. But generally, you will have standing items on each agenda from the work programme perspective. And then that will sort of vary depending on the time of the year that the meeting is actually happening. For example, you will see that this time around, we've got the annual report or the accounts. So it's all because that's happening around now. But at other times, there will be different items to reflect the time of year. And then the other thing as well, you will see that throughout the year, there will be opportunities for officers to review policies. Because the one thing you will have noticed is that the pension fund is riddled with regulations and as a result of that, there is a lot of policies and strategies and whatnot. That are in place to ensure the smooth and correct running of the pension fund. So throughout the year at different points, officers will be bringing policies and other document strategies to be reviewed, to be considered and so on. And I think it's pertinent to mention that you will see on the agenda as well that the investment strategy statement is also on the agenda. Because it's a living document and each time there is something of substance that changes the ISS, the investment strategy statement, has to be updated. Although by law, it has to be updated less frequently than once every three years. But it all depends on what happens during the year, so you will see that document come to this committee multiple times depending on what's happening and the need to update it. So Mercer will be discussing that shortly when that agenda item is reached. So your program will reflect broadly all the different activities that take place during the year. Thank you chair. Does the committee have any question or comment? Can the work plan of the committee to be noted as any recommendation put forward? agenda number 9, any other business? Can I ask members to there have any other business? (inaudible) (inaudible) (inaudible) [BLANK_AUDIO]