Transcript

Transcript

I'm sure whether he's watching back or not, you know, hello to David Speckley, he no doubt wouldn't miss one. But anyway, I have the usual thing to read out at the beginning. Please note that the meetings may be recorded and broadcast by people present as allowed for in law or by the Council. By attending either in personal or online, you may be picked up on recordings. Council recordings are covered by our privacy notice which can be found at barnet.gov.uk and may be retained and made available online. Please note that we are currently in the pre-election period in advance of the burnt oak by-election on the 13th of February 2025. During this time, ordinary council business can continue, but members are reminded not to refer to candidates or parties in relation to this upcoming election, which I'm sure won't be too hard because I'm not sure it has much to do at all with the agenda, so that's fine. Thank you for your support in ensuring that these principles are respected at all times. Great. So the first order of business is minutes. Does anyone have any comments on the business before I go through the action log? All relatively okay, I hope. In terms of the action log, that is somewhere. So, thank you. Action one was on risk management, which we discussed last time, and it was around negative media exposure and experience. That has been completed. Knowledge and understanding. That's obviously ongoing. We're always improving ourselves, growth mindset, et cetera. However, there is also training on the pension regulators' new code of practice. That's been completed. And thank you all for the very good attendance at the training yesterday, which was part of a call over. I'm both grateful for you all for doing for us and for attendance. That's been a great piece of training. There was also a video footage of the sustainability training day, and training materials should be circulated to the committee. I believe Mark has completed that. So, if everyone's all right, I will proceed to sign the minutes. No doubt it will be sent to the National Archives, where scholars shall pore over it for decades to come. Thank you very much. Absence of – I still pen, so please take this pen. Absence of members, we're delighted to have Councillor Ioannidis joining us live from somewhere warmer. But otherwise, everyone is here, I'm pleased to say, so thank you. Item three, disclosable pecuniary interests and non-pecuniary interests. I think we have the blanket one about our own savings. I have my usual one. But Councillor Mary, do you want to add? I should have asked before, is that a disclosable pecuniary interest? It doesn't give me any money, obviously. I don't – you probably give him money rather than the other way around, don't you, or something? So, yeah, probably – a son wouldn't be. Geoffrey's, he's – he's – he's – he's – he's – he's clos, and structures them on the kind of funds that we invest into. But I think it's so remote that it's not actually – I – I think – There's no pecuniary. There's no pecuniary. But it sounds like interesting work nonetheless. So, I do need to bother – You're right. And thanks for raising it and checking nonetheless. Is there anyone else who wanted to come in on Councillor Hutton? do you structure CLOs do you structure CLOs as well are we going to have a mass disclosure on this front I'm in receipt of a teacher's pension and it's mentioned in the papers teacher's pension are mentioned in the papers and I'm in receipt of a teacher's pension fantastic thank you not from Barnet but from the yeah perfect any more for any more okay thank you very much item 4 public questions and comments they're all seemingly broadly satisfied and they've given us none item 5 reports the monitoring officer same applies none members items none risk management review just to say before Mark introduced this that the sort of recommendation is that the pension fund committee note most recent administration and non-administration pension risk registers but I will hand over to Mark to introduce this item thank you Mark thank you thank you chair so the risk register review is a standing item for the committee where we we update the administration and non-administration pensions risk registers the last review by officers Adam and I was back on the 13th of December and we updated them accordingly both the new risk registers have been uploaded to the council's pensions intranet page now for both risk registers we reviewed the risk scores and the lowest possible risk scores for all the risks and any updated actions to mitigate the risks are shown on red in red on the on the risk registers we didn't start identifying new risks when Adam and I met on the 13th of December since the last committee meeting although there is an entry to be added on following the call over last night where it was discussed the last item on the agenda today will be added on for the next risk register for the next committee meeting a risk that is on both the risk registers which relates to record keeping which is risk 5 on the admin risk register and risk ACC01 on the non-administration register whether this is where they're used on reconciled pension contribution data from West Yorkshire pension fund we've spoken to West Yorkshire a while ago and this is still an ongoing process although it doesn't actually affect too many employers so it's not not a massive issue in terms of the general scheme of things but it may be possible because West Yorkshire haven't done much action since we last spoke to them though we need to get there may be a need for the section 151 officer or the committee chair to escalate this issue because initially this was was at this risk and was identified by an internal audit review and then the council so and there's also just outstanding issues on the risk registers for business continuity for the pensions team which in terms of the investment side it has a knock-on effect potentially for an update in investment management signatory lists but that's that's ongoing and hopefully be resolved in the near future so that's about it chair and I would be happy to take questions if you'd like to ask me I use chair's prerogative just to to say firstly thank you for the paper for that summary on the automating contributions and making sure that we're not using valuable officer time manually checking these things I know obviously you have in discussions raise this can we formally as a committee potentially ask to formally respond to the committee asking if they'd be prepared to develop something to solve this without having to clone Adam as our best option so that we can do this efficiently and if you know if not it tends to kind of a nice to have it's something which we like very strongly to have and if we can formally with committee's agreement communicate this I think that would be the committee's generally in agreement with that rather than me just fantastic thank you any other questions from the on this risk management paper because of my you know they're chairing at call over and spending far too much time at the beginning of the agenda we spoke about this quite extensively so potentially to going forward so I think that's already taken on board some members yes Kevin if you want to add something thanks very much chair I'm just going to say to the committee as well that the last item on the agenda which obviously we'll talk about in detail when we get to that item really is now an issue as opposed to a risk we probably need to recognise that and I think we will and the risk will be ensuring that this doesn't happen in the future but given so much it's an issue as opposed to a risk as it's already occurred just for clarification purposes yes it is a crystallised risk or something yeah absolutely okay without unless anyone else wants to come in then maybe we'll move forward to the recommendation which is to note the most recent administration risk registers thank you all so we'll move on to item 8 which is annual accounts and external audit update and the recommendation which we'll be considering is that we note the content of the three reports Adam would you like to introduce this paper yeah thank you chair so this report is to provide the committee with the BDO audit completion report for the 2020-21 audit as well as the audit plan and completion reports for the 21-22 and 22-23 audits BDO provided their audit completion report for the 21-22 audit and they presented and they presented this to GARMS committee on the 12th of December BDO are expecting to issue a disclaimed opinion on the council and pension funds 2020-21 financial statements this is due to being unable to complete work on the council's contribution prepayment issue and a few other issues as well and as we have passed the backstop date of the 13th December last year this report is attached as appendix A BDO have also provided the audit planning and completion reports for the 21-22 and 22-23 audits and they're attached as appendix B and C respectively as BDO had not completed the 2020-21 audit and we have now passed the backstop date of the 13th December they're expecting to issue disclaimed opinions on the final financial statements for both years with regards to the 23-24 audit being completed by Grant Thornton there are currently no new updates but the backstop for these audits is the 28th of February this year it's all from me chair thank you Adam any comments from the committee on councilor yeah so that is so that's on the financial on the annual report paper which is the next item and it it's the it's the refund that was never paid back so if it was in the wrong year reported in the wrong year that's why I was querying it was saying that the overpayment was in 23-24 when in fact it was 2021 unless it was just enough carrying forward it wasn't clear it wasn't clear from the paper so thanks I think I'll probably better make that a little clearer in the later session today but effectively there's more than one so you're right to pick it out but there's more than one that in that annual report relates to one of them but not all of the repayments and refunds so we'll go through each thank you any other questions on this item yes councillor thank you chair we spend every meeting talking about the issues around external audits for previous sessions there's obviously plenty of information around BDO and those audits I wonder if an officer could explain whether no updates on 23-24 is good news or bad news yeah I think well it's no update from the following update of the last committee meeting so we submitted a major back from them implement that yes nothing new from the last time they reported but we must remember that they've knocked and they will be very clearly looking at those and so is our understanding that's the only outstanding item and we might get external audits on time if if we ignored the matter at hand later this evening the no update means everything else is fine but we're waiting for this and it's on hold rather than no update means there could be other things that are going to hold it back even if we made decisions tonight that would aid the process moving forward yes I think it does mean that and of course we've got a new set of auditors now and they will be issuing their opinions for both the pension fund I think and cancelled by the backstop date notwithstanding this issue I should add that as well as my love of pension committee I occasionally dally as a member of GARMS and I've been very impressed by the work that the new external auditor has done certainly in comparison to their predecessor and so I would hope that progress would be swift and efficient on that basis that's the mirroring smith one of the things that's become very clear to me is there's a serious problem with auditors particularly low levels set by the government I just by obitadictor I will respond to that but then I'll let someone respond to it directly because it deserves it but I think one of the things the previous which may be bedeviled the previous auditors is they were withdrawing from the market totally so therefore the incentive to complete the work might not have been as present as it is with the new auditors who I believe want to continue being in the sector and so therefore be less effective that being said the fees part I can't speak to I don't know whether someone's supposed to so firstly to supplement that point that's absolutely right BDR or BDR are leaving the market you know it's a national contract through the PSAA they can't deliver in the way that they need to that has been recognised in the latest contract Grant Paunton are in my understanding confident that they can deliver within the new and not frankly I look forward to reading about militant audit workers unions and the Daily Mail or something when the fees go up is there anything more on external auditors maybe I'll just conclude by thanking officers for their work with external auditors on this and their continued work on it I know it's been a lot so thank you for our own team for the work they've done can we note the content of these three reports thank you very much item nine is the annual reports council Hutton was so excited for this she jumped ahead but we will let Adam introduce it again and then maybe we'll come back around for questions again so Adam thank you chair so this report is to present the pension fund annual report for 23-24 and ask for approval of the draft report and that it be published on the council and the scheme advisory board website the annual report is attached and whilst it was due to be published by the 1st of December last year the change in the date of the committee resulted in a delay in obtaining committee approval and this has been communicated to the scheme advisory board and also included in the report are details of what the annual report should contain thank you very much any questions on the annual report yeah and only my comment about the 20 22 20 yeah exactly so it would have been captured in more than one year any other questions on the annual report it is much improved from previous years we've come a long way I think it's great can we approve the draft 23-24 annual report thank you all item number 10 knowledge and understanding Mark I'm going to jump in ahead of you and just say small things which is are you know encourage everyone to I did not bear the interest of benefiting as a as a paid shill for Hyman Robertson's online learning academy but I should be because I'm a big fan and I've seen they've added new items and other things if like me you are proud that you've completed level 6 and you have a black belt in Hyman Robertson online learning academy there is yet more you can challenge yourself with so please go back in and revisit that and I hope new members of the committee will also be encouraged to delve in and explore that equally you know thank you again for your training yesterday which was very well received and thank you to Mark to talk more about the paper thank you chair again this is a standing item on the agenda for the committee just a reminder as the chair said that if any committee members do undertake any pensions related training or attend any webinars please let the pensions team know because we the training logs which we sent to committee members yesterday we can update them as appropriate to members to request details of any training we are in the process of organizing training for the pensions regulators new code of practice this is likely to be a joint committee and local pension board training session they've requested that as well expect that to be arranged by external provider who undertook the review of the Barnet Fund's compliance with the new code of practice and hopefully the training will take place sometime in the next couple of months or so in addition we also arranged for some training on the consultation following the government the government's consultation on potential changes to pooling other issues that came out of her mansion house speech this has been delayed from what we originally expected it to be done but again we hope that to be done back to the government there's no table there's no table of the Hyman's Lola training modules on this paper but as I said they were sent we have received them new format from Hyman's which wasn't particularly as clear as the old so as we have on the training logs that were sent to committee members yesterday and the we have started the strategic review of the board and committee training which will look look at the objectives for both both bodies we hope to have we'll have an update to the committee at the next meeting on that one thing to note that following the mentioned house speech and the subsequent consultation is that there may be take any questions thank you for that I know also we're shareholders of the London CIV and now with pooling potentially not quite as much in the best customers and more shareholders I suppose as they're gathering assets by law right so equally I know that they've generally the CIV has been keen to provide training for free as well so if there are particular areas I suppose whether it's on an asset class or whether it's on portfolio construction or whether it's on whatever whatever whatever obviously we've got amazing advice but if you think that there'd be things worth supplementing the London CIV whether they'd do it as a as a freebie any other questions from the yes thank you thank you chair yeah I do think it's important I know what's happening and I'd be the first to say that I acknowledge on that there was one thing I can't remember which page it's on and I think it's in this in this paper the relationship with the pension board and the pension committee I had always understood that into account to have a look at what we're doing and have a note over the site the wording in this paper seemed to have not been quite that strong and I just wondered how has anything changed with the relationship with the and the committee not as far as I'm aware councillor the local pensions board remit is to scrutinise the workings of the committee yeah they do have the statutory requirement to have pensions training as the committee doesn't at the moment but it potentially may come in in the future can we look at that can we request that they do the training they can they can request that we do training potentially as part of their scrutiny and oversight I mean one thing which the pension board does I believe have to do and I will stand corrected if I'm wrong pension regulators toolkit which because I'm sad I've done in my free time and thought was quite good and so it's kind of funny that they have sorry I should probably take that back because it's fascinating and very good also do in your free time but it's sort of it's strange to me that the people overseeing us have more of a training need to do training than we do I think that seems a bit odd to me it seems like we should be trained at least as well as the pension board that's tasked with overseeing us so if that's the thrust of your comments in that I would agree with you but potentially that's something for this committee looking forward to think we might not just think the regulators toolkit is particularly around the rules and how LGPS works mechanically and we might want to be dealt specific parts of the investment side of things I think actually one thing which I don't want to put words in your mouth so feel free to disagree but increasingly with products being run through the pool I know as part of the portal which the chair suddenly gets access to you can watch videos where people talk about recent performances of a product or whatever it might be it might be we might ask the sieve to do a bit of a deep dive on one of the products which we're invested in and give people a reminder of how it's doing for the whole committee and not just for the chair whoever shows up at the shareholder meeting that might be something which we might look at going forward potentially we know that the board are doing the training yes the board have an agenda as well to knowledge and understand I like it because we're guarding the guardians you're going to be the pension board for the pension board as they look over us I think that would be good okay any more on knowledge and understanding also comes to the fact that I haven't whether he wants to make a or something but I'm sure everything is okay okay good just just just one thing to double check trying to share this properly okay so if everything has been said then the first thing is that the pension fund committee note the contents of the knowledge of understanding report we so note I'm always quite I always wonder what would happen if you don't note something it's kind of funny but anyway secondly the pension fund committee notes the training options available as set out in appendix A yes and three the pension fund committee note the London borough of barnet pension team's recommendation the pension fund committee members complete the lgps online academy training maybe I might ask just that to be and the chair's recommendation do do do we all agree with that yes thank you I'm sure that will be the tipping point yes thank you very much so we'll move on to item 11 which is governance policy and compliance yes page 307 the governance policy and compliance statement and eventually we will be asked to review and approve the updated governance policy and compliance statement for the pension fund but before we do that let's hear from mark thanks chair so the governance policy and compliance statement is a required document that the fund needs to have under the lgps regulations previous version of this policy was dated back from 2017 so the new policy which is shown in appendix a is the updated version although to be honest there's not too many updates it's just tidied up a bit and made to look a bit prettier I suppose but the updates have been made in the company and paper as mentioned in the as well our aim is to review this policy at least every two years going forward although again the pension regulators new code of practice may require in between the next review some updates to be made to the policy so if that's the case we will ensure that it is reviewed prior to the two three maybe we can move straight to the recommendation then that we review and approve the updated policy so great thank you very much item 12 is the administration performance report and update on other administration and legislative matters which is much more interesting than the name suggests and we're going to be noting the current performance levels by west yorkshire pension fund and updates on other administration and legislative matters mark back to you thank you so shulkshire's performance recently has improved in terms of their performance levels against the kpi set with the recent figures for the last few months being above the december figure was pretty much the same as well which is good ideally we like performance levels to be around the 95% level over the previous few months in the summer time the performance had fallen below 90% as they had a large number of backlog cases these appear to almost have been completed now so hopefully going forward they can edge up towards that 95% mark although their workloads do remain high they have actually just recruited seven new administration staff which should again should help their performance going forward the number of complaints that West Yorkshire have continues to remain very low as well as the internal dispute resolution cases there are currently no stage one IDRP cases in progress and there is one stage two case which we're working on stage one cases are dealt with by West Yorkshire and stage two cases are dealt with by officers there are West Yorkshire as it says in the paper responded to four cases from the pensions ombudsman and we continue to await their decision on those cases and we've got further two cases which officers are working on a review of the administration strategy statement has been started and we will definitely present that to the committee at the next meeting the deadline of the 31st of August for issuing annual benefit statements has passed and as previously mentioned the figure was a lot better than in previous years currently 99.4% of members have had their annual benefit statements for 20th data or for West Yorkshire to finalise the calculations work continues on a small number of historic relievers to be processed again these are the trickier cases that need to be done West Yorkshire and officers are working with employers to ensure that the information that is required gets submitted especially with the pensions dashboard due to come into effect to get data as clean as possible in terms of the pensioners dashboard West Yorkshire are currently working with their platform provider on the data requirements and this should hopefully be completed by the end of March following that they will start the data testing so everything should be in place by the staging dates as I said the 30th of September they've confirmed that they will provide an update paper in the next month or so on how dashboard is going which we will pass on to the committee at the next meeting we've mentioned the finance update in terms of checking pension contributions take place between West Yorkshire and the Barnett pension team there was one employer which wasn't particularly great at doing that but that's now been improved and the report details at the last section on the last section on paragraph 1.26 onwards and that continued in terms of the pension regulators new code of practice as I mentioned earlier AON completed a review of how the fund complies currently with that new code there are a few actions to take forward and we're developing an action plan to take this forward the regulator ain't in place by the end of March so we should definitely have that in place by then most of the outstanding actions that came as a result of AON's review are in place as such but there needs to be better documentation or full process that needs to be developed to evidence that we comply with the new code and as I mentioned earlier we are arranging training for both board and committee which AON will be doing which will continue report hopefully in the next couple of months we'll provide that training and finally in terms of the 45 million pound data issue which has been mentioned previously Hymans have nearly completed or have completed their investigation they asked West Yorkshire to provide them with data as at March 2019 for their active members based on the data that West Yorkshire hold now for those members and then they compared that against the data that Capita provided for the 2019 valuation as well West Yorkshire the data West Yorkshire at the same date now which is according to Hyman is likely to explain most of that 45 million pound data experience which was seen in the 2022 valuation results they are currently writing reports which I'll include in the next administration update in the next committee meeting we plan to see if there is any similar data issues following the 2025 valuation which is due to start soon and if there is a significant issue again although speaking to one of Stephen's colleagues yesterday thank you very much maybe one thing I've noticed with West Yorkshire is obviously it's far improved from where we were under Capita but in my time here we've had the 95% which was meant to be oh you know there's the training a lot more people it's going to take them time to get up to speed then they're like oh there's a backlog of people and now they're training more people again and I wonder you know sorry the backlog's gone pretty much so I've been so much training it's it's my fervent hope that one day this committee shall be popping champagne bottles when we reach the 95% KPR also good news about the dashboard paper big I started trying to work out the beginning to the end of this whole dashboards process and it seems to have changed repeatedly over the course of different governments and plans and whatever so it'll be good hopefully when successfully that finally comes to place any other questions around administration report and other items thank you chair just a short question on the surgeries that the pension team run I know that you say that you're exploring extending it to other sites and other employers how well attended how useful current surgeries is it useful use of the pension team how often people as a monthly drop in yeah I mean it's probably a good point taking feedback on the surgeries my colleague Jim tends to do them now they're all fully attended there's one tomorrow in fact within Collingdale office we have had feedback from unions that they appreciate the contact with their members as well we're also in conjunction with West Yorkshire doing a surgery at the street scene depot early February as well and we tend to do quite a few presentations at schools as well where general pensions presentations but after which and to have individual chats with members to discuss their individual needs which seems to be good as well but I think it probably would be useful and things we could do better which I'm sure they probably could be this might seem like a tearously obvious point to make but it hasn't stopped me before in terms of the surgery that you have in terms of the most common questions or misconceptions obviously you answer them and help them out and the rest of it too do we then log them and add them to the faqs and the websites and kind of try and nip some of these questions in the bud by proactively offering some of this you know do you see the same things popping up again is there a way of adding it to our regular communications to members so that we're kind of broadcasting these things rather than just answering a specific person's question there are kind of specific topics a lot of people are coming up to retirement or paying would like to consider paying more contributions to the fund that's quite a popular one and sometimes certainly on the paying more contributions our plan is to actually have a series of most people have that's probably a correlation so they're the most common ones or definitely people that come outcomes that come out of these surgeries thank you for doing them and thank you for asking the question I would know the people wanting to pay more in and potentially trying to take money back can be problematic as we'll discover later in session any other questions on this paper okay then maybe we can note the current performance levels and updates on other administration and legislative matters thank you item 30 of the committee work program maybe I'll just ask if there's any particular questions on this topic yes any then I will have been to supplement thank you chair it's just to say that we'll need to add an item for the next meeting because when we talk about the contributions matter so it's really yes indeed so to make sure that I'm translating or understanding what you're saying matters arising from this subsequent conversation will then go back into the work program to action whatever we decide is right okay yes are we happy therefore on that basis to note the work program thank you all right we're having fun we keep going investment strategy item 14 the report includes an exempt appendix which is appendix one a reminder please to only discuss public information after Adam introduces it we'll be noting the status of the recent proposals approved by the pension fund committee in previous meetings and noting the proposed upcoming actions on the strategic allocation as a result of pooling but before we take those decisions over to Adam thank you chair so this report is to update the committee on the status of the proposed and proposed transitions as a result of pooling and to highlight the upcoming proposals at the next committee meeting the first table in the report under 1.6 details the status of the approved proposals that have been agreed at previous committee meetings as you can see the Elgin Raffi to Elgin Raffi CTI transition was completed in November last year with the and the Elsif Pepper transition is currently underway the first of the three tranches was done last week the second was done today and completed and the last one will be next week and finally a commitment to the Elsif Nature-Based Solutions has been made and the first drawdown is expected at the end of this month and attached as appendix one to the report is Hyman Robertson's credit review report which details the upcoming proposals of the next committee sorry with the details of the proposed of the upcoming proposals in table 1.10 thank you so much any questions or comments from committee strategy for natural resources or major based solutions looking at any other is that going to be our contribution or I was thinking about looking behind some of the assets we're already investing in and seeing how ESG I don't know how difficult that is to look at I think if let me see if I can give you an answer that satisfies the question because it's a broad question one of the things in knowledge and understanding which came up is that that London is increasingly where we're pulling a lot of our investments obviously Hyman's generally don't review London products but which has been outside of the pool in terms of knowledge and understanding I think it would be great to have a deeper dive in some of the products which were already invested in within the pool potentially as well we can ask for to be put on ESG criteria used or how they monitor how the managers are applying the ESG criteria so I think that thing which maybe I can think of knowledge and understanding if we next time we'll catch some other questions and see if there are maybe other things people want to respond to more I saw councillor mirroring smith and councillor woodcock relevant hands but I don't know whether it's do you still have a but I think it would still be worth hearing a bit more on nicely that they're going to suddenly have this comparable fund yeah it's a good question maybe to respond to that and I figure I'm creating lots of ideas for items of future committees which is slightly unfair of me but one of the things that's happening I suppose with pooling currently is lots of private markets investments from across London hopefully I don't have the visibility that Nick and others do across other funds but my understanding is London is doing a bit of a matching exercise so what are we taking on board from one fund that's very similar to what other people are doing and if there's a critical mass that seems like everyone wants something which looks a bit like X that can inform their product creation pipeline and all the rest of it too so I don't know what the results of that matching exercise so far has been in terms of how many other funds across London have an asset back approach and whether when they start doing this mix and matching exercise we might say we're actually one of six or seven people here maybe this is to create your own product and bring it on platform but I don't know if you feel like that's a fair summary of the process that as you understand it that's taking place and something which we might actively ask to have an update on as we outlier because there is no comparable fund available via London CIV in a meeting in mid November between the London CIV and ourselves at Hyman's and the officers of the pension fund we did flag this to the London CIV and my understanding is that they haven't yet come back to us to confirm whether there is wider demand across other London boroughs for an asset backed securities mandate but it's something that I'm happy for us at Hyman or in conjunction with officers we ask a specific question of the London CIV and probably expect a response over I would say three to six months let's say by which time they will be able to assess whether there is enough collective demand to warrant a product being about ABS at this point apart from seeing if it could be pulled with the London CIV we have definitely not decided to pull out of the sector yet very happy to say and that wouldn't have been done without you know extensive discussion and the committee making that decision so my understanding and I'm willing to be correct if I'm wrong is that there's we're in a process where our current private markets investments sort of being ported over to the CIV to be under the CIV wrapper but once they run out the question is will there be now a new product which we might then be able to go into which looks like it and that's where there's a question mark if there's lots of people who have similar investments in this area and they're running out and make sense that there's going be demand for that that's then a question which we haven't taken any view on yet but we wanted to have the training because lots of the committee were not on the committee when we originally invested in it I think it's fairly at least from my perspective it's quite a nuanced and interesting sub-asset class so it takes a little sometimes of people getting their head around it I think it's fair to so when it comes to that point in time where we do have to make a decision about it seems as though there's some other people and do we make that decision hopefully thanks to your training and continuing discussions about this we're in a position to know whether to do that but we're not proactively pulling out any investments that we've made so far yes Can I just clarify clearly back in 2008 there was a horrible problem with the CMOs and any other aspects of this whole area am I correct in assuming that a lot of that has now been cleaned up and sorted out to the issues they were at that time well I think I should answer that so the hymens don't have to because I can lose friends much more easily I suppose you know I think I had former colleagues used to work for Moody's and all the rest of it too I think there is a I would editorialize there is a structural problem when you're paying someone to review your product sometimes that there tends to whether it's through rational or irrational whatever that sometimes that means that people tend to go easy on things I think there's also a problem with how much we pay people who are reviewing stuff compared to financial structure when it comes to rating agencies but you all made this point and I think it might be left which is one shouldn't just rely on a stamp that Moody's or stand on the Paws or Fitch given something you have to actually rely on the actual ability of the manager itself and its track record and other things in terms of their ability to do credit analysis rather than what we've been through in the financial crisis so I don't know whether that's my personal view I don't know whether anyone else wants to be continued over a glass of wine or something maybe but yes any else on this yes Councillor We're going to have to make a quick decision because they aren't giving us a clear answer or we have to answer this pooling question or whatever can I get a bit more clarity on why you feel the three to six months is a useful window based on that timeline happy to you next so as part of the ongoing LGPS consultation that was launched in November the government made a number of potential announcements around deadlines for pooling one of those was that the intention is that all LGPS funds should have assets with their pool by March of 2026 so just over 12 months 15 months or so from now now that consultation closes in two days time and then we will find out regulation and to the back of that if that deadline is kept at March 20 26 then that sharpens the mind and will focus our activities and means we've got 12 months or there about to comply my mention of three to six months was to give you a guide for the amount of time the London SIV will need to discuss with the 31 other London boroughs to get a clear decision on whether they have any interest in an asset backed securities mandate as the chair alluded to the London SIV is only going to launch funds that have enough critical mass and realistically for a strategy such as that you might be expecting four five six other London boroughs that will need to show interest alongside you to make it a viable solution while we're talking about ABS it will be interesting I think maybe we can ask London SIV to tell us what other patterns and other asset classes seem to be emerging in terms of what's not on platform but seems to have been common investment London funds as well so maybe that might be an interesting thing to keep an eye for I should say as well that Tim from I can't Tim's last name he's just joined yes I joined and and I think is also I mean I don't know if he'll sleep over the next however many months but they're practically undertaking this work so hopefully the pitch will become clearer as time goes on but it'd be good to have more information about it back to this committee as it does emerge what patterns have any other questions thoughts comments on this okay so can we note the status of the recent proposals approved by the pension fund committee in previous meetings can we note the proposed upcoming actions on the strategic allocation as a result of pooling thank you very much move to item 15 which is the investment performance report again I have to advise that they include exempt dependencies appendix B please again only discuss public information and will be asked at the end note the investment performance of the pension fund but before we do Adam would you like to introduce the item yes thank you chair so this is a shorter report this time around which is just presenting Hyman's quarter two report which covers the quarter up to the 30 September 2024 Hyman's are going to provide a more verbal update on more recent goings on in the financial markets so I won't go into too much detail so it's just to note to the committee that the public report is appendix A and the exempt report is appendix B so I'll now hand over to Hyman's for their part I'll provide a brief verbal update on Q4 markets just to give you a bit of an idea as to how so over Q4 we saw sovereign bond yields rise quite sharply relative to recent bond performance and this comes off the back of some sticky inflation data so inflation being a bit more and coupled with some strong US growth as well and expectations of potentially inflationary policies coming in and markets started to question that and that's where that sort of rise in gilt yields came from so as a result that rise in gilt yields bond performances over the quarter were negative so overall it was I think we can probably expect some slightly positive overall performance from the Barnett Pension Fund coming through that quarter and it cuts up to base rates so overall no sort of things to flag in terms of the performance we do in our report as well no worthy to flag this time thank you very much I'm going to be self-indulgent and share some random thoughts which is when we had a recent jobs report in the US that was incredibly strong even after probably the US economy is almost close to full employment anyway there's likely to be a big tax cut coming and tariffs and yet the Fed still seems to be trying to cut rates I mean it seems to be illogical as far as I'm concerned so I think it's right that obviously the markets considering there'll be fewer but I'm not even sure why we need any at all perhaps the other because I worry that last time we did this was like the 70s and we had a massive rebirth in inflation and struggled to get it back under control again so anyway some random thoughts on monetary policy for you all one thing I would note I suppose as you'll be aware we went into fixed income a bit of an outlier compared to some other LGPS funds on this while rates or gilts going higher might make the value of that investment go down it also means our liabilities are also likely to go down so in some ways it's quite a nice matching asset like that and so while we're talking about gilts going up which I think is largely seen by what's been happening it's quite highly correlated with US yields anyway and so I think a lot of it is about worries about Trump and inflation and deficits and the like it does mean that we've got some protection especially as I would say that the stock market is increasingly concentrated in some AI stocks which let's just say valuations are I think Sir Humphrey would say courageous so I think we're well positioned even though I think we're in for a position of quite a lot of turbulence potentially over the next few years we can talk about monetary policy somewhere in the paper I read that I'll share globally so it said US I think and others I think it said there were three areas that we're looking at investment and returns am I correct have I got the right paper are you asking is there generally like a kind of geographical background of which geographies we're exposed to yeah because I thought we were not doing so well European front as there were US I can't remember sorry it's in the papers and I read it and I didn't make a note I mean maybe to frame this because I'll supplement and again council I can say if I've taken your point and totally distorted what you're trying to say but generally the FTSE is comparatively a lot cheaper than the US in terms of how we're geographically weighted and relative valuations and things how do you think the fund is positioned in terms of our geographical balance potentially yes council I think in the private version of the monitoring report there will be a lot more detail on the geographical allocations I mean if you think about our listed equity allocations that will be heavily weighted towards the US equity market partly because that makes up such a humongous part of global stock markets and allocations to UK and Europe will be far far smaller probably an aggregate below 15% or so of our exposure and that sort of geographical allocation will have ultimately done us a lot of good because the most significantly outperforming part of markets has been North America and US over the last year or two but I'd have to refer to the specific page or query that you might be looking at in the private part of the meeting maybe supplement two I mean even if they're listed in the states a lot of the global Microsoft revenues from across the world too so while they're obviously listed in the United States they're quite geographically diversified in terms of where their revenues come from exposure to the real economy globally too so that's I guess some consolation as well anyway any other questions on this and if not we'll proceed to the recommendation which is that we note the investment performance of the pension fund again one of these imponderables what do we do if we fail to note the performance I suppose it will cease to have performed the way it did anyway item 16 prepayments and subsequent repayments between the council and the pension fund maybe there'll be some questions on this will be interesting to know Kevin would you like to open this up before you do there are exempt appendices I'm being politely nudged to remember to actually say what I meant to say so appendices A1 A2 A3 and B are exempt so again please only discuss public information I'll cough loudly on the microphone if you're straying so be forewarned but then before we do let's turn over to Kevin thanks so thanks very much chair so with mind on the fact that we have exempt appendices and legal advice for both the council and the pension fund independently which if we discuss that I'm sure we will that will be in the exempt session so I'm really going to just talk about the events that have taken place given the events that have taken place a range of actions that the committee will be recommended to consider and eventually take to rectify the position that we've found ourselves in as an organisation so just to remind colleagues I'm sure they've read the report just going to go through the key matters so background being that the organisation took an option to prepay what we call secondary contributions in one payment of £20.5 million back in April 2020 the thinking behind that was that we make this prepayment instead of three very simple terms what we originally envisaged was say three payments of £7 from the council to the pensions fund instead of doing that to take a discount of cash flow could pay one payment of £20 up front £20 £3.7 is £21 the £1 million would have been generated to the council that was the original intention of that and therefore the council would theoretically pay the saving officers at the time took legal advice about that proposal and in theory that proposal was confirmed as lawful such payments as this are stipulated by the fund actuary and Stephen the fund actuary is here tonight will be able to speak with him at the appropriate times during the next few moments but the actuary stipulates on the rates and adjustment certificate and organisations have to comply with the adjustment certificate there's very little latitude the proposal to do this was regrettably not taken to the pension fund committee at the time the committee of the council at the time just for your information payment also we believe did not comply with the council's scheme of financial delegation were also paid into the pension fund via payroll and that was what was envisaged in the rates and adjustment certificate at the time it was issued back in 2019 what I mean by that is a proportion of pay designated as the and paid into the fund I know you know all this but it's just important background and the secondary contribution which is what all this is all about was also supplemented on the employee rate in effect the council therefore paid those secondary contributions into the fund duplicated the secondary contribution over this period reasons unknown officers decided to repay the duplicates 2021 212 and 223 first year 6.508 million was effectively paid physically paid fund to the council third payment which was part of this plan was not paid to the council so this matter was discovered during 22 23 and the third payment chosen not to be made at the time given the legality of that of making the first two payments and so the matter was then discussed with myself as the incoming CFO I discussed with the monitoring officer and there are three things that we could do in my opinion and again I can say what these would be in open session and then we'll debate them further I want to say at this point that we haven't reached between us and a number of people involved and given my personal view I'm not in favour of that at the moment but it's fair to say all three options there is no perfect answer here the other would be to make the third outstanding payment by some form of or other risks and so there are cons in relation to that option although would effectively most likely balance the regular through that boot is also the issue in relation to advice in relation to tax as we have been discussing there is potentially and unlikely but nevertheless potential ability and we can talk about that also in the exempt session thank you you'll keep sneezing whenever the word tax gets mentioned which is an interesting quirk but before we get started in an attenuated discussion before we have a fuller discussion in the exempt I just wanted to say first of all that since I became aware of this which was to say immediately we need to be fully transparent and spring into action that's exactly what has happened I'd like to thank the officer who did make everyone aware of this to begin with I think that took a bit of bravery to do so I'd like to just put on record my thanks to that officer and also to officers subsequently I think for the work that's gone into this I think I would hope that in terms of the briefings the papers the office to discuss this etc that this has been a very thorough process for good reason in terms of as well very clearly that our job is to look out for the pension fund and beneficiaries and nothing else and so in terms of appointing people to make sure that that happens and to make sure that we're doing it with the appropriate governance that possibly wasn't there at the time when the incident took place I think we've been very thorough and kind of copper bottomed about this so I just wanted to both note that but also thank everyone for their roles in making sure that I can say that that is true so thank you for that maybe I'll start off because my understanding is and then I'll certainly come to you that's all right my understanding is that we can talk about in general higher level governance issues but it's fair to say whether it's the journey we've been on with capital and administration or whatever else that there's been a long period of improvement I suppose the fund and professionalization and making sure that appropriate governance and checks and other things are then especially considering the amount of money that we're talking about this I think one of the things which I gather that is going to take place no matter what decision is made which is under exempt is that we will look again at the processes and governance and make sure that something like this certainly while can't eliminate risk it's very much less likely to transpire again I think in your original comments Kevin and again correct me if I'm mis-summarizing because I know you're very careful with your language around all of this but you know it should be the case that the rates and adjustment certificate is followed and that if someone proposes not to follow it that it is known to be able to make that decision and I think that was worth underlining so that that fundamentally is one of the things which went wrong here and should not happen again you can get into the final points about recommendations on things under exempt but just as a thing to say I suppose the obvious thing to say is what's happened was unacceptable I want to praise people for their reaction to this to go on a necessary journey to make sure it doesn't happen again and to say I think we've identified already from trying to work out what went wrong some obvious low-hanging fruit to how we can make sure this doesn't happen again I'm sure this is going to be a process where we'll identify more and that we can actually sort of lapse on this thing and make sure that it's the gold standard process that other councils might look to as opposed to a kind of cautionary tale that other councils might mention so maybe I'll just start with I guess that sort of editorial I'm not sure it needs a response if anyone feels moved to they can otherwise I'll move to Councillor Meary Thank you Chair I just wanted to address the question of your own personal position because as I understand it the pension fund responsibilities clarify how you can manage that problem absolutely I share I don't know whether handkerchiefs are at the ready but I will be stepping down as pension committee chair come full council and so decisions will be taken without me being compromised in such a way as you're probably aware the news of my I'm not sure the word is elevation maybe move is a better way of looking at things probably came as much of a surprise to me as to other people and obviously we've been considering this for some time that being said one of the first things which I said I can't remember if it was a predecessor or maybe Kevin was also in the room is we need to look out for the pension fund that is the role of this committee that is the role that I always as chair we have very clear responsibility which might diverge which is why we've taken separate advice and had separate roles and tried to as far as possible make sure that exactly the issue you raise which is exactly the right thing to raise and is an important one to raise won't compromise the decision that this committee and not just me obviously that this committee winds up taking so I think important question but I hope that satisfies you somewhat in terms of the answer any other questions in open session thank you chair I'm sure we might get into this in more depth in the session but obviously we've heard the chair's thoughts on previous I wonder whether others had used in open session on how best we reflect on the risk that we've identified and if I may add to your question we mentioned before about adding something to the work program that's both taking to account of whatever the actual decision is the mechanics of fixing what needs to be fixed but in terms of the governance and the oversight that officers and others here will need to do I certainly plan that we would go through an awful lot more of that detail in the exam session and we can deal with it there unless you want more of an answer in open session that maybe ask the committee's views rather than yes well I guess what it would be useful if you know when reflecting on in X number of years time that we at this stage when we knew about this issue we did the right thing to make sure it doesn't happen again that there's public record that officers who will be charged with looking at how to make sure it doesn't happen again understand that work should be done to ensure that it doesn't happen again yes if we can hand over to our monitoring officers so you'll see that at what I'd say we've talked about good governance and what governance is you know it's simply how decisions are made so I think a lot of the things you've had on the agenda tonight around training work programs are really really helpful I think what the committee are asked to do here is you're asked to make decisions on very technical matters and they have to be informed by advice but you also have to feel that there's a culture where you can say I need more assistance on that so I think in relation to this matter it's about making an informed decision so monitoring officers referred to having legal advice having tax advice having advice or comments from the actuary consulting the external auditors all of those things help you make an informed decision I think the other thing in relation to good governance is around learning from this so trying to understand why these decisions were made some of the issues are around record keeping so when you don't take things to formal committees it's often difficult to go and find the records for there and just transparent decision making so bringing something here even if it's for noting that becomes the corporate memory of the organisation and I think those sort of things are really really important for any decisions that any public body is making Kevin do you want to come in at this point if I may and I think as you wanted something in the session it's a really good point councillor and I would say that the key thing from my perspective and we have highlighted in the open report and that is the procedures involving consideration of the valuation report and the rates and adjustment certificate is absolutely maybe I might also behind this I think in a way that I don't think and I think which is I think there is cultural shift I think is a very important thing which certainly I think we would which is this isn't just another bank account to actually account this isn't another bank account of the council this is a legally defined separate thing if this was another employer you probably wouldn't have expected similar processes to have been following me all look forward to seeing trust there's any more to say on this in the public session I don't want to we can of course say much more in the private session but I just want to make sure that the public session is happy with yes okay then I think at this point just checking that we might exclude the person public and move it to exempt or do we want to do the recommendations first yes I'm still here good I'm glad to hear I'm very happy to say you're about that can can can others online can we confirm that no one else can hear what is taking place those of us who are joining yes yes nobody can hear nobody can hear thank you so much