Transcript

The recording of tonight's meeting may also be used for quality and training purposes. While we hope everything runs smoothly, please be patient if we hit any technical difficulties. In the event that technical issues require the meeting to be adjourned and it cannot be restarted within a few minutes, further updates will be posted on the Council's Democracy X account, which is at LBL Democracy. We will now move to the introductions. Please, can I ask that members turn on their cameras and microphones just before they are about to speak. I'll introduce members of the board and co-optees in alphabetical order by surname. Well, first of all is me, Councillor Linda Bray, Caplan Town Ward, I'm the chair of the board, and then we have Councillor Matthew Bryant. Councillor Matthew Bryant, Councillor of Stretopill West and Thornton Mall. Thank you. Councillor Liam Daly. Hello, Councillor Liam Daly here. I am a Councillor for Kennington Mall. Thank you. Thank you. Thank you. And our co-optees, Olusala Aikoo. Good evening. Olusala Aikoo. And Presley Rebello. Hi, I'm Presley Rebello. I represent the union. Thank you very much. And we have received apologies from one of our co-optees, Anne Biddle. Officers will be invited to introduce themselves when they speak. The key officers for the Pensions Board, not to bother with that, will introduce themselves later. So, agenda item one, does anyone have a declaration of pecuniary interest? No, neither do I. Thank you very much. Second item, minutes of the last meeting, which was held on 6th November 2024. These are set out from page one of the main agenda pack. No amendments have been received by Democratic Services. Are the minutes agreed? Agreed. Agreed. Thank you very much. Passing on to item three, which is the work programme. I'm going to ask Linda D'Souza. Or Sam Amuko to give a brief summary. Work programme sets out the year ahead. So, Linda or Saul, Linda, hello. Good evening, everyone. Good evening, Chair. Just to highlight the work programme, I think the update from the previous meeting that was held in November in respect of the Pensions Administration software contract, that's now in place. So, that's rated as a green and I believe the contract for the actuarial and the investments are forming into place. Correct me if I'm wrong, Saul or Peter. I think they're just about now in place. Thank you. You've got any comments, Saul? Good evening, Chair. No, I just wanted to confirm what Linda was saying, that the contracts are now in place. We're just waiting for the final procurement processes before they announce the winner of the retenders. Great. Thank you. Thank you. Any questions? I think so anyway, so you can't disclose who the advisers will be at this stage. And if that's correct, at what point do you envisage being able to disclose who the contracts have been awarded to? Once the legal procurement processes, the standstill period is finished. I don't have a specific date for that, but once that is finished, then we will be able to disclose procurement colleagues will be able to disclose who has actually one. Is that the will be tendering at the same time the investment management contract, which is held by mercies at the moment and also the actuarial one? Will they both be intended at the same time? That's correct. OK, any other questions? No. OK, thank you very much. OK, thank you. Move on to item four. Business plan tracker. And again, I'm going to ask Linda D'Souza or Sam Muco to give a brief summary. Good evening, Chair. I think maybe I've got confused with the work plan and the business plan tracker. So I was referring to the business plan tracker actually when I first spoke. The work plan, just going back to the work plan, obviously these are reports that will be in place for the forthcoming year. This, of course, doesn't include matters that may crop up during the year, so reports will be brought to the board even if it's not stated in the work program, if and when that is needed. But in terms of the business case tracker, as I said, the pension admin contract is in place and as Saul alluded to, the investment and the actuarial contracts are almost in place. Good. Okay. Any questions? No? No. Okay, then on to item five, pensions administration quarterly performance report October to December 2024. Again, could I ask Linda D'Souza to give a brief introduction, please? Thank you very much, Chair. So this is the quarterly performance report that covers the period October to December 24. And you've got in this one, you've got six appendices, one to six. So I'll just touch on a few areas before I open for questions. 2.2 outlines the cases that have been dealt with in this quarter. And then you've got the main performance indicators that are shown in the appendix one. As usual, I think from my part, I'd really like to commend the team for maintaining its high performance, especially against the backdrop of all the major activities that we've got on the go at the moment. One being McLeod and the other being pensions dashboard to name but a few. So I think we're doing really well in terms of how we fall with planning and putting measures in place to manage workflow as much as we can without calling on additional resources to assist in these projects. So in 2.3, I've mentioned that as part of the ongoing McLeod remedy, we've issued a notification to all active members of the scheme to determine whether they could fall within the boundaries of the remedy, meaning if they have other public service pension scheme within the period of service that that is covered in the scheme. And then a bit later in the report, in the general updates, I've provided a bit more of an update on where we are on the McLeod project remedy. So as at the end of this quarter, I think we've processed something like over 3,800 cases that we've identified. But like I said, when we get the responses from the active members and soon the deferred members, there may be more cases that we we need to review at the time. And then I've got in 2.21, just to mention that we've, as you know, you participated in the national knowledge assessment, so we've got the results in Appendix 4 and also with the proposed training plan and next steps that's been drafted for consideration and then implementation. And I've also provided a brief update on pensions dashboard, and I think that's 2.3, just noting that the new government has published a statement committing to the staging, the staging timetable that was in place before they came into power. And then I've also given you a brief update on our position as a fund in terms of our connection readiness. And then I've shared in 2.33 that, as I've said, we've completed the repercurement of the pensions admin software contract. So I've kind of sort of highlighted what the contract delivers, etc. Fortunately for us, it was the same incumbent that was under the old contract. I think we had to tender out early, even though the end date of the contract was March 2026. In the event that we procured the successful bidder was a different supplier, we'd need plenty of leading time to move to different systems. So that's why there was a long lead in time for that. And then as usual, I've lifted from the general updates that were taken from the committee meeting that was carried out a few weeks ago, just covering the position of the London sieve, the latest position, I think that that's at November, a little bit of an update on the annual report. Another reason to commend is that we've retained the UK stewardship status, which was a really great achievement as well. And we're also going through the planning and preparation stages of the valuation exercise. My team's already forwarded the actuary with membership data and cash flow data for the previous two years so that they can start reviewing the position ahead of receiving the final valuation year, which is which is this year 2425. So hopefully that will mean that we should receive the results of the actual of the valuation in good time from the actuary. And then on the final point, 2.37, that relates to the recent fit for purpose, fit for the future, sorry, consultation that took place. And appendix six details the response of the fund, which was sent out by the chair of the pensions committee. So I'll stop there and I'll open for questions. Any questions, please? Councillor Bryant. I was just, I suppose, obviously, if you notice, it's good to see that the performance, the stats are maintaining that high level which you commented on. So I think you commend your team for that. And also the membership, there seems to be fewer number of fewer people dropping out of membership now as well than had been the case, which that had been something we were concerned on. The, on the McLeod judgment, I'd just be interested to know, obviously, from the work you've done, are there any implications there in terms of the liabilities of the people who actually come within scope of the judgment from what we've actually now discovered? I know some of that was built into the last triennial valuation, but I don't know whether there's any new information that will affect the 2025 revaluation. I doubt that there will be a large impact because I think with a lot of these activities, it's a shed load of work and activities to just highlight maybe that a few members fall within scope. So there are very few members that fall within scope of rectification to be truthful. So it doesn't didn't really have an impact on the fund in general. And I think with the government actuaries departments, they're the ones that sort of assess the whole fund to see if it made an impact in terms of the wider fund. And it was kind of subsumed in the improvements to the fund. So there was no impact in terms of changing the benefit structure for members or increasing contribution rates for employers. Okay, okay. Yeah, I think we would echo the thanks and some commendations to to the team. Well, well done, everyone. I have a couple of questions following up actually from Councillor Bryant. The percentage of people opting out of the LGPS is 85%. That still seems quite high. I mean, should, is that average or should we be doing anything to try and improve the number of members? That's not the percentage who have opted out. That's the percentage who are in the fund in relation to the cohort in the working for the borough, working for the council. Oh, okay. I mean, that's, yeah, that's okay. So it has, so, so really it's 15% who aren't in the scheme. Yeah. Although it's not as good. Oh no, sorry, I'm getting, yeah, getting the figures confused. Yeah. The members who have opted out has gradually declined. So that percentage is the people still remaining. That's correct. Yeah. Okay. I would say though, just to, just to forewarn you, this is the pensions or automatic re-enrollment year. And so April of this year is where members who aren't already in the, the scheme, but who are eligible job holders will be automatically enrolled into the LGPS and, you know, teachers pensions or whichever scheme that they, they should belong to. And this is the, this is the time when many people who don't, didn't want to be in the scheme, but, but have been automatically enrolled will opt out as soon as they've been enrolled. So those numbers will probably go up for 25,

1. Right. So just forewarning you. Yeah. Yeah. Okay. Well, it happens every three years. That's right. Yeah. Yeah. Yeah. Yeah. That's correct. Yes. Can we take a survey of reasons why they're opting out, maybe just a survey so we know why they're opting out. And I think the government is going to be looking into that as to reasons why they're opting out. So maybe we can as well start. Yeah. That, that, that, that is, I mean, some people, a lot of the time they say personal reasons. Obviously when somebody wants to opt out, we just don't opt them out straight away. We, we, we ask them, we, we try to sell the scheme, so to speak, and, and let them know the benefits of the scheme. We talk about the 50, 50 scheme. If they can't quite afford the full contribution rate, they can go down by half and have sort of still have pension benefits, but then they'd still have the life cover, the death benefits if they were to die in service, et cetera. So we do try to persuade staff to remain in the scheme. But for instance, I was talking to somebody just the other day who just said, I've got other commitments and pension isn't one of them at the moment. So maybe in the future it will be. So it's a different rafter of reasons, but, but yes, I, I hear what you're saying in terms of possibly sending something out to scheme to eligible scheme members who are not currently in the scheme. Possibly we can do that for Lambeth staff, but obviously there are a cohort of staff who are not employees of the council, but employees of the other employers within the Lambeth fund that we don't know who are sort of not in the scheme. So, but, but certainly we could sort of look at doing something by way of survey for the, the non scheme members who work for Lambeth council. And you rightly say there is a consultation at the moment that has is proposing that there'd be some sort of review, et cetera, on how we'd work out or persuade people or, or receiving data on those people who opt out and the reasons why. So that is, is forthcoming as well. Yes, councillor Liam. Thanks, Linda. Is, is there a, a general target either, um, within the council or, um, nationally for, um, enrolment? There is no set target, et cetera. I mean, there's lots of material to advertise the scheme, um, obviously because it's a, um, it's a contractual enrolment. It's a, it's a contractual enrolment type scheme as well. So because of the automatic rules, but contractually anyway, somebody who starts employment in a, in, in an organisation where they, they need to be, um, contractually enrolled. They will be enrolled into the LGPS straight away without them saying whether they wish to or not. And it's only when they physically want to opt out, then we kind of have a conversation with them to, to tell them that the benefits of the schemes. Because you'd be surprised that people still feel, um, have this view that it's a sort of like a money purchase type arrangement. Whether you put money in and, and depending on the investments, whether they go up or down, then, then, you know, it depends on what your benefits are. So I, I think the answer to that in a lot of cases is, um, public publicizing more, having more seminars, more material so that people do really understand the scheme. Um, and so that's what we're endeavouring to do. Thank you. Yeah. I should say education. Yeah. I suppose, um, would there, would, would there be a, a line in which we would say, ah, that this is too low, that we obviously have an issue here. Is it, would that be about benchmarking with equivalence or, or as you say, I mean, I opt out of mine in my, in my, in my, my day job. Um, and then that's once again, personal choice, but if there's a trend with that, would it be incumbent on us to investigate that? Or do we just say we've done the education, it's equivalent based on the individual's personal preference. Um, we provided the service and it doesn't matter whether it's 40% or 85%. That's we're doing what we're doing. I just wonder if there's any policy or thought, thought around that. Okay. There's no policy as such, but obviously with my team and, and funds across the country, they, they do try to publicize the scheme and that's possibly, um, also why, um, central government have put, put out this, um, consultation to propose that we do. We do sort of, um, look at numbers, et cetera. There's also, um, uh, in the proposal, what you call a fair deal, um, which is open in other public sectors, but it's not quite open in, in local government. So they're looking to change that and, and with fair deal, what, what tends to happen is that if, um, a contract is awarded where staff are tube-ed from the council or, or, or, or an organization that has, um, the LGPS in play, the staff move across to the new employer. And they, the new employer, um, um, can have a broadly comparable scheme or remain in their LGPS. And sometimes they, they have a broadly comparable scheme, but what's happening with the fair deal, um, implementation, if it goes through, is that staff who are tube-ed transferred to, um, another organization still doing the work, um, that the council need to do, but through a different company. They will have, um, solid rights to remain as a, uh, a Lambeth council scheme member in the LGPS and they won't move across in, in terms of their pensions. So that is being implemented and that will possibly have an impact on staff, um, who, uh, when they move outside of the council remit, so to speak, um, maybe pensions falls by the wayside a little bit. Um, out of their view, um, so maybe that will improve on the numbers as well. Um, and also we are looking at, um, like I said, ramping up our, our communications where. We have another, another project on the go where we're refreshing our, uh, member self service website. And that's a website where scheme members can go into a portal, um, make their own calculations and, and, you know, review what their benefits are, um, where it's. Turning into something a little bit more user friendly where they can make more projections and things like that. And hopefully, um, with the implementation of pensions dashboards, it will raise the awareness of, um, people's, um, savings. Um, so that it ensures that people consider more their savings in retirement. So things are being done, but no, there's no set benchmark, but obviously if, if it was below a certain figure, um, there would be queries on that. I don't, for, for Lambeth's point of view, it's never been below the, the 80, 85% range to be truthful. So if it falls below that, then there, there would be questions, um, that we'd have to ask. Thanks, Linda. You're welcome. And I assume that if somebody opts out, they can opt back in fairly. Yes. Yes. That's right. They get, come back in and yeah, box your uncle. Seriously. Good. Um, another one I had, um, on, um, paragraph, um, 2.3 on page 12, talking about member communications. And, um, you've already talked about, um, McLeod remedy, but, um, you also say an annual allowance. The letter was also issued to scheme members who were close to exceeding the annual allowance threshold. Um, and also to those who pay a significant amount towards additional voluntary contributions, which could therefore push them over the threshold. Could you just clarify that for us? Okay. So, um, technically in any given year, um, the scheme allows, um, scheme members to have a certain amount of pensions growth, um, from one year to the next. And if that growth exceeds the, the, the CPI rate, then there would be a tax charge for that growth. So, for instance, those possibly, um, an example, if, uh, a member of staff had a huge promotion, um, huge pay rise, then the growth would possibly exceed what the maximum was in terms of the threshold. threshold and so there would be a tax charge implemented and that tax charge could, um, either be paid for by the scheme member through their self assessment straight to HMRC or a certain amount would be deducted from their pension when they do come to retirement age. Um, the annual allowance for, um, um, um, staff at the moment is, it's, it's 60,000. So if that threshold, if that growth exceeds that, that's, that's where the tax charges is payable. And obviously where somebody pays in house AVCs, additional voluntary contributions that is added to the pensions growth. Um, so that is included. Okay. Okay. Thank you. Thank you. I hope that makes sense. Yes. Yeah. Thanks. Um, okay. Yeah. There are a couple of complaints, but I don't think they're serious. Are they? What? Yeah. Well, that, yes, actually. Yeah. What? Yes. One was, um, not proceeded with, was it? Um, good. Okay. Any final questions from anyone? No? No. No. Yeah. No. Engagement. It's good that you started, you know, engaging with them. Are you going to get feedback to be sure that they attended? Yeah. So they're ready for the evaluation and the, you know, review of the emphasis. Yeah. Yeah. I mean, with, with the, especially in particular with the valuation, we're always in, in touch with the employers. Um, we will be sending them out some information prior to the actual, um, actuarial evaluation, um, final results, just to give them a heads up, tell them what it's about. Because sometimes with these employees, you have a different incumbent, a different officer that's possibly never done it before. So we try to give them as much information as possible so that they're, um, um, able to ask the right questions. Um, and then as part of the valuation process, we would invite them to discuss their results and, and talk to them about the FSS that the FSS goes through a consultation period. Once the committee and, um, has ratified it, the board has reviewed it and it goes to, um, employers as well to, to review and to comment on, uh, as part of the consultation period. We have, um, we invite them to come in, um, in person where we invite the actuaries to, to discuss their results with them as well. So, so we are, so it is like a project, an actual evaluation project plan, but we do have a plan for, um, employer engagement as well. So anything useful like this, um, in terms of, um, providing extra training from outside sources. We, we do tend to, to, um, let them know that they can avail of it. This is a 2.28. So that's in respect of the McLeod. Um, um, so it's explaining the, the process of what we do in terms of the, the McLeod process, um, working through each member where we've identified that, um, their, their records need to be reviewed to see if they fall into, um, the McLeod process. Um, and as at that date, um, we had, um, 1,386 that were in scope. And as at December, we went, we got through 1,118. I dare say we've probably processed the majority of that 65 now to be truthful now that we're in February. But this was a situation in December. Like I said, it's, it's, it's a moving feast because, um, as I said, we've sent letters out to active members. Um, that's another tranche of the process asking if they've got other public service, um, um, pension rights. And if they fall into the McLeod remedy, the numbers will fluctuate again. So this is not just a static, um, number. It's something that we'd be having to work through for, for year on year. Thank you. Okay. Finally, I just draw attention to a couple of recommended, um, uh, training events on page 14. Um, I'm going on the, the one on the 4th of March, but, um, um, um, I don't seem to have any information about the, uh, Hyman's Robertson one, but, um, um, I'll check it out later. If anyone's interested in going on that. Okay. Um, are the recommendations agreed? Agreed. Agreed. Thank you. Okay. Going on to item six, risk register update. So, um, Linda D'Souza and Sam Mucco. Could you give us a brief introduction, please? Yes. Thank you, chair. So this is the quarterly risk register report that, um, is, um, sent to the pensions board every meeting. Um, just to highlight that the only change to the register at this stage, um, relates to, as I've, as I've spoken about the pensions admin system contract, which is now in place. And so it won't therefore be featured in the next report. So I've got that in, um, page 58, I think, um, PA 25. Um, just to say that it's been completed. But apart from that, there, there are no other changes. So open to any questions. Any questions? No. Yep. No. No. Okay. All right. That's a question. Oh, sorry. Count Cron. You'll have to wave a bit harder. Just a quick question. I suppose it just, um, looking at risk PA8, which is cyber security. I'm just, obviously there's been quite a lot talking about the risk of, and there have been some cyber attacks in financial services industry in the last three months. Big Barclays problem. I think they had. I'm just wondering. Are we, are we confident? We have the current risk of being very low. Uh, are we confident about, uh, that and our mitigations or the actions that we put in place to mitigate it? I mean, we're, we're fairly confident. Obviously we, we bolt on to, um, the, the cyber risk, um, security risk profile of the council as well. So we, we utilize those, those facilities, but also in terms of, um, security of the actual system I was talking about. Actually, they, they are, they, they're one of the top suppliers in, in terms of, um, pensions, um, software applications. And they've got several cyber security charter marks and things like that. So whereas, obviously, um, there, you know, um, something could happen, but we're as confident as we can be. They run, um, annual, um, risk, um, surveys, um, and business continuity, um, exercises, and they send us the assurances that it's, it's passed the test, etc. We have, um, um, meetings with them every quarter, at least every quarter to go through the various number of things, but that, that is one of them. And so we're satisfied that we're kind of meeting those requirements. But as I said, you know, you can get very, um, sophisticated systems, can't you, in, in place. So we're, we're doing all that we can, as, as well as the council and, in raising awareness of cyber security. Any other questions? Yeah, I suppose climate change risk will be go, go up. Um, bearing in mind, um, President Trump, um, announcements about, um, drill baby drill and so on, but, um, there's not much we can do about that, unfortunately. Um, Okay, um, do you, men, we've, um, we've had our questions. Um, so are the recommendations agreed? True. Thank you. Um, so on to item seven, um, investment performance report, um, third quarter of 2024, page 73. Um, Sam Amuko, would you give us, um, a brief introduction, please? Uh, thank you. Good evening, chair. Uh, just a couple of observations from myself, uh, on the investment performance, uh, for this quarter. Um, the market value of the fund increased by 0.6% or added about 10.6 million pounds. Uh, nevertheless, the, uh, the performance against benchmark was still under the waters. Uh, by, uh, about a 0.4%. Uh, this was, uh, mainly driven by poor performance in our emerging market fund that's managed by the London sieve and the, uh, property portfolios managed by Invesco. Uh, the other point that I wanted to observe is that our exposure to the UK, um, was about 21.8% of the fund or around about 389 million point 5, 389.5 million. And the funding, uh, health of the fund at the point in time was 117% or roughly about 260. Million surplus. Uh, with those few remarks, uh, chair, I welcome any questions. Any questions? No. Um, yes, I was a bit, um, concerned about, um, Invesco property and, um, uh, Churchill, um, mentioned in the summary and, um, also the London sieve under performance, but, um, I think it's the case that, um, pensions committee, um, addressed that issue, um, at their committee meeting. Is that correct? Yes, um, with regard to the, um, uh, the property portfolio, uh, committee took decision to, um, uh, terminate one of the funds, uh, for consistently poor performance. And with regard to the LC funds, um, uh, the LC did present committee, uh, uh, in January. Um, and they are fairly confident that although these numbers do not look good at this stage, but that they are engaging with the underlying fund managers and that, uh, they have hope that their processes, uh, will withstand, uh, the bad patches that they have gone and turn around, uh, in, in a short while. Okay. Okay. Okay. No questions, no questions about that. Um. Okay. In that case, um, are the recommendations agreed? Yep. Thank you. Um, okay. Um, okay. On to, um, item eight draft annual report 2023-24, um, page 95. Um, San, um, could you give us a brief introduction, please? Uh, thank you chair. Um, I think, uh, my colleague Linda, um, alluded to most of this. I'll just make brief remarks that the 2223, uh, statement of accounts, uh, was signed off on the 29th of November last year and the audit of the 2324 is ongoing. Um. Uh, with that, uh, uh, welcome any questions. Yes. Yes. Yes. This is just a draft set of accounts, but, uh, have, how far, well, how close are mass ours to complete in the audit and are there any significant items that have emerged thus far from their audit? Um, there are a few, um, uh, kind of challenging items where it is a question of really understanding, um, uh, the systems that the fund uses, uh, uh, but nothing that is untoward. Uh, let me put it that way. Um, that officers and the auditors are working through for them to understand how the system that the pension fund uses because, of course, the pension fund uses the council system. Uh, and that tends to generate, uh, uh, transactions that do not, uh, look helpful. Uh, but otherwise beyond that, um, uh. Nothing else that I could, um, bring to your attention. That's all right. That's always then are, are you confident that we'll hit? Because the deadline is 28th of February, I think, for getting these submitted. Um, are we confident we will achieve that deadline? And also from a governance point of view, will the pensions committee be meeting to sign off the final audited set of accounts? Once the getting issues are resolved, yes, the pension committee obviously goes first to the pension committee. Um, and as you say, uh, the backstop date that the government has imposed is the 28th of February, and we're working frantically to meet that deadline. Yeah, I mean, why has there been this big, uh, backlog of local authority audits? I mean, what's the reason for that? Do you know? I think mainly this is a spillover from the, uh, COVID-19 period, uh, uh, which is throwing a wrench into the valuations of physical assets for, uh, most councils. And as a result, uh, auditors were reluctant to sign off on unverified valuations of the fiscal assets that, uh, the councils have on their balance sheets. Uh, and that has kind of compounded, uh, the problems. Um, but I think that with the plan that the government has put in place with backstop dates, uh, that might help to ease, uh, the burden. Good. Thank you. Any, any other questions? No. No. Okay. Then, um, are the recommendations agreed? Agreed. Agreed. Okay. Um, that concludes the public part of this meeting. Um, I move now that the present public be excluded from the remainder of the meeting due to the likely disclosure of exempt information in that section. having considered the public interest test. Um, can we have a show of hands, um, that, um, that is agreeable to the board? Thank you. Okay. So we now close the public meeting of the pensions board. Thank you and good night to all our viewers. Attendees will need to exit the meeting and join the separate exempt meeting invitation.