The Pension Board met on 10 January 2019 to discuss a governance review, an update on the fund's administration, and concerns regarding a Property Asset Transfer. The Board resolved to seek legal advice on its duties concerning the Property Asset Transfer and to review policy documents, excluding the Discretions' Policy.

Governance Review Update

Mary Lambe, Senior Benefits & Governance Consultant at Aon, provided an update on a governance review commissioned by the council. The review, which is approximately 90% complete, focuses on compliance with the Pensions Regulator's code of practice, a review of governance arrangements, and activity with the London CIV. An effectiveness questionnaire will be sent to Board and Pension Committee Members to gauge their views on meeting effectiveness and training relevance. The review aims to identify areas for prioritisation and focus going forward, with findings generally positive but highlighting a need to concentrate on areas such as training and ensuring conflict of interest policies are in place and regularly reviewed. The Board noted that Aon's governance framework tool could be used for this review, and progress against previous recommendations, such as the implementation of a risk register and expanded terms of reference for the Pension Committee, has been made. The gathered information will be used to benchmark the effectiveness of Croydon's Pension Board against others.

Fund Administration and Staffing

An update report was presented, with the Chair highlighting the need for reports to be provided in advance. The Head of Pensions and Treasury, whose post is currently vacant and being advertised, apologised for the lateness of the report, attributing it to the manual adjustments required by the data recording system. The team is otherwise fully staffed, with two team leaders covering the vacant Head of Pensions role. Approximately 1,000 business as usual cases, ranging from address changes to retirement notifications, are processed monthly. Work has begun on the triennial valuation, which has revealed some errors, and the council is exploring the possibility of outsourcing administration to help the service catch up, with particular emphasis on the resources required to manage deferred pensions. Members expressed concern about the extent of outstanding business as usual cases and agreed that this issue would be addressed once a new Head of Pensions is in post. The Board resolved to note the content of the report, including information on Key Performance Indicators, staffing, and data scores as required by the Pensions Regulator.

Property Asset Transfer Concerns

The Board discussed the Property Asset Transfer, noting that their response had been shared with the Pension Committee. The Pension Committee had agreed the Property Asset Transfer recommendation, which put them out of step with the Board. Members expressed concern that a reduction in employer contributions during uncertain economic conditions could lead to a decrease in the fund's value and a potential increase in its deficit. While it was assumed the Council would address any deficit increase, concern was raised about this becoming the responsibility of other fund members. Although the Pensions Regulator's remit excludes investment matters, the Board questioned whether the solvency of the fund might be a concern. The Head of Pensions and Treasury explained that the Secretary of State provides guidance on funding goals and that fund diversity helps to reduce volatility. Despite the actuary stating that one Scheme Employer's contributions would not affect others, Board Members struggled to understand how this part of the fund would be ring-fenced. A conflict of interest was also raised, with specific reference to the role played by Eversheds. The Board resolved to note the response made to the Director of Resources and agreed to seek legal advice, possibly from the Monitoring Officer, on whether the Board had fulfilled its legal duty and to obtain further information on how non-Council employers will be ring-fenced.

Forward Plan and Policy Review

The Board resolved to review policy documents as requested by the Pension Committee, as detailed in the report. The only exception was the Discretions' Policy for the Council, which the Board considered to be outside its remit.

Scheme Advisory Board Horizon Scanning

The Head of Pensions and Treasury highlighted that the actual costs of the Local Government Pension Scheme (LGPS)¹ were below the stipulated value, suggesting potential for benefit augmentation. Discussions on the potential impact of Brexit indicated that payments to overseas accounts might become more difficult, although the Head of Pensions and Treasury noted that the scheme is prohibited from making payments to any overseas account.

London CIV Update

The Head of Pensions and Treasury reported that the government was encouraging more activity through the London CIV, but this was being hindered by the lack of a transition team. Concerns were raised that payments were being made into the London CIV's bank account, but as the final destination for funds differed, this was considered co-mingling and bad practice. The Chair of the Pension Committee was to raise this with the London CIV and escalate the matter if necessary.

Training Needs

The Board identified two training needs: one on the actuarial valuation and another on long-term developments. It was agreed that if these were also training needs for the Pension Committee, joint training might be provided.