The Pension Fund Committee of Harrow Council met on Thursday 4 April 2024 to discuss the new code of practice from The Pensions Regulator and review the pension fund's annual report and accounts. The committee also reviewed investment and manager performance, noting a healthy funding level for the pension fund.

The Pensions Regulator Code of Practice

The committee was asked to note information on compliance with the general code of practice issued by The Pensions Regulator (TPR). This new code consolidates previous guidance and introduces new areas of focus, including cyber controls and pension scams. Officers will provide future updates to the committee and board on compliance. While the code is not legally prescriptive, it sets out suggested good practice for pension schemes. The report highlighted that many of the areas covered by the new code are already addressed within the Local Government Pension Scheme (LGPS) governance and administration. However, the council will review its policies, particularly around meetings and decision-making, and work with its administrative authority on IT systems and cyber controls. The committee was assured that significant additional costs or the need for new staff were not anticipated, as the LGPS already has robust governance in place.

Pension Fund Annual Report and Accounts - Audit Strategy Memorandum

The committee received an update on the audit strategy for the Pension Fund Annual Report and Accounts for the year ending 31 March 2023. Mazars, the auditors, have commenced fieldwork for the 2022-23 accounts, following delays in the audit of previous years' accounts. A specific risk identified for Harrow relates to the validation of data migration from a payroll system change in 2022, which could impact employer and employee contributions. The auditors aim to complete and sign off the accounts by the end of September 2024. Councillor Jerry Miles inquired about the health of the Harrow Pension Fund, and was informed that it is considered healthy and well-funded, with a funding level of 119% as of 31 December 2023.

Investments and Managers Performance Review

The committee reviewed the quarterly update on investments and manager performance, which included a draft work programme for the upcoming financial year. A key focus for the next year will be the preparation for the triennial valuation of the pension fund. The investment performance dashboard, prepared by Aon, showed the fund's funding level at 119% as of 31 December 2023. The total value of the fund at that date was just over £1 billion, and it had risen to £1.032 billion by the end of February 2024. The committee noted the receipt of a capital distribution of over £4 million from the liquidation of assets in the LaSalle property fund.

Independent advisor Colin Robertson commented on the fund's performance, noting that while the fund had performed well against its benchmark and peer group over the last quarter and year, this was partly due to the overall strong performance of the stock market. He also raised concerns about the meaningless list of the analysis of perks longer term performance which did not include underperforming managers who had been dismissed. Miriam, the interim treasury and pensions manager, acknowledged this issue and stated that the council is looking into appointing a global custodian, which would provide third-party valuation of stocks and assets, as well as improving performance analysis. This change is expected to bring benefits that outweigh any additional costs. The committee agreed with the recommendation to approve the draft work programme for the 2024/25 municipal year.