The Pension Board of Harrow Council met on Monday 5 February 2024 to review the performance of the Harrow Pension Fund, discuss audit findings, and consider government consultations on pension investments. The Board noted the quarterly performance update, the completion of the 2021-22 audit, and reviewed items from the Pension Fund Committee, while also discussing recruitment for a vacant board position and the council's work programme.

Pension Administration Update

The Board received an update on the administration performance of the Harrow Pension Fund for the quarter ending 31 December 2023. A total of 1,876 tasks were completed, with an average of 73% finished within the target time. Performance had dipped due to staffing changes and issues with the council's payroll system. Two new complaints were received: one concerning a late pension payment, which was resolved, and another regarding a death grant eligibility, which was not upheld. The Board was also informed about ongoing issues with active members' annual benefit statements, with approximately 970 outstanding. A fix was being tested, with statements expected to be available via Member Self Service by the end of March 2024. The late issuance of these statements had been logged as a breach. The Board queried a £200,000 rise in administration costs due to the assignment of the council's payroll system to the Pension Fund, with an explanation requiring a private session. The report was noted by the Board.

Audit of Pension Fund Accounts 2021-22

The Board reviewed the Audit Report of Pension Fund Accounts for 2021-2022. The formal sign-off of the accounts had been delayed due to national issues affecting local authority audits, although the audit itself was largely complete. The auditors, Mazars, had reported their findings to the Governance, Audit, Risk Management and Standards (GARMS) Committee. The Board expressed concern that governance could be compromised if account balances from fund managers were not received promptly. Officers explained that while monthly valuations were available, auditors required direct confirmation from managers. To address this, officers would write to fund managers early in the process for the 2023-24 accounts, requesting prompt responses to auditor requests. The report was noted by the Board.

Review of Pension Fund Committee Items

A report summarising matters considered by the Pension Fund Committee on 20 December 2023 was presented. The Board noted that the funding level of the Pension Fund had improved significantly since the 2022 Triennial Valuation, largely due to rising interest rates. The Board inquired about reducing equity investments, and was advised that the Pension Fund's investment consultants recommended continuous monitoring and re-balancing of holdings. The Pension Fund Committee was retaining a 50% allocation to equities. The Board also asked about de-risking and whether Harrow's Pension Fund performed below benchmark. Officers explained that while some managers had underperformed, leading to the replacement of two equity managers in 2021 and 2022, the strategic allocation to equities remained at 50%. The performance of some London CIV equity funds was noted as a concern. The Board was informed that the newly appointed Chief Investment Officer of London CIV would be invited to the next Pension Fund Committee meeting. The report was noted.

Government Consultation on Investments and Pooling

The Board received an update on the government's consultation regarding Local Government Pension Scheme (LGPS) investments and pooling. The consultation followed reforms announced by the Chancellor of the Exchequer in July 2023, covering asset pooling, levelling up, and private equity opportunities. The outcome of the consultation was published on 22 November 2023. The Board commented that consolidating investment pools would be a significant task, potentially requiring an independent review for success. It was acknowledged that further regulations and guidance would be issued. The report was noted.

Recruitment to Board Vacancy - Active Scheme Member

The Board received a report detailing the steps being taken to fill a vacant position on the Board for an Active Scheme Member. The Active Member Database would also be targeted for recruitment. The report was noted.

Pension Board Work Programme 2023-24

The Board received the Pension Board Work Programme for the remainder of the 2023-24 Municipal Year. The report was noted.