Agenda and minutes

An Apology for absence was received from Sunil Gandhi (Employer Member – Non Brent Council).

Members are invited to declare at this stage of the meeting, the nature and existence of any relevant disclosable pecuniary or personal interests in the items on this agenda and to specify the item(s) to which they relate.

The Chair, David Ewart, declared a personal interest as a member of the Chartered Institute of Public Finance and Accountancy (CIPFA) and as a member of another local authority pension fund. 

To approve the minutes of the previous meeting held on 09 November 2022 as a correct record.

The minutes of the previous meeting held on Wednesday 9 November 2022 were agreed as an accurate record.

To consider any matters arising from the minutes of the previous meeting.

None.

This report updates the Pension Board on various pensions administration matters as part of its remit to oversee the administration of the Brent Pension Fund.

Sawan Shah (Head of Pensions, Brent Council) introduced the report, which updated the Pension Board on various pensions administration matters as part of its remit to oversee the administration of the Brent Pension Fund. The Board firstly focussed on the Pensions Administration Performance Report, which reviewed the performance of the Local Pensions Partnership Administration (LPP) contract against agreed Service Level Agreements (SLAs) during October to December 2022. Members noted that the full Q3 2022-23 Performance Report was attached as Appendix 1 to the report.

As an initial introduction, Sawan Shah provided an overview of the membership statistics for the Brent Pension Fund, which as of December 2022, consisted of 5,999 active members, 7,138 pensioners (including dependants), and 10,065 deferred beneficiaries. Regarding these numbers, the Board noted that membership did not tend to vary significantly from quarter to quarter. Sawan Shah explained that the majority of the working age active members fell into the 31 to 60 age groups while 51 to 60 was the banding with the highest number of deferred members. For pensioner and dependant members, the Board were informed that the number of members in the under 65, 65 to 69, and 70 to 74 bands was broadly the same, with membership numbers declining progressively into the older bands.

Regarding LPP performance in comparison to SLAs, the Board were notified that on 11 November 2022 the Brent Pension Fund had completed migration to a new pension administration system called Universal Pension Management (UPM). The migration process had impacted pension administration performance, with the quarterly average percentage of cases processed on time being 84.0%, which was below the usual contractual SLA target of 95%. However, due to disruption caused by the UPM migration, revised SLAs had been agreed with the Fund, with a target of 90% of payment cases being processed on time and 70% for other case types. In addition to the underperformance compared to contractual SLAs of case processing, the Fund saw significant increases in its average Help Desk wait times. In October 2022, the average wait time was 3 minutes and 58 seconds, in November this increased to 4 minutes and 55 seconds, and in December this increased again to 9 minutes and 2 seconds. Overall, average wait times across the quarter were approximately 6 minutes with the last two months of the quarter above the target time of 4 minutes. Once again, this was attributed to an increase in calls and caseload spikes related to the UPM migration. Sawan Shah reassured the Board that monthly meetings were held between the Fund and LPP to monitor performance and review trends.

Before handing over to John Crowhurst (Commercial Director, LPP) to provide a more detailed review of pension administration performance, Sawan Shah highlighted the complaints data since the last Pension Board meeting in November 2022. 13 new complaint cases had been received, which included 4 new complaints in November 2022, 7 new complaints in December 2022, and 2 new complaints in January 2023.  Out of the 13  ...  view the full minutes text for item 5.

The purpose of this report is to update the committee on recent developments within the Local Government Pension Scheme (LGPS) regulatory environment and any recent consultations issued which would have a significant impact on the Fund

Ravinder Jassar (Deputy Director of Finance, Brent Council) introduced the report providing an update on recent developments within the Local Government Pension Scheme (LGPS) regulatory environment and any recent consultations issued which would have a significant impact on the Fund.

In considering the report the Board noted the following updates:

• In October 2022, the Department for Levelling Up, Housing and Communities (DLUHC) had published the LGPS statistics for 2021/22. Highlights were as follows:

Ø  Total expenditure was £14.4 billion, an increase of 6.6% cent on 2020/21. This was driven in part by an increase in lump-sum retirement payments.

Ø  Total income was £15.9 billion, a decrease of 8.1% on 2020/21.

Ø  Employer contributions decreased by 24.3 per cent on 2020/21 to £7.8 billion. This decrease in total income and employer contributions was common in the final year of the three-year valuation cycle due to employers making early payment of contributions in the previous two years.

Ø  The market value of LGPS funds on 31 March 2022 was £364 billion, an increase of 8%.

Ø  There were 6.3 million scheme members as of 31 March 2022, comprising of 2 million active members, 1.9 million pensioners and 2.3 million deferred members.

• The announcement in relation to the 2023/24 employee contribution bands, which would be effective from 1 April 2023. These were calculated by increasing the 2022/23 employee contribution bands by the September CPI figure of 10.1%. As the employee contribution bands were being uplifted by a higher rate than the average pay award, there was likely to be more members of staff dropping into a lower band than in previous years. This would reduce the contributions payable to the Fund by members. The Board were advised that this would have a small negative impact on the cashflow position of the Fund in the short term, however, higher inflation expectations had been factored into the 2022 valuation therefore it was not a cause for concern in the longer term.

• Ravinder Jassar explained that DLUHC had issued a consultation on changing the in scheme revaluation date from 1 to 6 April, with effect from 1 April 2023 and thereafter on each 6 April. The proposed change would remove the impact of high inflation on the annual allowance (AA) and reduced the number of members incurring a tax charge. The consultation had run for two weeks and closed on 24 February 2023. The board were informed that the Fund’s actuarial advisors had produced a briefing note on this subject which was attached in Appendix 6 of the report.

• Lee Rowley MP, Minister for Local Government, had responded to a letter written to him in August 2022 by the Scheme Advisory Board regarding the separation of main authority accounts and pension fund accounts. Currently the two accounts were tied together which had caused delays in signing off pension fund accounts when authority accounts were awaiting audit sign off. Officials within central government had been asked to consider the scope for developing this further, although the separation  ...  view the full minutes text for item 6.

This report presents the updated Risk Register for the Brent Pension Fund Pensions Administration Service

Carlito Rendora (Senior Finance Analyst, Brent Council) presented the report, which updated the Board on the Risk Register, attached as Appendix 1 of the report, for the Brent Pension Fund Pensions Administration Service. The Board were advised that one key change to the Risk Register had occurred, a new risk had been added in response to significantly higher than expected inflation (highlighted as item 9.7 within the Risk Register attached as Appendix 1 to the report).  Other changes made to the Risk Register to keep the document up to date had been outlined in section 3.6 of the main report. In addition, the Board received and noted the Risk Strategy for the Fund, attached as Appendix 2 of the report.

In thanking Carlito Rendora for the for the overview, the Chair welcomed questions and contributions from Board members. Contributions, questions, and responses were as follows:

• Regarding the impact of the downsizing and closure of primary schools, the Board were informed that if this were to occur it would have an effect on the Fund’s cashflow, since fewer staff resulted in fewer members and less contributions. Nevertheless, Sawan Shah (Head of Pensions, Brent Council) reassured the Board that the Fund’s actuary advisers had recently modelled the maturity of the Fund, doing so at every triennial evaluation, with the issue not being a significant concern at the time of the meeting.

• Ravinder Jassar (Deputy Director of Finance, Brent Council) advised the Board that the external auditors, Grant Thornton, were placing the Pension Fund under ‘hot review’, which was a further detailed review of the Fund’s accounts before year-end closure. As a result of the ‘hot review’, the Board noted the potential for delays in closing the accounts on which a further update was requested at the next Board meeting.

• Concerning the review dates of the items included in the Risk Register, the Board heard that the items with 2023 stated as the next review date were reviewed annually, whereas it was noted on the Risk Register where items were reviewed on a more frequent basis. Furthermore, Sawan Shah informed the Board that some actions were Council-wide, such as GDPR training which was completed by all officers on an ongoing basis. Sawan Shah advised that he would ensure a further review was undertaken to ensure that all information was accurate and up to date

• The Board were advised that the scores on the Risk Register reflected the likelihood and impact of the risk without the control in place. The control was influenced by the risk score, with higher risk scores resulting in a higher level of control attached to it. The Board noted that the control-adjusted risk scores were not currently included as part of the Risk Register.

The Board welcomed the report and as no further issues were raised it was RESOLVED to note the report including the key changes set out in section 3.5 of the report.

This report presents the analysis and results of the investment review carried out by Hymans Robertson. The review follows on from the 2020 strategic investment review and the Fund’s 2022 Actuarial Valuation.

Before moving on to remaining items on the agenda the Chair reminded Board members that agenda items 8, 9, 10, 11, 12, and 14 were reports referred to the Pension Board for information following their consideration at the Brent Pension Fund Sub-Committee.

The Board received an update on the review undertaken by the Fund’s investment advisor, Hymans Robertson, of the current investment strategy, following on from the Fund’s 2022 valuation. The purpose of the review was to evaluate the current investment strategy and analyse the ability of alternative strategies to meet the Fund’s strategic objectives and followed the report having been considered in detail at the Brent Pension Fund Sub Committee on 20 February 2023.

In receiving the update, the Board noted that it was best practice to periodically review the Fund’s investment strategy to allow for the consideration of recent data and to review the performance of assets. The Board were advised that the Fund’s 2019 investment strategy was deemed as still valid, with recommendations to rebalance asset holdings to move towards long-term allocation targets. The next steps following on from the review was to prioritise actions over the next three years, with the investment in the London CIV UK Housing Fund and the rebalancing of the Fund’s equity holdings likely to be considered priorities.

After the conclusion of the update, the Chair invited contributions from Board members, with questions, responses and comments summarised below:

• In responding to a question raising concerns over the three year time period between reviews due to recent economic volatility, Sawan Shah stated that the Fund was a long-term investor meaning current volatility was expected to have less of a long term impact. The Board were informed that the performance of the Fund was reviewed quarterly but the three year investment strategy review, which was resource-intensive, struck a good balance between short-term and long-term monitoring.

• Regarding the recommendation to reduce global equity holdings by 6%, the Board were advised that the decision was largely a defensive measure. The Board noted that the Fund’s maturity was growing, meaning the Fund was well funded and was able to make gains in less risky assets. In addition, income assets, such as property and infrastructure, were better protected from inflation, resulting in a number of funds advising greater allocations to these holdings.

Members welcomed the update and with no further issues raised, it was RESOLVED to note the Investment Strategy Review, including the exempt information included within Appendix 2 of the report.

To receive the Brent Pension Fund H2 2022 Investment Monitoring Report.

The Board received an update on the Brent Pension Fund H2 2022 Investment Monitoring Report, which reviewed the Fund’s performance over the second half of 2022.

In noting that the report had been subject to detailed review at the Brent Pension Fund Sub Committee on 20 February 2023 and covered monitoring performance up to 31 December 2022, the Board RESOLVED to note the H2 2022 Investment Monitoring Report without any further detailed comment.

This report updates the Board on the London CIV UK Housing Fund and the Product Assurance Review conducted by the Fund's investment advisors.

The Board received a report updating members on the London CIV UK Housing Fund, which included the Product Assurance Review (PAR) conducted by the Fund's investment advisors (Hymans Robertson) and their recommendations for investment and implementation. The Board were informed that both London CIV and Hymans Robertson had attended the Pension Fund Sub-Committee on 20 February 2023 in order to present the proposal in further detail. The Sub-Committee had agreed, in principle, to a commitment of 2.8% of total Fund assets (circa £30m) to the London CIV UK Housing Fund.

Following the introduction to the report, the Chair welcomed questions and comments from Board members. The subsequent discussion is summarised below:

• In response to a comment about the potential reliance on central government funding in relation to social housing provision and the associated impact in terms of exposure of the London CIV UK Housing Fund, the Board were assured that the associated risks had been identified and recognised.  The Fund identified for Brent’s investment did not include exposure to the private rented market and was not specifically aimed at properties in Brent having a national focus instead.

Members welcomed the report and as no further issues were raised it was RESOLVED to note the update provided and investment identified, including the exempt information included within Appendix 1 of the report

This report sets out the results of 2022 triennial actuarial valuation and the Funding Strategy Statement (FSS) to the Board.

The Board received a report providing an update on the results of the 2022 triennial actuarial valuation and the associated policies, which included the Funding Strategy Statement.  In noting that the report had been subject to detailed consideration at the Brent Pension Fund Sub Committee on 20 February 2023, the Board received a further update on key actions that had occurred since the last Pension Board meeting in November 2022. These included issuing draft employer results schedules to employers, which showed the contribution rate for each employer for the next three years. In addition, an employer’s forum had been held in November 2022, in which the process for determining the contribution rate was explained and employers questioned officers and the fund actuary on the valuation process. The Board also noted that the Council expected the final version of the draft valuation report, attached in Appendix 1 of the report, to be completed before the 31 March deadline.

Members welcomed the update and as no further issues were raised it was RESOLVED to note the update provided on the draft Valuation report and associated Funding Strategy Statement, including the exempt information included within Appendix 5 of the report.

This report summarises the outcome of the Investment Management Services tender.

The Board received a report which summarised the outcome of the investment management services tender. The Board were informed that Hymans Robertson LLP were re-appointed to provide investment management services for the Brent Pension Fund. In welcoming the update, the Chair praised the 60% weighting given to the quality criteria during the procurement process.

With no further issues raised it was RESOLVED to note the update on the procurement of investment management services and reappointment of Hymans Robertson LLP as presented to the Brent Pension Fund Sub Committee on 20 February 2023.

The following items are not for publication as they relate to the category of exempt information set out below, as specified under Part 1, Schedule 12A of the Local Government Act 1972:

Agenda Item 8:       Investment Strategy Review – Appendix 2 (Investment Strategy Review 2023: Appendix 7 – Low Carbon Equities).

This appendix has been classified as exempt under Paragraph 3 of Part 1 Schedule 12A of the Local Government Act 1972, namely: “Information relating to the financial or business affairs of and particular person (including the authority holding that information).”

Agenda Item 10:      Housing Allocation Report – Appendix 1 (Product Assurance Review – London CIV UK Housing Fund).

This appendix has been classified as exempt under Paragraph 3 of Part 1 Schedule 12A of the Local Government Act 1972, namely: “Information relating to the financial or business affairs of and particular person (including the authority holding that information).”

Agenda Item 11:      2022 Triennial Valuation Results and Funding Strategy Statement – Appendix 5 (Rates and Adjustments Certificate).

This appendix has been classified as exempt under Paragraph 3 of Part 1 Schedule 12A of the Local Government Act 1972, namely: “Information relating to the financial or business affairs of and particular person (including the authority holding that information).”

The press and public will be excluded from the remainder of the meeting as the report(s) to be considered contain the following category of exempt information as specified in Paragraph 3, Schedule 12A of the Local Government Act 1972, namely:

“Information relating to the financial or business affairs of and particular person (including the authority holding that information).”

At this stage in proceedings the Pension Board was asked to consider whether they wished to exclude the press and public for consideration of the final report on the agenda.  Given the following item had been submitted for information and it was felt could be considered without the need to disclose any information likely to be classified as exempt it was RESOLVED not to exclude the press and public from the remainder of the meeting.

The meeting then continued in open session

This report outlines the funding position and the process for an employer’s exit from the Fund.

The Board received a final report providing an update on the funding position and the process for an employer’s exit from the Fund. The Board were advised that the matter had been considered in detail at the Brent Pension Fund Sub Committee on 20 February 2023 with the impact of the employer leaving the Fund not expected to create a significant impact.

The Board therefore RESOLVED to note the update provided without any further comment.

The provisional dates scheduled for Pension Board meetings in 2023-24 have been identified as follows:

Monday 24 July 2023 at 6pm

Wednesday 8 November 2023 at 6pm

Monday 25 March 2024 at 6pm

Please note these dates are subject to final confirmation with meetings, at this stage, scheduled to continue online.

The Board noted that the provisional dates for the next meetings were as follows, with meetings (at this stage) scheduled to continue online:

• Monday 24 July 2023 at 6pm
• Wednesday 8 November 2023 at 6pm
• Monday 25 March 2024 at 6pm

Notice of items to be raised under this heading must be given in writing to the Head of Executive and Member Services or her representative before the meeting in accordance with Standing Order 60.

None.