Agenda and minutes

Apologies were received from Councillor Kabir and 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.

None declared.

To approve the minutes of the previous meeting held on Monday 24 July 2023 as a correct record.

The minutes of the previous meeting held on Monday 24 July 2023 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 Finance, 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 was informed that the report was divided into five sections, ‘LPPA Quarter 1 Performance’, ‘McCloud’, ‘Performance Metrics’, ‘Annual Benefit Statements’ and ‘Internal Audit’, which would be addressed in turn. It was explained that the data covered April to June 2023 and therefore was slightly out of date at the time of the meeting.  In addition to the Pension Board meetings, members noted that officers and the Local Pensions Partnership Administration (LPPA) held monthly meetings to review performance and address any issues.

In discussing the overall performance of LPPA during quarter 1, members were advised that the Casework metric showed that performance was above Service Level Agreement’s (SLA) for the majority of cases. However, the performance concerning ‘transfers out’, ‘retirements from active status’ and ‘deaths’ was considered disappointing. As these cases should be a priority for LPPA, officers had raised these concerns with LPPA through varying channels such as the Pension Board, Client Forum and regular performance monitoring meetings. The Board was also informed that the average call wait time for the Help Desk fluctuated between two and four minutes across the quarter, which was within the SLA. In addition, it was detailed that the number of complaints had trended downwards since the completion of the UPM system migration, with 22 complaints since the last Board meeting in July, a decrease from 33 in the prior reporting period. To finalise, Sawan Shah explained that, in addition to the data included in the ‘interim performance reports for July and August’ on page 17 of the agenda, the Fund had now received data for September 2023, meaning that data was available for the whole of quarter 2.

Following the introduction of the report, the Chair welcomed John Crowhurst from LPPA, the Council’s administration service provider, who provided a verbal update regarding recent pensions administration performance, with the update summarised below:

•         In speaking on the underperformance in retirements from active cases in quarter 1, members were advised that performance was improving, with 78% of cases being processed within the SLA in quarter 1, 94% in quarter 2 and, so far in quarter 3, 100% of cases had been processed within the SLA.

•         It was detailed that the percentage of bereavement cases processed within the SLA was 83% in quarter 1, 80% in quarter 2 and from October to the date of the meeting, 8 November 2023, 79% of bereavement cases had been processed within the SLA. However, the Board was informed that this data included all bereavement cases and therefore concerned both cases where there was a beneficiary and also where there was no beneficiary and thus a payment was not required to be made. Whilst LPPA was prioritising cases in which a payment was required, at the time of the meeting, it could not be  ...  view the full minutes text for item 5.

This report updates the Board 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.

John Smith (Pensions Manager, Brent Council) presented a report that updated the Board 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. To begin, John Smith detailed the changes in the SCAPE discount rate, which had been reduced from CPI plus 2.4% to CPI plus 1.7% from 30 March 2023, which increased the notional cost of providing pension benefits. Although the change in the discount rate did not directly impact the LGPS, it was more impactful for unfunded schemes, the Board was advised that many factors within the LGPS were based on the SCAPE discount rate and all contracts to purchase Additional Pension Contributions (APCs) were being revised in April 2024. As the cost of purchasing APCs would increase, it was likely that some existing contracts would terminate and there would be fewer new contracts.

The change to the SCAPE discount also impacted the cost control mechanism which intended to keep the cost of providing pension benefits within a 3% affordability corridor. The Board noted that the core mechanism of the cost cap still used a discount rate of CPI plus 3%, which would ordinarily have seen the cost of providing pension benefits falling due to a decline in longevity. However, the reduction in the SCAPE discount rate (CPI plus 1.7%) increased cost and therefore more than offset the potential reduction, keeping variation within the 3% corridor.

Members were also advised that The Pension Regulator’s Single Code was expected to be published in the near future, which brought together 15 codes, with Code 14 relating to the public sector. It was explained that the wording in the original Code was vague and did not differentiate between schemes within the public sector, with the updated Code using consistent terminology to clarify the applicability of elements dependent on the scheme.

Lastly, the Board noted that the Pensions (Extension of Automatic Enrolment) Act 2023 received Royal Assent on 18 September 2023. This Act enabled the Government to make regulations that lowered the minimum age for automatic enrolment from 22 to 18 and removed the lower earnings limit for contributions.

With no additional contributions and in thanking John Smith for the update, the Board RESOLVED to note the report.

This report informs members of the provision of a Local Government Pensions Scheme (LGPS) focused online pensions learning facility for officers, Pensions Sub-Committee and Pension Board members.

George Patsalides (Finance Analyst, Brent Council) presented the report, which informed members of the provision of a Local Government Pensions Scheme (LGPS) focused online pensions learning facility for officers, Pension Fund Sub-Committee members and Pension Board members. The Board was advised that this report was a continuation of a report considered by the Pension Board in March 2021 regarding member training and development, with the Training Plan attached as Appendix 1 of the report covering the key areas of the LGPS which fulfilled the Fund’s statutory obligations outlined by The Pensions Regulator.

It was explained that the training was hosted on the LGPS Online Learning Academy (LOLA) which had been developed by the Council’s actuaries, Hymans Robertson LLP. The training consisted of ‘bitesize’ modules which corresponded to the topics outlined in the Training Plan. Whilst members could complete training at their own pace, they were encouraged to complete one module per month, with training coinciding with important dates within the fiscal calendar. To conclude, George Patsalides stated that members would be receiving their login details over the coming days.

Following the presentation of the report, the Chair commended the Training Plan and Strategy and encouraged members to complete the training modules as recommended to ensure that the Board had the required underpinning knowledge to carry out its duties. As there were no further questions, the Board RESOLVED to note the report and supported the roll-out of the online learning programme provided by the Council’s actuaries, Hymans Robertson LLP.

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

Sawan Shah introduced 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 was advised that the Risk Register was a standing item at all Pension Board meetings which allowed the Fund to identify and manage risks related to the Pension Scheme. In identifying the main amendments to the Risk Register, the Board noted that the following key changes had been made:

•         The risk related to data migration, Item 5.7, was deleted because the move to Civica (UPM) was completed in November 2022.

•         In relation to Item 9.2, geographical and economic risk in relation to investments, the risk was changed to reflect updated geographical and economic risk, resulting in the risk score and comment being altered.

Members were also informed that officers were conducting a comprehensive review of the Risk Register, in particular relating to the scoring of risks. It was proposed to change the scoring from its current 1-10 scale to a 1-5 scale, as the current system was deemed too granular which made it difficult to differentiate between the magnitude of risks.

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

•         In response to a query relating to the two amber rated risks, concerning the Annual Benefit Statements 2023/24 and geographical and economic risk in relation to investments, the Board was informed that when taking into account their likelihood of occurring, their impact on the Fund and the identified mitigations, these issues posed the highest risk to the Fund.

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

To receive the Brent Pension Fund Quarter 2 2023 Investment Monitoring Report.

Before moving on to remaining items on the agenda, the Chair reminded Board members that agenda items 9, 10, 11, 12, 13 and 15 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 Brent Pension Fund Quarter 2 Investment Monitoring Report, which reviewed the Fund’s performance over the second quarter of 2023. Members noted that the value of the Fund had increased by 0.5% over the quarter, with a valuation of £1,125.7m up from £1,116.4m at the end of Quarter 1 2023. It was explained that the Fund’s passive global equity exposure was the main driver of positive return on an absolute basis, with income and protection assets, on aggregate, detracting from the total Fund return, which was outlined in page 215 of the agenda pack. In addition, members noted that the Fund’s asset allocations were broadly in line with interim target allocations, and the one and three year returns were 4.9% and 5% respectively.

In noting that the report had been subject to detailed review at the Brent Pension Fund Sub Committee on 4 October 2023 and covered monitoring performance up to 30 June 2023, the Board RESOLVED to note the Quarter 2 Investment Monitoring Report without any further detailed comment.

This report provides an update on the Pension Fund Annual Report and Accounts for the year ended 31 March 2023 and the draft Investment Strategy Statement (ISS).

The Board received an update on the Pension Fund Annual Report and Accounts for the year ended 31 March 2023 and the draft Investment Strategy Statement (ISS). Sawan Shah (Head of Finance, Brent Council) explained that progress had been made since the report was published for the Brent Pension Fund Sub-Committee in late September, with the accounts being signed off on 23 October 2023. The achievement of having the accounts signed off was emphasised, as the majority of local government accounts were still outstanding which placed Brent in the minority of local authorities who had signed off their accounts for 2022/23.

With the Board commending the sign off of the accounts and praising the work of the Finance Team, it was RESOLVED to note the report as presented to the Brent Pension Fund Sub Committee on 4 October 2023.

This report relates to the consultation launched by the Department for Levelling Up, Housing and Communities (DLUHC) regarding the investments of the Local Government Pension Scheme (LGPS). The report covers the areas of asset pooling, levelling up, opportunities in private equity, investment consultancy services and the definition of investments.

The Board received a report that outlined the Department for Levelling Up, Housing and Communities (DLUHC) consultation on proposals relating to the investments of the Local Government Pension Scheme (LGPS), covering the areas of asset pooling, levelling up, opportunities in private equity, investment consultancy services and the definition of investments. Members noted that the consultation was published in July 2023 and closed in October 2023, with the main proposals relating to the aforementioned areas highlighted in the cover report.

Overall, the Board was advised that officers were generally supportive of increased pooling and recognised the benefits such as fee savings and greater access to certain asset classes that increased pooling offered. However, members noted that a number of concerns had been raised regarding the proposals, which were widely shared across local government and are summarised below:

•         The proposed deadline for the pooling of listed assets of March 2025 was considered challenging.

•         As it would be difficult to transfer passive or index-tracking assets by the proposed deadline without incurring significant transaction costs and higher ongoing charges, concerns were raised that these assets would not be classified as ‘pooled’.

•         It was believed that funds should retain responsibility for setting asset allocations and therefore any ambitions regarding asset allocations should be guidance rather than a requirement.

•         The resource burden surrounding the requirements for publishing plans/reporting was highlighted.

•         The ambition for funds to invest 10% of asset allocation into private equity was not supported as many funds were fully funded, thus there was less requirement to take risk, and the proposal contradicted other proposals which stated that funds would retain control of their investment strategies.

The Board also heard that the exempt Appendix 1 of the report contained a draft response to the consultation by Hymans Robertson LLP and the Scheme Advisory Board’s response had also been issued since the publication of the report.

In welcoming the report and any future feedback arising from the consultation, the Board RESOLVED to note the report.

This report updates the Board on engagement activity undertaken by LAPFF (the Local Authority Pension Fund Forum) on behalf of the Fund.

The Board received an update on engagement activity undertaken by LAPFF (the Local Authority Pension Fund Forum) on behalf of the Fund, which demonstrated the Fund’s commitment to Responsible Investment and engagement as a way to achieve its objectives.

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

To receive an update from Pensions & Investment Research Consultants regarding the Fund’s performance as of March 2023.

The Board received a presentation from Pensions & Investment Research Consultants regarding the Fund’s performance as of March 2023.

As there were no additional comments, The Board RESOLVED to note the presentation provided.

The following item is not for publication as it relates to the following category of exempt information set out below, as specified under Part 1 Schedule 12A of the Local Government Act 1972:

Agenda Item 11:      DLUHC Consultation on LGPS Investments – Appendix 1

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 any particular person (including the authority holding that information)”

Members are also asked to consider the exclusion of the press and public for the remainder of the meeting as the remaining report to be considered contains the following category of exempt information as specified in Paragraph 3, Part 1 Schedule 12A of the Local Government Act 1972, namely: “Information relating to the financial or business affairs of any 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 that it could be considered without the need to disclose any information 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 updates the Board on recent developments regarding Brent Pension Fund investments held within the London CIV (LCIV).

The Board received and RESOLVED to note, without further comment, a report that provided an update on recent developments regarding Brent Pension Fund investments held within the London CIV.

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

None.