Agenda and minutes

The Chair will agree with Members the arrangements for management of the meeting, including the order of business, confirmation of Agenda items and acceptance of late reports.

The Chair opened the meeting following introductions.  The Chair apologised for the late circulation of reports and agreed to take all reports as a matter of urgency for the reasons given.

This is the time for Members to declare any interest they may have in any matter being considered at this meeting.

Councillors Baikie, Gray, Kellaway and Mirza are members of the Local Government Pension Scheme and are advised to declare a personal interest in all items on the agenda.  All Councillors declaring a personal interest are entitled to remain throughout the meeting and take part in discussions.

It is not anticipated that membership of the Pension Scheme would result in a prejudicial interest.  However, Members are asked to consider all items on the agenda and considered their own position and seek advice from the Monitoring Officer if they are in any doubt.

Councillors Baikie, Gray, Kellaway and Mirza declared a personal interest in all items on the agenda by virtue of being a member of the Local Government Pension Scheme.  All Councillors declaring a personal interest remained throughout the meeting and took part in discussions.

Councillor Kellaway declared a personal interest in Agenda Item 7 by virtue of being the Council’s nominated representative on the Board of Newco, an organisation named in the report.

The minutes of the meeting held on 26 June 2012, for are enclosed for approval.

The minutes of the Investment and Accounts Committee meeting held on 26 June 2012 were agreed as a correct record.

Exempt Appendices 1-5 are attached as Agenda Item 13

Stephen Wild, Corporate Finance Manager, presented this report which set out the Investment Advisers’ comments on the strategic asset allocation, property manager proposals and Members’ review of a Global Equity Fund. 

The Committee was informed that it had been some time since the property mandate had been reviewed and that it was proposed to undertake a strategic review of the mandate.  The Committee noted the performance fee structure proposed by a Global Equity Manager

Judy Saunders, the Independent Investment Adviser, outlined her paper and her review of the Fund’s investment strategy.  The Chair thanked Judy for the paper and felt it would help to start the discussion on the investment strategy. 

Decisions

The Investment and Accounts Committee agreed:

1.  to undertake a strategic review of the property mandate;

2.  that the property manager be informed that they do not need to rebalance the current portfolio to bring them back within the 50% core funds threshold;

3.  that a full procurement exercise be undertaken on a Fund Manager;

4.  to provide the Global Equity Manager two additional quarters from 1 July 2012 to recover performance in line with their performance objective, with officers working up contingency plans should they fail to do so;

5.  to note the performance fee structure proposed by the Global Equity Manager, and that officers negotiate a performance cap to the fee;

6.  to note the Review of Asset Allocation and Managers and Property report from the Independent Investment Adviser and that a report be presented at a future meeting on the proposals set out along with the comments of the Investment Adviser; and

7.  that officers arrange a meeting with one of the Fund’s other Global Equity Managers to discuss issues raised in the Independent Investment Advisors review.

Exempt Appendix 1 is attached as Agenda Item 14

Stephen Wild, Corporate Finance Manager, presented this report which sought to provide an update on progress in agreeing the final form and terms between the Administrative Authority and Newham Partnership Working (NPW) for the admission agreement, transfer agreement and provision of any bond or indemnity.  The report also outlined progress in agreeing scheduled body status for Newco Product Limited (Newco).  This was delegated to the Director of Finance, in consultation with the Chair and Director - Legal, People and Change, by the Investment and Accounts Committee on 26 June 2012.

This report was not available at the time of publication as discussions were still ongoing with Newham Partnership Working (NPW) in order to present the latest position of those negotiations.

The Committee was informed that no proposal had yet been received from NPW regarding a bond.  The Committee was also informed of the potential affect on the Council’s Revenue Budget if admitted bodies were unable to secure bonds to protect their pension liabilities.

Councillor Hudson informed the Committee that business units created through the Small Business Programme were expected to generate revenue streams capable of covering their liabilities including pensions.

The Committee also made it clear that the past deficit on transferred staff must pass to NPW.

Decision

The Investment and Accounts Committee agreed to note the report.

Report to follow

Stephen Wild, Corporate Finance Manager, presented this report which informed the Committee that the Pensions Act 2008 requires employers to start automatically enrolling eligible staff into qualifying pension schemes.  The report sets out this Council’s response to these requirements and provided implementation options for consideration.

This report was not available at the time of publication as relevant guidance was only published at the start of August 2012.  Leaving a decision until the next Committee meeting in September may potentially result in difficulties in meeting the implementation timetable.

The Committee was informed that 43% of staff were currently outside of the Local Government Pension Scheme or had opted out.  The Committee was also informed that the potential impact to the Council’s budget strategy was as yet unquantified but would be significant.

Neil Lewin, Head of Commercial Pensions at the London Pension Funds Authority (LPFA), outlined the potential of transitional arrangements, as well as the support that could be offered by the LPFA in informing staff of the benefits of being members of the Scheme and other publicity materials.

Councillor Gray expressed his view that any delay caused through the transition arrangements would set a bad example to the private sector and could reduce the potential value of pensions by up to 4 years of those currently outside the LGPS. 

Councillor Hudson expressed his concern about the impact of pension contributions on the lowest paid staff and asked for further information on the average salary of employees not in the scheme and the potential impact on these staff of making contributions.

The Committee was advised that staff earning less than £8,105 or who were aged under 22 were not affected by the Automatic Enrolment requirements.  The Committee was also advised that the requirements also did not apply to councillors who were not in the Scheme.

The Chair, Councillor Kellaway, requested that regular updates be provided to future meetings on the implementation and publicity of the Automatic Enrolment programme.

Decisions

The Investment and Accounts Committee agreed:

1.  the transitional arrangements as set out in section 2.10 (option 2) of the report;

2.  that officers would provide additional information on the average salary of employees not in the scheme and the potential impact on these staff of making contributions;

3.  that officers should arrange a programme of promoting the benefits of the pension scheme to encourage opted out staff to join; and

4.  that regular updates be provided to future meetings on the implementation and publicity of the Automatic Enrolment programme.

Report to follow

Stephen Wild, Corporate Finance Manager, presented the draft Annual Pension Fund Report.

This report was not available at the time of publication as further work was required to the draft Annual Report to address queries raised by the auditor prior to submission to the Committee for approval.

The Chair, Councillor Kellaway, requested that all Members of the Committee review the draft report and to submit any comments to officers for inclusion.

Decisions

The Investment and Accounts Committee agreed:

1.  the draft Annual Report; and

2.  to delegate authorisation of the final version for publication to the Chair, Councillor Kellaway.

The next meeting of the Investment and Accounts Committee is scheduled to take place on 19 September 2012

The next meeting of the Investment and Accounts Committee is scheduled to take place on 19 September 2012.

In accordance with Section 100(A)(4) of the Local Government Act 1972, the Committee is asked to resolve that the press and public be excluded from the meeting for specific items of business on the grounds that they may involve the likely disclosure of exempt information as defined in the paragraph of Part I of Schedule 12A to the Act, as amended.

Agreed to exclude the press and the public from the meeting during consideration of the following exempt information:

·  Exempt Appendices 1-4 for Agenda Item 6 - Fund Manager Update

·  Exempted Appendix 1 for Agenda Item 7 - Admitted / Scheduled Bodies - Update on Admissions Requests