The Pensions Committee and Board of Haringey Council met on Thursday 25 July 2024 to discuss the Pension Fund's external audit plan, its administration strategy, and investment performance. Key decisions included the approval of the revised Pensions Administration Strategy and the noting of the Pension Fund's risk register and the Local Authority Pension Fund Forum's update.

Pension Fund External Audit Plan – Year to 31 March 2024

The committee received an update on the draft audit plan prepared by the Pension Fund's external auditors, KPMG, for the audit of the Pension Fund's Annual Accounts for the year ended 31 March 2024. KPMG outlined their audit procedures, including checks on asset valuations and a risk assessment of contributions and benefit payments. They noted that this was their first year as auditors and that the plan would be reassessed at year-end. Concerns were raised by Councillor Tammy Hymas regarding segregation of duties, specifically the roles of preparer and reviewer of financial journals. KPMG explained they would be looking for separate roles and responsibilities in this area and that the outcome of this audit test could lead to recommendations for improvement. The committee also discussed the ongoing issue of unaudited financial accounts from previous years, with Taryn Eves explaining that officers were awaiting confirmation from the previous auditors, BDO, and the Government on the process for the new auditor to address these.

Pensions Administration Strategy

The committee approved the revised draft Pension Fund Administration Strategy following a vote of nine in favour. Jamie Abbott, Pensions Manager, introduced the report, which aimed to ensure that both the Administering Authority and scheme employers understood and fulfilled their roles and responsibilities in the Fund's administration. Councillor John Bevan inquired about the number of external employers and whether any had been fined for delays in providing information, to which Jamie Abbott confirmed there were 60 external employers and none had received a fine. It was clarified that the intention of the strategy was not to punish employers but to run the scheme more effectively. Councillor Hymas requested that the annual newsletter on the self-service portal be provided to the committee, which Jamie Abbott agreed to do.

Pensions Administration Update

The committee noted and approved the report providing updates on the Pension Fund's administration activities for the quarter ending 31 March 2024. Jamie Abbott presented the report, which included updates on membership, the online Member Self Service portal, Service Level Agreement (SLA) statistics, and the approval of new admission agreements. Councillor Thayahlan Iyngkaran questioned the proportion of active members registered on the portal, and while there was no specific target, officers were pleased to see an increase. Councillor Bevan raised concerns about performance against Key Performance Indicators (KPIs), noting that the processing of transfers was a current issue. The team had recruited two new apprentices and planned to re-prioritise the transfer backlog. The report also detailed the admission of several entities, including KGB Cleaning Ltd and Accent Catering, as new employers participating in the Haringey Local Government Pension Scheme due to service contracts with local schools.

Haringey Pension Fund Risk Register

The committee noted the report updating them on the Pension Fund's risk register. Jamie Abbott introduced the paper, which focused on administrative-related risks. Craig Pattison queried the cyber risk being rated as green, prompting Tim Mpofu to suggest it should be reviewed and likely changed to amber. Councillor George Dunstall noted the usefulness of a column to indicate when a risk was subject to change, which Tim Mpofu confirmed would be reflected in future iterations. Councillor Hymas sought clarification on the backstop date for outstanding audits, with Taryn Eves explaining that a consultation was underway to set this date, though it was not yet agreed.

Local Authority Pension Fund Forum (LAPFF) Update

The committee noted the update on the Local Authority Pension Fund Forum's (LAPFF) engagement and voting activities. Tim Mpofu presented the report, which detailed LAPFF's engagement with 148 companies during the quarter ending 31 March 2024, primarily on human rights and social issues. The report also highlighted a voting alert concerning Apple, where LAPFF recommended opposing several resolutions, including executive compensation, and Legal and General Investment Management (LGIM) voted accordingly.

Responsible Investment Policy Development Plan

The committee noted the report presenting the Responsible Investment (RI) Policy development plan. Tim Mpofu introduced the plan, which aims to establish the Pension Fund's approach to integrating environmental, social, and governance (ESG) considerations into its investment process. Councillor Matt White suggested officers consult with other authorities with similar plans, and Tim Mpofu confirmed that representatives from Waltham Forest Council and Haringey Council were involved in the London Collective Investment Vehicle's (LCIV) sustainable investment working group. Steve Turner highlighted the importance of understanding the legal position regarding divestments based on ethical decisions and suggested inviting LGIM to provide an update on their responsible investing approach. Patrick Uzice advised that while the statutory requirement to invest in a variety of matters did not inherently prevent divestment from specific companies, the wider impact of such decisions would need to be assessed.

Forward Plan

The committee noted the report outlining key priorities for the Pensions Committee and Board (PCB) over the upcoming months and seeking input into future agendas. Tim Mpofu confirmed he would share dates of relevant future training courses and encouraged members to undertake available training.

Pension Fund Quarterly Investment and Performance Update

This item was noted and was to be discussed in depth under the exempt agenda item 19. The report provided updates on the Pension Fund's performance for the quarter ended 31 March 2024, including an overview of fund performance, market commentary from the independent advisor, investment manager performance, asset allocation, and market outlook. The Fund's investment portfolio stood at £1.868bn, a 5.68% increase over the quarter. While the Fund slightly outperformed its benchmark for the quarter, it had underperformed over longer periods. The estimated funding level as at 31 March 2024 was 140%, an improvement attributed to increased interest rates. Global equities saw significant gains in Q1 2024, driven by expectations of interest rate cuts and positive corporate earnings. The report also detailed the Fund's asset allocation, with all asset classes within acceptable ranges, and noted that approximately 78% of the Fund's assets were invested with the London Collective Investment Vehicle (LCIV).