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Agenda and minutes

Venue: Executive Boardroom 3 - Waltham Forest Town Hall. View directions

Contact: John Williams, Democratic Services  Tel 020 8496 4344 Email: john.williams@walthamforest.gov.uk

Items
No. Item

1.

APOLOGIES FOR ABSENCE

Minutes:

Apologies for absence were received from Debbie Drew, Pensions and Treasury Manager.

2.

DECLARATIONS OF INTEREST

Board Members are required to declare any pecuniary or non-pecuniary interest they or their spouse/partner may have in any matter that is to be considered at this meeting.  Interests are defined in the front cover of this agenda.

Minutes:

None.

3.

MINUTES OF PREVIOUS MEETING pdf icon PDF 93 KB

To approve the minutes of the meeting held on 25 April 2018.

Minutes:

The minutes of the meeting held on 25 April 2018 were approved as a correct record and signed by the Chair.

4.

REPORTS TO THE BOARD

As the agenda contains reports that have been considered by the Pension Fund Committee, the minutes of the previous two meetings are attached for information.

Minutes:

Members commented generally that the volume of paper sent to the Board was unreasonable and unnecessarily detailed.  Members were volunteers and the role of the Board was advisory rather than executive.  Therefore they should be provided with bespoke reports that provided the necessary level of detail for meaningful overview, rather than Pension Fund Committee papers, with links to more detailed documents where necessary.

 

Decision

 

The Board asked for briefer, bespoke reports to future meetings as set out above.

5.

MINUTES OF THE PENSION FUND COMMITTEE - 13 SEPTEMBER 2018 pdf icon PDF 101 KB

Minutes:

Noted.

6.

DRAFT MINUTES OF PENSION FUND COMMITTEE - 27 NOVEMBER 2018 pdf icon PDF 120 KB

Minutes:

Noted.

7.

EXCLUSION OF PRESS AND PUBLIC

Reports for all items are open except for certain Appendices for items 7, 11 and 12 as listed per item; which were deemed exempt in accordance with Section 100 (A-H) of the Local Government Act 1972 and Schedule 12A, as amended, when previously considered by the Pension Fund Committee, on  ...  view the full agenda text for item 7.

Minutes:

No members of the press or public were present.

8.

TRAINING - ACCOUNTING AND AUDIT

Minutes:

The Board received training from John Turnbull, Strategic Director of Finance and Governance on pensions accounting and auditing standards.  The presentation slides, prepared by John Raisin, Independent Advisor to the Pension Fund Committee have been appended to the electronic version of the minutes.

 

John Turnbull drew the Board’s attention to the main points as follows:

 

·           The Pension Fund Annual Report must include the fund account and net asset statement with supporting notes and disclosures.

 

·           The accounts are prepared in accordance with the CIPFA Code of Practice on Local Authority Accounting, which require a disclosure checklist and a consistency checklist.

 

·           Administration – The cost of this has come under intense scrutiny and underlined the need for consistency, despite historic differences in the way different funds were manages, especially with regard to investment management costs, and governance costs.  In response CIPFA has issued guidance, last revised in 2016, aiming to promote a sounder basis for comparison between reporting periods and between Funds.

 

·           Actuarial Present Value of Promised Retirement Benefits is calculated according to the relevant International Accounting Standards.

 

·           External Audit – carries out an independent audit and gives an opinion on the Fund’s financial statements and the Pension Fund Committee Annual Report.

 

Mr Turnbull commented that volatility within local government pensions does not have the same impact as it would in the private sector, because the contribution made by the employer is based on the triennial valuation.  He reminded the Board that the next one would be on 31 March 2019, and the Board would see how the Pension Fund Committee deals with the valuation and its impact on the contribution.  It was important to recognise that valuation is based on a certain date and does not include factors such as the future prospects of the Fund.

 

The Chair reminded members that International Accounting Standards produce a standardised valuation but does not reflect the actual returns on assets, but enables comparison with other entities.  Mr Turnbull explained to the Board that the accounts themselves were relatively simple, showing income and expenditure, and presenting a ‘true and fair’ view of the situation.

 

Internal Audit - Members agreed that as well as external audit, internal audit was as relevant to the Board, and probably more so than to the Committee, in that it provided independent assurance on the effectiveness of the existing control environment.  The emphasis was therefore more operational.  There was indeed a school of thought that the Pension Fund should have its own internal audit plan. 

 

In any case, the Chair said that the Board should receive and consider internal audit findings of ‘limited assurance’ in relation to the Fund, or other instances that might give rise to doubt, such as incorrect payments being made to pensioners.  A note from the Chief Internal Auditor would be a useful addition to the agenda, and she would be welcome to attend a future meeting.

 

Minute xx below also refers in relation to separate External Audit reports.

 

Decision

 

The Board

 

(a)    noted the report;

 

(b)  ...  view the full minutes text for item 8.

9.

PENSION REGULATOR CODE 14 - REVIEW - PRESENTATION FROM GERARD MOORE - AN ASSOCIATE OF THE CIPFA PENSIONS NETWORK pdf icon PDF 84 KB

Additional documents:

Minutes:

The Board received a presentation from Gerard Moore, CIPFA Associate.  Slides? Compliance report? Mr Moore said that there were increasingly high expectations of Pension Board members, and that the considered Waltham Forest to be fairly well advanced.  He drew members’ attention to the CIPFA Guide for Pension Boards, which may be accessed here.  The Strategic Director of Finance and Governance commended it to members.

 

Mr Moore said that The Pensions Regulator was taking an increasing interest in the work of pension boards.  The Chair commented that he was surprised that only one London borough had been selected for sampling, and this provided the opportunity to put matters in order.  The Regulator sees boards meeting at least four times a year. 

 

Shared Service – it was likely that the Regulator would take an interest in the Shared Service, Waltham Forest’s relationship with it as an employer.  The Board should therefore focus on the area of administration, and would be entitled to draw the Regulator’s attention if it did not feel that the employer was providing the Service with adequate information.

 

Focus of the Board – Sheila Bennett asked about the respective roles of the Board and the Pension Fund Committee.  It was explained that most of the Committee’s work related to investments.  This was not the role of the Board, but it was entirely right for the Board to focus on processes and administration. 

 

Fund performance - However, the Chair commented that the performance of the Fund had been comparatively poor over a period of thirty years, and the Board was bound to enquire as to how errors of the past could be avoided.  The Board represents the interests of the scheme members and employers in the Fund.  If the Fund is not performing, jobs are put at risk because costs must go up to meet the shortfall.  Therefore it was not unreasonable to make observations on the Fund’s overall strategy and performance.  The Board’s role is nothing if not to ask questions.

 

Mr Turnbull responded that the opportunity for the Board to comment would most appropriately be at the time of valuation.  Mr Moore added that it was reasonable to compare performance with like and neighbouring boroughs.  In London, it was typical for the Council itself to be by far the largest employer.  He contrasted this with large funds outside London: in Merseyside for example, Liverpool City Council although the largest employer only accounted for 22 per cent of the Fund.

 

Reporting Breaches – in relation to 3.4.2 of CIPFA’s compliance report, Mr Moore emphasised that board and Committee members were obliged to report a breach; and that there should be a fast track to enable the reporting of potential breaches to the Code, and this need was even more acute if the Board was only to meet twice a year.  The Chair said that if necessary a special meeting should be called.

 

It was accepted that the potential breach should be material, and not, for example, the failure  ...  view the full minutes text for item 9.

10.

PENSION FUND ADMINISTRATION REPORT pdf icon PDF 81 KB

Additional documents:

Minutes:

Consideration was given to a report of the Strategic Director of Finance and Governance and Pensions and Treasury Manager.

 

John Turnbull introduced the report and said that Waltham Forest’s performance had hitherto been below the rest of the other authorities in the Shared Service.  As discussed at length at the last meeting, the reasons were largely historic, rooted in poor record-keeping and were the main explanation why the Council had moved away from the previous provider, Capita.  As s.151 officer, Mr Turnbull said he had also been concerned by the potential impact of this on the actuary.

 

Stuart Petrie asked whether given the work programme, it would be reasonable to assume that records would be accurate by the end of 2020.  Mr Turnbull said that much of this depended on length of service, and the infinitely more complex calculation associated with the average- rather than final-salary scheme.

 

The Chair added that given the complexities of transfers in and out, people with more than one part-time job (as Sandra Bennett attested), and employers that no longer exist – contractors for example – the chances of 100 per cent accuracy were slim.  The situation was not the same as in the other boroughs in the Service: although performance should begin to converge, the historic pattern of poor quality data was another matter.  The long-term risk of this was a major reason why certain authorities never outsourced administration in the first place.

 

Decision

 

The Board noted the report.

11.

GOVERNMENT ACTUARY'S DEPARTMENT REPORT ON LOCAL GOVERNMENT PENSION SCHEME ENGLAND AND WALES REVIEW OF THE ACTUARIAL VALUATIONS OF FUNDS AS AT 31 MARCH 2016 pdf icon PDF 79 KB

Additional documents:

Minutes:

Consideration was given to a report of the Strategic Director of Finance and Governance and Pensions and Treasury Manager.

 

John Turnbull introduced the report and said the Government Actuary was appointed to report on whether each of the 91 funds within the Local Government Pension Scheme achieved the aims of compliance, consistency, solvency and long-term cost efficiency.

 

The Waltham Forest Pension Fund was flagged as amber as its funding level was in the bottom ten per cent. After further review, the Government Actuary was satisfied that the Fund’s deficit recovery plan was sufficient at this time to work towards addressing the Fund’s deficit.  This was due to historical factors leading to low funding of which the Fund’s officers were well aware.  It was possible for a fund to have 100+ per cent funding but still be flagged amber for other reasons.

 

Decision

 

The Board noted the Governments Actuary’s Department Report on Local Government Pension Scheme England and Wales Review of the Actuarial Valuations of Funds as at 31 March 2016 pursuant to Section 13 of the Public Service Pensions Act 2013.

12.

PENSION FUND ANNUAL REPORT AND ACCOUNTS FINAL AND EXTERNAL AUDIT REPORT pdf icon PDF 81 KB

Additional documents:

Minutes:

Consideration was given to a report of the Strategic Director of Finance and Governance and Pensions and Treasury Manager.  The report was considered by the Pension Fund Committee on 13 September 2018,

 

The Chair commented that there used to be a distinct external audit for the Pension Fund as distinct from the Council’s accounts that was paid for s: he suggested that this would assist the Pension Fund Committee in its role, and the Strategic Director of Finance and Governance undertook to raise this with the new External Auditors EY.

 

The Chair urged Board members to read the parts of the documents relevant to the Pension Fund, and asked that it be circulated in advance the following year.  He added that the report and accounts were very well presented and asked that the Board’s compliments be passed to officers.

 

Decision

 

The Board

 

(a)  noted the report;

 

(b)  asked that consideration be given to the provision of a separate External Audit report on the Pension Fund accounts in future;

 

(c)  that future the Pension Fund Annual Report and Accounts and the External Audit Report be circulated to the Board well in advance; and

 

praised officers for the quality of presentation.

13.

INVESTMENT STRATEGY REPORTS - SEPTEMBER AND NOVEMBER 2018 pdf icon PDF 81 KB

Additional documents:

Minutes:

Consideration was given to a report of the Strategic Director of Finance and Governance and Pensions and Treasury Manager.

 

It was considered that the matters raised in the report had already been considered during the course of the meeting.

 

Decision

 

The Board noted the reports.

14.

DATE OF NEXT MEETING

Minutes:

It was noted that the next meeting of the Board will be on [    ] 2019 at [   ]