Newham Labour Group Questionnaire on Council Governance Model (deadline 2.10.20)

 

Dear John (4000 Labour members in Newham would have received this email on 26 September)  Newham Labour Group’s Working Party are conducting a survey on the Democracy and Civic Participation Commission’s Report and the future of democracy in Newham. Please do look at the information in the leaflet provided here.  This is a survey being conducted by the Newham Council Labour Group’s Working Group, who are considering what alternative governance model should appear on the ballot during the planned referendum that is a Newham Labour manifesto pledge. The decision on the alternative governance model will be taken at a meeting of Newham Labour Group that will be held by 15th October 2020 and we would like your views to feed into the process.  The manifesto pledge made in 2018, was to hold a referendum on the future of the current Directly Elected Mayoral model with a clear alternative so that Newham voters can decide which governance model is best for Newham Council. The date put forward by Newham Labour Group will be set following further conversation with the National Labour Party and subject to the Coronavirus Laws.   Your views will feed into the Working Group’s report to the Newham Council Labour Group. Thank you for taking the time to fill this survey out. The results from this survey will form part of the report to the Newham Council Labour Group. Your data or responses will not be used individually at any point. All responses and data collected from this survey will be handled and processed by Newham Labour Group Organiser, Hasib Baber, in the strictest of confidence and your name will not appear in any report. The survey will need to be completed by the 2nd October 2020 to allow for compilation and analysis. The use of Labour Membership number is to make sure only Labour members complete the survey, the responses will be anonymised and in no way be linked to you should you choose not give your name. Any surveys completed without providing a valid membership number will not be counted.  You can complete the survey at the following link. As mentioned, for issues of security, you will need your Labour Party membership number in order to fill in and submit the survey for a valid vote.  Your Labour Party membership number is printed on your membership card and on postal correspondence from the Labour Party. You can also access it by logging on to my.labour.org.uk/profile to view a digital copy of your membership card.  Kind regards,  Hasib Baber  Newham Labour Group Campaigns Organiser •Working Group Local Governance Information Leaflet (1).pdf

"Holding your Board to Account" fringe NAPF 2014

I am still catching up on posts about the NAPF (National Association Pension Funds) annual conference earlier this month.

This fringe was one of the better ones. Governance manager, Ashley Hamilton, from Royal London Asset Management (RLAM) spoke about how investors should hold company boards to account and what lessons should we learn from past corporate scandals.

I knew Ashley when she use to work for Pension governance consultants PIRC.  RLAM is part of Royal London which is the UK's largest mutually owned insurance company.

Ashley explained that companies are starting to recognise that investors see good governance as a a means to add value. In Japan it is also seen as a market advantage. Such standards help protect the integrity of the London market and stop certain international companies listing here.

Many investors are "passive". This means they are exposed to all companies in an index. Poor governance does have financial consequences.  For example Olympus's unlawful "kickbacks" and Newscorp, which lost $7 billion in market value in 4 days after the phone hacking scandal was exposed.

Reporting and transparency is not a means to an end.  Need to also look at corporate culture and leadership.

Tesco ticked all of the boxes of standard corporate governance. So what went wrong? the Board lost touch with customers and suppliers. It is now sending executive back to the shop floor.

Barclay's Bank also ticked all the boxes and complied with codes. Lord Turner thought it's problems were a due to a pattern of behaviour, complex structures and aggressive regulatory approaches. There needs to be cultural reform. A recognition that making excess profits at the expense of stakeholders or customers is wrong and self defeating.

Investors should be aware and look out for "Governance hot spots".  Such as a dominant or aggressive CEO who does not welcome debate or discussions: when there is no real "succession plan"; ask does the Chair of the remuneration committee really understand what and why they pay Executives or do they just leave it to the consultants to explain? 

Does the organisation have diverse pools of talent? Good governance is an indicator of risks and of opportunity. Governance is an art not a science.

RLAM vote all UK shares in Annual General meetings and if against or abstain, they will write to companies and explain why. They will take part in collective engagement and as a last resort will make a public statement.  Engagement is best pre-crisis, not post.

Her fund manager colleagues at RLAM recently thanked Ashley for her report on poor practises at the troubled retailer, Sports Direct. They took notice of her concerns and sold out of the company which then went on to lose 20% of its value.

There are of course limits of engagement. An index fund will have to hold shares in companies with bad practises; there is a "free rider problem" and absentee proxy votes still swamp AGMs.  There is also concentration of company AGMs in April and May which means there is time and resource constraints.

Corporate governance is important but not a panacea. Cultural problems are more serious than non-compliance. Trustees should be asking questions of fund managers and consultants. Actively vote your shares and facilitate information flows.

I asked Ashley the question was there empirical proof that companies that are held to account produce superior long term returns?

Ashley responded by saying that there is not that clear data but there is plenty of evidence of what happens when things go wrong.

Who do you want to look after your future? Tell the FCA to give you a say!

This is another great campaign by ShareAction to encourage all of us with pensions to hold the financial services industry to account for what they do with our money.

It is clear that we are being ripped off and we often have little or no control over the means of our future. To me both these points are related.

The new regulator, the Financial Conduct Authority (FCA) is holding a "consultation" on governance but ShareAction believes that the Government clearly thinks that we don't have any rights to what happens to our money or how it is invested.

If you think it is important that you have transparency and a voice - then click here and let the FCA know.

Its not an Equitable Life Henry if your pension has been robbed

On Friday I received a cheque for £46.13 from the UK government in compensation for its failure to regulate the Equitable Life.  It was estimated that I had a "relative loss" of £205.94 (including interest) out of a holding that should have been worth £1250.30 (see scan left). It was pro rata down to £46.13.

Equitable Life ran my Additional Voluntary Contributions (AVC) top up pension saving fund at Tower Hamlets Council. In 2000 the Equitable Life effectively became bankrupt due to an adverse House of Lords court judgement.

The 200 year old mutually owned Equitable Life had promised to pay savers a rate of return which due to changing market conditions was completely unaffordable.

The basis of the claim against the Government financial regulators (and others) at the time was that they had failed to regulate it properly and if they had then it wouldn't have failed.

I had only recently started saving with Equitable life and had 50% invested in a unit trust fund which was not directly affected. However, Equitable life was seen at the time as a leading pension and investment company and many people lost a massive chunk of their life savings.

The reasons for the collapse are complex and still under dispute but rubbish governance as well as poor regulation was at the heart of it. Equitable Life was the oldest mutual insurer but behaved almost as badly and as recklessly with policy holders money as any of the big privately owned banks did before 2007.

This is a lesson to all of us who believe in mutual ownership.   30,000 policy holders died before they could receive any compensation and probably less than 10% of losses are going to be compensated.

Check out Equitable Life Members Support Group

AMNT open meeting Thursday 26 Sept - Fees, Charges (& what we can do about them)

The next open meeting of the AMNT is next Thursday 26 September 2013. All member nominated pension trustees and representatives are invited to join the AMNT and attend. Click on this Eventbrite link.

"Getting the best value for money is the theme of your next AMNT members' meeting. Fees, charges (and what we can do about them), responsible investing and trustee training will all be on the agenda. The open meeting takes place at the Pensions Insurance Corporation 14 Cornhill, London EC3V 3ND on Thursday 26th September.

As you know, all trustees should complete the Pensions Regulator's Trustee Toolkit, and even those who have done so may know that the Regulator regularly updates the training. On the morning of 26 September you are invited to join in our Trustee Toolkit Training session, and this time we will be going through the Regulator's e-learning modules on Pension Liberation Fraud, and "DB scheme, solvent employer: wind-up or buy-out". We are allowing lots of time to talk around these issues during the session.

After lunch we will be discussing responsible investing and some of the corporate factors that may have a negative impact on investment returns to our schemes which we as trustees should be looking at.

We will also be reporting back on the Department for Work and Pensions' consultation on governance in defined benefit schemes and their proposals on improving trusteeship in the DC world.

Our recent newsletter asked whether you might be interested in taking the PMI exams - the Award in Pensions Trusteeship – and several members responded.

On the day we hope to be able to go through some of the previous exam questions to give you a flavour of what it involves.

But many of our trustee members place the highest value on being able to meet up with fellow trustees and talk about common issues and problems, and there'll be plenty of time on the day to chat informally. As always, those who don't need to rush off can stay for a drink and have another opportunity to network".

Focus on Member Nominated Representation in the LGPS

This is the article I posted on the Pension Social Media site Mallowstreet for a feature they did on trustees. I have been short listed for the annual Mallowstreet Awards for 2013 as "Most Influential Trustee" (2nd year running) and "Top Blogger". 

"I've been a member nominated representative on the Tower Hamlets Local Government Pension Scheme since 1996 (there are no Trustees in the LGPS). I was nominated by my trade union UNISON and have been there ever since. In fact all the original Councillors, Council officers, professional advisers and fund managers have all left apart from me. I am also the admitted body representative.  

There are 101 different LGPS. Collectively they are worth around £130 billion. It is an open defined benefit scheme.  The Tower Hamlets scheme is worth (June) £930 million and has 16,000 members (5,200 active).  There is an investment panel which reports to a Council committee.

The main challenge as a "trustee" is keeping up-to-date with the scheme paperwork and keeping your pension knowledge current. The best part of the role (not really a highlight) is holding your fund managers and advisers to account. Especially with regard to good Governance and other ESG issues. It is surprising how poorly prepared some managers are when they come to present to panel. Even in Beauty Parades you find prospective managers come to see us and they haven't even read our Statement of Investment Principles.

The LGPS is changing dramatically next year with a new set of benefits. Also there are going to be local pensions boards set up in partnership with the trade unions and the employer representatives (elected Councillors). There will be for the first time 50/50 representation on these boards.

I think all member nominated trustees or representatives need more support and independent training. UNISON is planning to offer training and advice to its representatives. The TUC Trustee Network and the Association of Member Nominated Trustees (AMNT) have been really supportive (as of course can be social media sites such as Mallowstreet!).

It can be very difficult as a lay trustee to feel confident enough to challenge your advisers and managers. You need the input of your peers".

A thousand trustees for the LGPS

This is an article I wrote on behalf of the AMNT for Professional Pensions on the future Governance of the Local Government Pension Scheme.

"The Public Sector Pensions Bill is currently on its way back to the House of Commons after being amended by the Lords. One of these amendments, accepted by the government, is that the proposed new Local Government Pension Scheme boards will have 50/50 employer/employee representation.

There are 101 separate council pension funds in the UK. At the moment most of details are still unclear but it is thought that board members will have similar powers and responsibilities as those of trustees in private sector defined benefit schemes.

Most existing LGPS schemes are supervised by elected councillors with often little or none beneficiary representation. If for example it is agreed that these new boards had ten members each, then there is a huge organisational and logistical challenge ahead. It is thought the new governance arrangements are planned to start in April 2014.

While many existing councillors may simply switch from existing committee panels to boards, they will have to be selected, trained and supported in the new arrangements. Employees will in many cases have for the first time the right to representation and full voting rights.

I have been an employee representative on a London LGPS since 1996. At first for many years I was called an "observer" on the pension investment committee. This meant that I had no vote but did have access to papers, attend beauty parades, training and could ask questions to advisors and fund managers. This changed and now I and one other employee representative have two seats and voting rights on the investment panel and a seat but without voting rights on the formal council pension committee.

I would point out that we have never felt the need to actually force a vote at investment panel. Like the vast majority of private sector pension trustee meetings, issues are best dealt with by consensus whenever possible. I don't expect that to change with 50/50 representation.

This is a huge step change for employees and the local government trade union Unison is already planning an ambitious recruitment and training programme for representatives. With a 19.5% total contribution cap it is now very much in the interests of employees and employers to make sure the fund is well run and efficient.

Professional advisers and fund managers will also have change the way they do business with the LGPS. The issue of the merger of LGPS is separate.

Everything will have to change to some degree. I am also an employer trustee on a private DB scheme and it has been a very different experience to that in the LGPS.

It is vital that we get the LGPS governance arrangements right. Not only are four million people in the UK members but it is collectively the biggest funded pension scheme in the UK with around £150bn in assets. Meanwhile some senior members of the government have privately referred to the LGPS as the British sovereign wealth fund and hope it will invest more in housing and infrastructure to kick start the economy.

The AMNT welcomes this development which puts to rest this governance anomaly between public and private funded DB. Can the government now tackle the appalling governance gap in contract-based defined contribution schemes?

John Gray is chairman of the AMNT DB working group"