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Agenda and minutes

Venue: Committee Room 4, Town Hall, Upper Street, N1 2UD. View directions

Items
No. Item

111.

Apologies for absence

Minutes:

Received from David Bennett, Thelma Harvey and David Poyser (observers from Pension Board) and Councillor Andy Hull.

112.

Declaration of substitutes

Minutes:

None.

113.

Declaration of interests

If you have a Disclosable Pecuniary Interest* in an item of business:

         if it is not yet on the council’s register, you must declare both the existence and details of it at the start of the meeting or when it becomes apparent;

         you may choose to declare a Disclosable Pecuniary Interest that is already in the register in the interests of openness and transparency. 

In both the above cases, you must leave the room without participating in discussion of the item.

 

If you have a personal interest in an item of business and you intend to speak or vote on the item you must declare both the existence and details of it at the start of the meeting or when it becomes apparent but you may participate in the discussion and vote on the item.

 

*(a)      Employment, etc - Any employment, office, trade, profession or vocation carried on for profit or gain.

(b)        Sponsorship - Any payment or other financial benefit in respect of your expenses in carrying out duties as a member, or of your election; including from a trade union.

(c)        Contracts - Any current contract for goods, services or works, between you or your partner (or a body in which one of you has a beneficial interest) and the council.

(d)        Land - Any beneficial interest in land which is within the council’s area.

(e)        Licences- Any licence to occupy land in the council’s area for a month or longer.

(f)        Corporate tenancies - Any tenancy between the council and a body in which you or your partner have a beneficial interest.

 (g) Securities - Any beneficial interest in securities of a body which has a place of business or land in the council’s area, if the total nominal value of the securities exceeds £25,000 or one hundredth of the total issued share capital of that body or of any one class of its issued share capital. 

 

This applies to all members present at the meeting.

 

Minutes:

None.

114.

Minutes of the previous meeting pdf icon PDF 119 KB

Minutes:

RESOLVED:

That the minutes of the meeting held on 16 October 2017 be confirmed as a correct record and the Chair be authorised to sign them.

115.

Pension Fund performance - 1 July to 30 September 2017 pdf icon PDF 272 KB

Minutes:

The Head of Pension Fund and Treasury Management pointed out that the figures in paragraph 3.3 of the report actually indicated performance with the hedge and should be amended as follows to indicate performance without the hedge:

 

Paragraph 3.3 – replace the figures “1.33, 1.37, 8.20% and 7.67%” with “1.34, 1.38, 8.38% and 8.8%”, respectively.

 

 

RESOLVED:

(a) That the performance of the Fund from 1 July to 30 September 2017, as per the BNY Mellon interactive performance report, detailed in the report of the Corporate Director of Resources, be noted.        

(b) That the report by Allenbridge Investment Advisers on fund managers’ quarterly performance, detailed in Appendix 1 to the report and their presentation, including the amendment to page 27 of the agenda by replacing the figure “8.1%” for Hearthstone’s performance over three years with “7.04%”, be noted.

(c) That, for the future, the quarterly performance figures include both the hedged and unhedged figures.

(d) That it be noted that the Head of the Pension Fund and Treasury Management would raise the matter of underperformance by London CIV – Newton at a future London CIV managers meeting and would seek a meeting with Newton.

 

 

 

 

116.

Presentation from Allenbridge Investment Advisers on quarterly performance pdf icon PDF 494 KB

117.

London CIV update pdf icon PDF 432 KB

Minutes:

Members expressed concern that Hugh Grover, the Chief Executive, and Jill Davys, Client Relationship Director, had left London CIV and noted that their successors were from City and financial backgrounds, rather than local government.  The Sub-Committee regretted the loss of local government experience in these departures.

 

RESOLVED:

(a) That the progress made at the London CIV in launching funds and running portfolios over the period from July to October 2017, as detailed in the report of the Corporate Director of Resources, be noted.

(b) That, in view of the Sub-Committee’s concern about the recent departure of the Chief Executive and the Client Relationship Director, the Chair write to the London CIV to express the Sub-Committee’s concern at the loss of local government expertise in the management team at London CIV.

(c) Noted the Sub-Committee’s interest in attending the forthcoming Infrastructure Seminar, the date for which was to be arranged.

118.

Investment strategy update - infrastructure pdf icon PDF 122 KB

Minutes:

RESOLVED:

(a) That the progress made on an infrastructure procurement process, as detailed in the report of the Corporate Director of Resources, be noted.

(b) That officers collaborate with other interested local authorities in a joint tender for infrastructure.

(c) That officers continue to contribute to the London CIV infrastructure working group.

119.

Pensions Sub-Committee 2017/18 - Forward Plan pdf icon PDF 182 KB

Minutes:

RESOLVED:

That the contents of Appendix A to the report of the Corporate Director of Resources, detailing proposed agenda items for future meetings, be noted.

 

 

 

120.

ESG and climate change risk assessment and rating pdf icon PDF 228 KB

Minutes:

The Sub-Committee received confidential presentations from Kate Brett at Mercer on the environmental, social and governance ratings of the Fund’s existing managers and a climate risk assessment.  The Sub-Committee noted that most managers had better average ESG ratings than the relevant universe.

 

RESOLVED:

(a) That the exempt presentations by Mercer on the environmental, social and governance ratings of the Fund’s existing managers and the climate change risk assessment be noted.

(b) That officers have regular follow up discussions with managers as an important element of communicating expectations on ESG and climate integration and develop investment beliefs and a strategic approach to climate risk.

 

121.

Equity protection strategy - implementation pdf icon PDF 111 KB

Minutes:

Norbert Fullerton and Adam Lane, from Mercer, gave a presentation on equity risk management of the Fund.

 

Ian Kirk, from Mercer, gave a presentation on the 2016 valuation outcomes and potential 2019 valuation outcomes.  The Sub-Committee noted the deficit of £296m  in the Fund as at 31 March 2016, compared to the assumed deficit of £91m by 31 March 2019, a 93% funding level. Given the very positive position, members considered that it was worth protecting the gain in the equity portfolio.  It was noted that approximately one third of the Fund was held in property and corporate bonds and that, in the long term, those should deliver.  There was also some demographic risk, as people were living longer, causing strain on the Fund.

 

Members considered options for paying for protection of the Fund ie paying a premium or not, or a combination approach of paying half the premium and giving up a percentage of gains.

 

 

RESOLVED:

(a) That Mercer’s exempt presentation on the implementation of an equity protection strategy be noted.

(b) That the objectives for implementing an equity protection strategy be approved.

(c) That the equity protection strategy be financed by the payment of a premium, at a cost of approximately £21m, for a period up to March 2020.

(d) That the Corporate Director of Resources, in consultation with the Corporate Director of Law and Governance and the Chair of the Sub-Committee, be authorised to proceed as swiftly as possible with the procurement process and appointment of insurance provider and due diligence to procure the services of capable managers to protect the equity in the Fund.

122.

Exclusion of press and public

Minutes:

RESOLVED:

That the press and public be excluded during consideration of the following items as the presence of members of the public and press would result in the disclosure of exempt information within the terms of Schedule 12A of the Local Government Act 1972, for the reasons indicated:

 

 

Agenda item               Title                                                     Reason for exemption

       

 E1                               ESG and climate change risk           Category 3 – Information   

assessment and rating – exempt      relating to the financial or

appendix                                           business affairs of any

                                                                                   particular person

           (including the authority  

           holding that information).

 

E2                                Equity protection strategy -              Category 3 – Information   

                                    Implementation – exempt                 relating to the financial or

appendix                                           business affairs of any

                                                                                   particular person

           (including the authority  

           holding that information).

 

 

 

                                   

 

123.

ESG and climate change risk assessment and rating - exempt appendix

Minutes:

Noted.

124.

Equity protection strategy - implementation - exempt appendix

Minutes:

Noted.