You are here: Agenda and minutes

Agenda and minutes

Venue: The link to the Zoom meeting is below. If you prefer to join the meeting by phone please dial 0203 481 5240 . The meeting ID is 980 9711 5233

Contact: Mary Green  Telephone: 0207 527 3005

Link: Join the meeting via this link

Items
No. Item

150.

Apologies for absence

Minutes:

Received from Alan Begg (Pensions Board member).

151.

Declaration of substitutes

Minutes:

None.

152.

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:

Councillor Convery declared an interest in all items on the agenda as a member of the Pension Fund.

 

Councillor Poyser declared an interest in items on the agenda relating to Franklin Templeton.

153.

Minutes of the previous meeting pdf icon PDF 69 KB

Additional documents:

Minutes:

RESOLVED:

That the minutes of the meetings held on 15 September 2020 and 11 November 2020 be confirmed as an accurate record of proceedings and the Chair be authorised to sign them.

 

154.

Pension Fund performance from July-September 2020 pdf icon PDF 121 KB

Additional documents:

Minutes:

Marc Weidner, Managing Director at Franklin Templeton, gave a confidential presentation on progress on the Fund I and Fund II real estate performance and activities and the proposal to re-invest in Fund III.

 

Members asked questions about expectations on progress on real estate business plans across the globe, particularly in view of Covid19 and the implications for office space.  The Chair reiterated the Sub-Committee’s very high expectations around ESG and their intention to reduce fossil fuel and carbon in the Pension Fund.

 

RESOLVED:

(a)  That the performance of the Fund from 1 April to 30 June 2020 as per BNY Mellon interactive performance report and detailed in the report of the Corporate Director of Resources, be noted.

(b) That the presentation by MJ Hudson Allenbridge, on fund managers’ quarterly performance, attached as Appendix 1 to the report, be noted.

(c) That the  presentation from Franklin Templeton (global property fund manager) on current Fund I and Fund II performance and activities and the proposal to re-invest in Fund III be noted.

(d) That the re-investment proposal to the Franklin Templeton Fund III be approved, with a commitment of $50m.

(e) That officers be authorised to complete subscription and legal documentation, in connection with resolution (d) above.

(f) That Mercer’s September 2020 LGPS “Current Issues” brochure, attached as Appendix 2 to the report, be noted.

155.

Investment Strategy Statement update pdf icon PDF 92 KB

Additional documents:

Minutes:

 

 

 

An amendment was made to page 66 of the agenda pack, comprising the asset class table in paragraph 3, by the substitution of “5%” instead of 10% next to “Multi Asset Credit” and “10% instead of “5%” next to “Private Debt”.

 

 

RESOLVED: That, subject to the amendment above being made to paragraph 3 of the Investment Strategy Statement, the draft Investment Strategy Statement attached as Appendix 1 to the report of the Corporate Director of Finance be approved and officers be authorised to publish it on the Council’s website.

156.

Funding review update pdf icon PDF 93 KB

Minutes:

Michelle Doman, Mercer, gave a confidential presentation to the Sub-Committee on their outlook on the funding position and risk principles.

 

 

RESOLVED:

(a) That the presentation prepared by the Fund Actuary, attached as Exempt Appendix 1 to the report of the Corporate Director of Finance, be noted.

(b) That the summary findings in paragraph 3.5 and reproduced below of the report of the Corporate Director of Finance be noted:

 

1) The funding level had increased by 5% since the 2019 valuation to 90%.

However, the outlook of investment returns had reduced.

2) Though there had been gains, the period to being fully funded had increased

3) Ongoing monitoring of employers represented the greatest risk (low affordability and high funding deficit)

4) Lowering the discount rate (in the absence of increasing investment risk/return) would increase the chance of achieving the recovery plan but this would increase employer contributions when affordability had reduced.

5) The Fund might have to accept an increase in funding risk and might want to consider options to reduce this risk.

 

(c) That the Sub-Committee review the position in six months’ time.

 

157.

Review of equity protection strategy pdf icon PDF 109 KB

Minutes:

Tony English and Aniket Bhaduri, from Mercers, gave a confidential presentation to the Sub-Committee, recapping on the Fund’s past experience with equity protection and setting out options for future equity protection.

 

Given future uncertainty of markets, members of the Sub-Committee suggested that it might be helpful to investigate other ways of reducing volatility in the Fund.  It was noted that a short-term protection strategy, as was being proposed, would have significant cost implications.  In light of this, members decided not to take action at the present time and  that the Sub-Committee should receive a report on emerging risk in six months time, with a view to investigating ways of reducing risk via other ways eg equities exposure.

 

RESOLVED:

(a) That the presentation from Mercers on the background, market update and reasons why pension schemes consider equity protection strategies, attached as exempt Appendix 1 to the report of the Corporate Director of Finance, be noted.

(b) That officers report to the Sub-Committee in six months time on emerging risk, in order that members may explore whether a risk mitigation strategy is necessary and, if so, what form it should take.

158.

London CIV update pdf icon PDF 90 KB

Minutes:

RESOLVED:

That the progress and activities presented at the November London CIV business update session (exempt Appendix1) and news briefing Collective Voice-October 2020, exempt Appendix 1A, both as attached to the report of the Corporate Director of Resources, be noted.

159.

Investment Strategy review update- Private debt allocation pdf icon PDF 92 KB

Minutes:

Tony English gave a confidential presentation to the Sub-Committee on Private Debt and how the proposed strategic asset allocation to Private Debt might be implemented to achieve the agreed target returns within risk parameters.

 

Officers suggested that they carry out due diligence exercises between now and March 2021 on options for Private Debt allocation, including the London CIV Private Debt Fund, in order to provide options for the Sub-Committee’s consideration in March 2021.

 

RESOLVED:

(a) That the presentation from Mercer on Private Debt, attached as Exempt Appendix 1 to the report of the Corporate Director of Resources, be noted.

(b) That officers report to the Sub-Committee in March 2021 on options for Private Debt allocation, including the London CIV Private Debt Fund.

160.

Forward Plan of business pdf icon PDF 93 KB

Minutes:

RESOLVED:

That the appendix to the report of the Corporate Director of Resources, detailing agenda items for forthcoming meetings, together with the additional reports detailed below be approved:

 

(i) Funding position - That the Sub-Committee review the position in six months’ time (May/June 2021).

(ii) Review of equity protection strategy - That officers report to the Sub-Committee in six months time on emerging risk, in order that members may explore whether a risk mitigation strategy is necessary and, if so, what form it should take (May/June 2021).

(iii) Investment Strategy update - Private Debt - That officers report to the Sub-Committee in March 2021 on options for Private Debt allocation, including the London CIV Private Debt Fund.

161.

Decarbonisation policy - action plan for passive equities and net zero carbon transition training pdf icon PDF 115 KB

Minutes:

 

RESOLVED:

(a) That the action plan (exempt Appendix 1 to the report of the Corporate Director of Resources) to further reduce carbon emissions and reserve on the Fund’s passive emerging and UK equities be noted

(b) That a report be submitted to the Sub-Committee in March 2021 on more evolved and progressive responsible indices now available in the market in for options on the Fund’s passive equities.

(c) That it be noted that, since 2016, the Fund had achieved in its equities:

i) 72% of its target to reduce exposure to carbon intensive companies

ii) 73% of its target to reduce absolute emissions.

(d) That the training briefing on Net Zero Carbon Transition (attached exempt Appendix to the report) be noted

(e) That an alternative training session date for a more detailed and informed discussion on net zero carbon be arranged and that members of the Pensions Board and the Executive Member for Environment and Transport be invited to the session.

162.

Review of objectives set for providers of investment consultancy pdf icon PDF 110 KB

Minutes:

Representatives from MJ Hudson and Mercer left the meeting before the Sub-Committee’s discussion.

 

 

RESOLVED:

(a) That the legal requirement for trustees of occupational pensions (including LGPS) to set strategic objectives for investment consultancy providers, as detailed in the report of the Corporate Director of Resources, came into effect from 10 December 2019.

(b) That the objectives set out in exempt Appendix 1 to the report be noted and the performance rating of the investment consultancy providers be approved.

(c) That the objectives be reviewed at least annually and/or where there is a change in the Fund’s requirements.

(d) That the Corporate Director of Resources, in consultation with the Acting Director of Law and Governance, be authorised to submit an annual compliance statement confirming compliance with Part 7 of the Order, noting that the first statement must be submitted to the CMA by 7 January 2021, covering the period 10 December 2019 to 9 December 2020.

163.

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 E1

Title

Reasons for exemption

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Agenda item E2   

 

 

Agenda item E3

 

 

Agenda item E4

 

 

Agenda item E5

 

 

 

Agenda item E6

 

 

 

 

Agenda item E7

Pension Fund performance from July-September 2020- exempt appendices

 

 

 

 

 

 

Funding review update – exempt appendix

 

Review of equity protection strategy - exempt appendix

 

London CIV update – exempt

appendix

 

Investment Strategy review update-  Private debt allocation - exempt appendix

 

Decarbonisation policy - action plan for passive equities and net zero carbon transition training - exempt appendices

 

Review of objectives set for    providers of investment consultancy – exempt appendix

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Category 3 – Information relating to the financial or business affairs of any particular person (including the authority holding that information)

 

ditto

   

  

ditto

 

 

ditto

 

 

ditto

 

 

 

ditto

 

 

 

 

ditto

 

164.

Pension Fund performance from July-September 2020 - exempt appendix

Minutes:

Noted.

165.

Funding review update - exempt appendix

Minutes:

Noted.

166.

Review of equity protection strategy - exempt appendix

Minutes:

Noted.

167.

London CIV update - exempt appendix

Minutes:

Noted.

168.

Investment Strategy review update- Private debt allocation - exempt appendix

Minutes:

None.

169.

Decarbonisation policy - action plan for passive equities and net zero carbon transition training - exempt appendices

Minutes:

None.

170.

Review of objectives set for providers of investment consultancy - exempt appendix

Minutes:

None.