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Agenda and minutes

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Items
No. Item

116.

Apologies for absence

Minutes:

None.

117.

Declaration of substitutes

Minutes:

None.

118.

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 a personal interest in items on the agenda as a member of the Pension Fund.

119.

Minutes of the previous meeting pdf icon PDF 67 KB

Minutes:

 

RESOLVED:

That the minutes of the meeting held on 3 December 2019 be confirmed as an accurate record of proceedings and the Chair be authorised to sign them.

 

 

Matters arising

The Chair noted that he, in consultation with the S151 Officer, had approved proposals relating to Hearthstone Investments that would help

make the Fund more attractive to investors and reduce Islington’s holdings over time, as detailed in minute no 111 on the Investment Strategy update.

 

With regard to minute 107, relating to the Actuarial Valuation and Funding Strategy Statement, it was noted that the discount rate for future service had been agreed as CPI +2.8% p.a., with a recovery period of 19 years.

 

The Chair welcomed Councillor Gill to his first meeting of the Sub-Committee, by virtue of his role as the Executive Member for Finance and Performance. He noted that it was customary for that postholder to also hold the position of Vice-Chair of the Pensions Sub-Committee.

 

 

 

120.

Annual Fund performance presentation by PIRC

Minutes:

Neil Sellstrom, Client Services Manager at PIRC Limited, gave a presentation to the Sub-Committee detailing the annual review of the Fund.

 

The following points were noted:

 

·       The Average UK LGPS Fund had produced a return of -4.8% for the year

·       Following the market collapse from Covid 19, equities were the worst performing asset class

·       All regions suffered significant falls, but the UK was the poorest performing at -18.3% in the year

·       Multi Asset Credit Funds also suffered significant losses

·       Bonds performed better

·      Alternatives were the strongest performers with Private Equity delivering the best returns overall

       DGF were the poorest performers, even when market conditions offered them opportunities to add value.

       Islington’s asset allocation was different to the Universe average, with a relatively high allocation to property and diversified growth and a lower exposure to alternatives and bonds

       The Fund was overweight in its equity benchmark at the year end which had been a positive until the last month of the year

       The structure had a small positive impact on relative performance in the latest year mainly due to the equity protection

       Manager performance had been mixed, with Newton doing reasonably well, Schroders DGF underperforming and positive returns from private equity. Overall, there had been good performance over the year

       On longer term performance, equities and bonds had delivered returns of 5-6% p.a. over the last twenty years.  Both alternatives and property had performed ahead of this with returns of around 7% p.a. However, DGF Funds had delivered a negative return over 3 years

       There had been a shift from domestic to global equity assets over time

       The Fund was in the top quartile over the latest three year period, but had been below average over the longer term. However,  improvement in recent years had brought it into line with the average over the medium

       Over the last ten years, the Fund had experienced a lower than average level of volatility, but this had delivered a slightly below average return.

       Over the last five years the picture had improved, with the Fund reducing its overall level of volatility whilst managing to deliver a return in line with average – it was more efficient than most of its peers.

       The equity protection insurance had protected the Fund

 

 

The Sub-Committee thanked Neil Sellstrom for his presentation.

 

 

 

 

 

 

121.

Pension Fund performance from January to March 2020 pdf icon PDF 120 KB

Additional documents:

Minutes:

 

 

 

Members of the Sub-Committee briefly discussed timings and practicalities of restructuring the Fund, particularly with a view to further decarbonisation of the Fund and minimising transaction costs. Members were looking to have a more diversified portfolio and hoped to review the asset classes in the Fund in September 2020 or, if the Covid19 emergency was ongoing, by no later than the end of the year.

 

 

RESOLVED:

(a) That the performance of the Fund from 1 January to 31 March 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 Hudsons Allenbridge, on fund managers’ quarterly performance, attached as Appendix 1 to the report, be noted.

(c) That the May 2020 LGPS “Current Issues”, attached as Appendix 2 to the report, be noted.

(d) That a review of the asset classes of the Fund take place at the September 2020 meeting or, if the Covid19 emergency was ongoing, by no later than the end of this year.

122.

Decarbonisation Policy monitoring - progress update pdf icon PDF 112 KB

Minutes:

 

Members noted progress to date on the agreed monitoring plan on the Sub-Committee’s decarbonisation policy, as detailed in the report of the Corporate Director of Resources.  However, they noted that it had not yet been possible to obtain accurate information on the carbon footprint reserves. Mercer’s representative offered to provide this service. In view of the importance of the availability of this information to the Council’s overall ambition to be carbon neutral, including the Pension Fund, the Sub-Committee agreed that the Head of the Pension Fund and Treasury Management negotiate the provision of this service from Mercer.

 

 

RESOLVED:

(a) That progress to date on the agreed monitoring plan on the Sub-Committee’s decarbonisation policy, as detailed in the report of the Corporate Director of Resources, be noted. 

(b) That the Head of the Pension Fund and Treasury Management be authorised to negotiate with Mercer the provision of monitoring information on the carbon footprint reserves.

(c) That a detailed report be submitted to the next meeting of the Sub-Committee.

 

 

 

 

 

123.

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, be approved.

124.

Investment Strategy Review update pdf icon PDF 107 KB

Minutes:

 

 

 

Members of the Sub-Committee  considered proposed changes to the Multi Asset Credit asset allocation.

 

 

RESOLVED:

(a) That the presentation from “Mercer on Multi Asset Credit Implementation considerations”, attached as Exempt Appendix 1 to the report of the Corporate Director of Resources, be noted.

(b) That an update report be submitted to the next meeting of the Sub-Committee.

125.

London CIV update pdf icon PDF 89 KB

Minutes:

 

 

RESOLVED:

(a)  That the progress and activities in the news briefing “Collective Voice -May” attached as Appendix 1 (private and confidential), to the report of the Corporate Director of Resources, be noted.

(b) That it be noted that LCIV had now closed their LGPS pension provision to new entrants.

126.

Equity protection strategy settlement position pdf icon PDF 214 KB

Minutes:

The Chair had agreed that this report be considered as urgent business in order that members of the Sub-Committee could be informed of the outcome of the final cash position after settlement and the end of the strategy.

 

RESOLVED:

That the report of the Corporate Director of Resources, providing a recap of the Fund’s objectives for implementing the equity protection strategy managed by LGIM and the cash position realised after maturity on the settlement dates, be noted.

 

127.

Investment Strategy Review update - exempt appendix

Minutes:

Tony English and Alex Goddard, from Mercer, gave a comprehensive presentation to the Sub-Committee on the options available.

 

RESOLVED:

(a) That Tony English and Alex Goddard, from Mercer, be thanked for their comprehensive presentation on the proposed allocation of Fund assets to Multi-Asset Credit.

(b) That the contents of the exempt appendix be noted.

(c) That the following additional criterion be added to the list for the selection of a manager in this category: “Sound business ethics and protection of investors’ reputation”.

128.

London CIV update - exempt appendix

Minutes:

RESOLVED:

That the contents of the exempt appendix be noted.