Issue - meetings

Report FSD18060

Comprising high level risks (underpinned by more detailed registers within individual business plans), the Pension Fund Risk Register (appended to Report FSD18060) feeds into the Corporate Risk Register via the Corporate Risk Management Group.

The Fund’s agreed Asset Allocation Strategy (reviewed in 2016/17) balances the risks associated with a high allocation to growth assets, particularly equities, with the need to improve the funding level and maintain employer contribution rates at a relatively stable level, whilst also meeting the Fund’s cash-flow requirements.

A summary of the main investment risks comprised:

·  Concentration/credit – the risk of underperformance or default from a significant allocation to any single investment or type of investment;

·  Illiquidity – the risk that the Fund has insufficient liquid assets to meet its cash flow requirements;

·  Currency risk – the risk that the currencies of the Fund’s assets underperform relative to sterling;

·  Interest rate risk – the risk that the values or future cash flows from investments fluctuate as a result of changes in market interest rates; and

·  Manager underperformance – the failure by the investment managers to achieve their benchmark rate of investment return.

A Member felt that governance around the CIV is a risk missing from the Register. Although the Fund continues to retain ownership of its investments in the London Collective Investment Vehicle (LCIV), Members supported the view and it was RESOLVED that:

(1)  the current Pension Fund Risk Register be noted along with existing controls in place to mitigate the risks; and

(2)  further commentary be added to the Register to reflect an additional risk of governance related to the London Collective Investment Vehicle.