Agenda and minutes

Venue: Bromley Civic Centre

Contact: Keith Pringle  020 8313 4508

Items
No. Item

52.

APOLOGIES FOR ABSENCE AND NOTIFICATION OF SUBSTITUTE MEMBERS

Minutes:

Apologies for non-attendance were received from Mr. Geoffrey Wright, Member Representative, Local Pensions Board.

 

53.

DECLARATIONS OF INTEREST

Minutes:

Cllr Russell Mellor, Cllr Simon Fawthrop, and Cllr David Jefferys each declared an interest as deferred Members of the Local Government Pension Scheme.

54.

CONFIRMATION OF MINUTES OF THE MEETING HELD ON 24TH JULY 2018 EXCLUDING THOSE CONTAINING EXEMPT INFORMATION pdf icon PDF 118 KB

Minutes:

The Minutes were agreed.

 

55.

QUESTIONS BY MEMBERS OF THE PUBLIC ATTENDING THE MEETING

In accordance with the Council’s Constitution, questions to this Sub-Committee must be received in writing four working days before the date of the meeting. Therefore please ensure that questions are received by the Democratic Services Team by 5pm on Friday 7th September 2018.

Minutes:

There were no questions.

 

56.

RE-ORDER OF AGENDA ITEMS

Minutes:

Following the previous item, and with no members of the public present at the meeting, Members agreed to move into Part 2 proceedings at this point to take item 10(London CIV – Governance Update and Due Diligence Review) and Item 9 (Confirmation of Exempt Minutes of the Meeting held on 24th July 2018). This enabled Members to consider item 10 ahead of item 6 (London CIV Due Diligence - attendance by LCIV Representatives).

 

Members also agreed to take item 5 (Chairman’s Update) under Part 2 proceedings to receive briefing on issues in preparation for item 6.

 

Following item 5, Members agreed to move back to Part 1 proceedings and take item 6 and then item 7 (Pension Fund Performance Q1 2018/19). 

 

57.

CHAIRMAN'S UPDATE

Minutes:

This item was considered under Part 2 proceedings so that the Director of Finance, with the Chairman’s agreement, could brief Members on issues in preparation for item 6.

 

58.

LONDON CIV DUE DILIGENCE - ATTENDANCE BY LONDON CIV REPRESENTATIVES

Minutes:

London CIV representatives attending for the item comprised Mr. Mark Hyde-Harrison, Interim CEO, and Mr Kevin Cullen, Client Relations Director.

 

John Arthur also returned to the room for all Part 1 proceedings of the meeting.

 

Mr Hyde-Harrison began the presentation with a brief background on the history of LGPS Fund Investment pools, the primary purpose of which is to achieve cost savings for member funds. Pooling LGPS funds became mandatory in 2015/16. Some Pools are now established with others on the way to being so. The presentation slides were circulated to those at the meeting.

 

Formerly having 33 Funds of London Boroughs, the LCIV now had 32 Funds as the L B Richmond and L B Wandsworth pension funds merged on 1st October 2016. Fund investments managed by the LCIV ranged from almost 80% for L B Tower Hamlets to approximately 16% for the City of London authority, and currently nil for Bromley.

 

The LCIV currently has £16.5bn of assets under management. The LCIV has equity products and other funds and has launched a number of fixed income funds. There is also a wide range of passive funds. Pooling began as soon as the LCIV started. Set up costs are therefore relatively low and savings are exceeding projected costs resulting in savings for boroughs. 

 

Through an extensive investment consultation over the previous quarter, the LCIV are obtaining an understanding of the current asset allocation of boroughs and what future allocations might look like. The consultations also covered a client engagement framework to ensure regular ongoing information updates from boroughs about their target asset allocations. Additionally the consultation covered working with a group of officers and Treasurers to define pooling methods. It is intended to use the asset allocation information to shape a product launch- programme which would then be used to work with boroughs to understand how best to meet individual borough pooling plans. All 32 boroughs had been contacted and meetings had taken place with 30 boroughs since 1st May 2018.  A total of 22 boroughs had returned their current and target asset allocations in line with the new asset classes and strategies. Further boroughs are finalising this with consultants under the new definitions. The presentation also outlined information totalling asset allocation classes and strategies from those boroughs who had returned details along with information by strategy on assets currently pooled.  The allocations would be subject to ongoing discussions.

 

Additionally, the presentation referred to a new bespoke reporting system to provide commentary on a borough’s personalised investment mandate along with updates provided in LCIV newsletters. Borough LCIV Valuations are also updated daily on the LCIV client portal and Information sheets are updated quarterly. Meet the Manager Days had also taken place with LCIV Managers making presentations (16th May 2018 for Fixed Income and 16th August 2018 for Equity with the LCIV Infrastructure manger likely to be present at a presentation on 15th November 2018). An organisation chart of the London CIV was included in  ...  view the full minutes text for item 58.

59.

PENSION FUND PERFORMANCE Q1 2018/19 pdf icon PDF 121 KB

Additional documents:

Minutes:

Report FSD18069

 

Details were provided of the Fund’s investment performance for the first

quarter of 2018/19. Additional detail was provided in an appended report from

the Fund’s external advisers, MJ Hudson Allenbridge.

 

The market value of the Fund ended the June quarter at £1,017.9m (£970.7m at 31st March) and had further increased to £1,044.3m as at 31st July 2018. The quarter total fund return of +4.95% against a +4.43% benchmark, compared to a +4.9% average across the 61 LGPS funds in PIRC’s universe. Detail on performance by individual fund managers was appended to Report FSD18069. 

 

The Fund’s medium and long-term returns remained very strong overall - the Fund ranking third in the PIRC LGPS universe for the year to 31st March 2018, first over three years, second over five years, first over ten years and second over 20 and 30 years.

 

Information on general financial and membership trends of the Pension Fund

was also outlined along with summarised information on early

retirements. Final outturn details for the 2017/18 Pension Fund Revenue Account, the first quarter position for 2018/19, and fund membership numbers were also appended to the report.

 

Where the assets of an employer exiting a Fund are greater than its pension liabilities as published in a revised rates and adjustments certificate (Exit Credits), Report FSD18069 advised that recent changes to the LGPS 2013 Regulations required a Fund to pay any excess in credit to an exiting employer within three months of cessation of the admission agreement. Further information would be included in the LGPS 2018 (Amendment) Regulations to be considered by the General Purposes and Licensing Committee at its meeting on 26th September 2018.

 

The report also outlined future Fund Manager attendance as:

 

·  Schroders (multi-asset income) on 7th November 2018 and

·  Baillie Gifford (global equities and fixed income) on 5th March 2019.

 

The Chairman was pleased with the performance reported. Noting that the General Purposes and Licensing (GP&L) Committee will consider further information on Exit Credits to be included in the LGPS 2018 (Amendment) Regulations, the Chairman highlighted a preference to see the Sub-Committee a Committee in its own right rather than as a Sub-Committee of the GP&L Committee. Another Member, also pleased with the report, thanked MJ Hudson Allenbridge for the Quarterly Review appended to Report FSD18069.

 

A Member expressed concern at the continued underperformance of MFS. Mr Arthur indicated that MFS looked for certainty and hope in their approach whereas Baillie Gifford looked for more growth. Mr Arthur felt the two managers work well together in the Fund’s portfolio - the MFS investment philosophy and process suggested their approach is unlikely to change.   

 

A Member asked whether MFS are best placed to respond in the event of a downturn and whether there is an argument to reduce the MFS holding rather than Blackrock’s holding should the latter perform better over a year. Mr Arthur explained that most of the MFS portfolio is now  ...  view the full minutes text for item 59.

60.

LOCAL GOVERNMENT ACT 1972 AS AMENDED BY THE LOCAL GOVERNMENT (ACCESS TO INFORMATION) (VARIATION) ORDER 2006 AND FREEDOM OF INFORMATION ACT 2000

The Chairman to move that the Press and public be excluded during consideration of the items of business referred to below as it is likely in view of the nature of the business to be transacted or the nature of the proceedings that if members of the Press and public were present there would be disclosure to them of exempt information.

Minutes:

RESOLVED that the Press and public be excluded during consideration of the items of business referred to below as it is likely in view of the nature of the business to be transacted or the nature of the proceedings that if members of the Press and public were present there would be disclosure to them of exempt information.

 

The following summaries

refer to matters

involving exempt information

61.

CONFIRMATION OF EXEMPT MINUTES OF THE MEETING HELD ON 24TH JULY 2018

Minutes:

The exempt minutes were agreed.

 

62.

LONDON CIV - GOVERNANCE UPDATE AND DUE DILIGENCE REVIEW

Minutes:

Report FSD18070

 

Members agreed that the Council’s contract with MJ Hudson Allenbridge should be varied so the company can undertake due diligence of the London CIV and its governance arrangements on behalf of the Sub-Committee.

 

Members also noted that the Pensions CIV Sectoral Joint Committee had been formally dissolved and that Cllr Keith Onslow had been appointed to the new London CIV Shareholder Committee.

 

John Arthur left the room for the first part of discussion on this item and subsequently returned to provide clarification on some questions from Members before then leaving the room again in order for Members to conclude their discussion.

 

 

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