Agenda and minutes

There were no apologies for absence.

There were no declarations on interest.

In accordance with the Council’s Constitution, questions that are not specific to reports on the agenda must have been received in writing 10 working days before the date of the meeting (5pm on Wednesday 13^th January 2021.) 

Questions specifically relating to reports on the agenda should be received within two working days of the normal publication date of the agenda. Please ensure that questions specifically on reports on the agenda are received by the Democratic Services Team by 5pm on Thursday 21^st January 2021.

No questions had been received.

RESOLVED that the minutes of the meeting held on 1^st December 2020 (excluding exempt information) be confirmed.

Report FSD20100

The Sub-Committee received a report providing a summary of the investment performance of Bromley’s Pension Fund in the 3rd quarter of 2020/21. Further detail on investment performance was provided in a separate report from the Fund’s external adviser, MJ Hudson Allenbridge, at Appendix 5. The report also contained information on general financial and membership trends of the Pension Fund and summarised information on early retirements.

The Chairman invited John Arthur of MJ Hudson Allenbridge to summarise his report. His report had been written before final performance data was available, but it was clear that it had been a good quarter with the Fund outperforming against the benchmark by 2.17% and reaching £1.313bn. The three main factors were the strong performance of the Baillie Gifford Global Alpha Fund (which provided about half of the added performance), being overweight in equities, the best performing asset class, and the straight line increases of the multi asset income funds.

The Fund was 4.6% overweight in equities at the end of 2019 and underweight in other classes. The re-allocation towards added value property had now started and about  $70-80m would be drawn down over the next four years, with roughly $5m a quarter going out to Morgan Stanley. It was important that this was managed, and he recommended holding an element of cash, probably $10m, for this purpose.  As the Fund would be gently selling equities to finance the move into international property, he proposed, to keep the fund stable, that some profits when equities outperformed were banked  into the multi asset income fund. This would control risk while there was a cash outflow from the Fund. He suggested that if multi asset income dropped below 18% of the Fund at quarter end then equity should be moved across.

There had been a steady improvement in the equity portfolios, despite the drop in March 2020. In terms of cash-flow, the Fund remained roughly in balance. He viewed March 2020 as a liquidity crisis, with central banks stepping in with massive quantitative easing which stopped further deterioration. There had then been a hope phase followed by a solvency phase, when the long-term effects of the covid crisis on the economy were being assessed.

The UK had performed poorly over the quarter compared to the US market which was more tech-heavy. In terms of the global outlook, the massive build up in debt (UK Government borrowing had reached £280bn) would lead to inflation and a volatile return on assets over the year. With personal spending across the world depressed by the crisis, as the vaccines were rolled out he expected an urge to spend and a rapid recovery later in the year. The question would be whether this would lead to inflation. In the medium term, he suggested that the recovery would be as transitory as the crisis caused by the pandemic, and high government debt would reduce economic growth.

In terms of the individual fund managers’ reports, Baillie Gifford’s performance continued to be  ...  view the full minutes text for item 104.

Report FSD21009

The Sub-Committee received a report providing information about the forthcoming implementation of the Member Self-service portal and i-Connect, the data management portal. It was confirmed that normal communications with scheme members were continuing outside the system, and the proposals in the report were to implement an updated solution from the existing contractor after elements of the system had been turned off at Bromley’s request in August 2019 due to security concerns. It was confirmed that the self-service portal would hold scheme documentation and allow scheme members to make inquiries about their entitlements, automating manual processes for maintaining and changing personal information. 

Some Councillors questioned whether the costs should exceed the savings from automation, and asked whether there had been a procurement exercise.  It was explained that this was an extension of the existing contract so the Council was restricted to using this one solution for the remainder of the contract until 2023, unless it was prepared to re-configure the whole IT system overlay. The proposal would future-proof interactions with scheme members and also assist with the changes to regulations expected in the next few years.

RESOLVED that the proposed changes to the contract for the Pension System with Aquila Heywood, the impact these changes will have on fund administration for the Council and the pricing details included in the part 2 report based on the package of implementing both Member Self-service and i-Connect, be noted and supported.

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

The exempt minutes of the meeting held on 1^st December 2020 were confirmed, subject to a minor correction.

See minute 105.

The Chairman and Director of Finance updated Members on a number of issues affecting the Pension Fund.