Agenda item

Report FSD16077

Details were provided of the Fund’s investment performance for the first quarter, 2016/17. Additional detail was provided in an appended report from the Fund’s external advisers, AllenbridgeEpic. Baillie Gifford provided further commentary on its performance and view of the economic outlook.

Information on general financial and membership trends of the Pension Fund was also outlined along with summarised information on early retirements.

The market value of the Fund ended the September quarter at £863.3m and had risen further to £882.2m as at 31st October. Overall fund performance figures were not available but the quarter’s performance figures for each fund manager was summarised and an approximation provided of the total fund return.

With the WM Company (State Street) ceasing to provide performance measurement services to clients for whom they were not also custodian, BNY Mellon (the Council’s main custodian) would provide performance measurement information going forward. However, as data migration had not yet completed, overall performance figures for the fund were not available. A new provider for LGPS comparator information had emerged covering a number of LGPS funds and comparator data was expected for the third quarter monitoring report.

Following transfer of LGPS members from Passenger Transport Services to GS Plus Ltd, a wholly owned subsidiary of the Royal Borough of Greenwich (RBG), the employees became active members of the RBG Pension Fund from 1st December 2015 (the transfer date). From continuing discussions, Mercer (the Council’s fund actuary) had advised of an expected provisional transfer value between £1.5m and £2m. The sale of assets to generate the required funding would be determined on agreeing a final transfer value. It was proposed that the Director of Finance be delegated authority to agree the final transfer, in consultation with the Sub-Committee’s Chairman and Vice-Chairman. Should the transfer value exceed £2m, a further report would be presented.

In discussion, Member agreement was suggested on the final transfer and assumptions considered. However, actuaries determined the final value of bulk transfers (linked to the Council’s triennial valuation); should the actuaries dispute a transfer value, an independent actuary would determine the final sum. External Audit would also protect an actuary’s independence (as required by regulations). The transfer had been agreed by Council and a Member preferred completing the transfer to reduce liabilities. The sum transfer would be effective from transfer date and any final adjustment made later. Reference was also made to the Diversified Growth Funds, one of which was underperforming; as such advice would be sought on the continuing use of the asset class.

Following the transfer of Total Facilities Management Services, admitted body status for Amey had been agreed with effect from 1st October 2016. Transfer of a further six employees to Cushman and Wakefield was scheduled for 1st December 2016 and Cushman and Wakefield were also working to secure admitted body status (expected in advance of the transfer date). 

RESOLVED that:

(a)  the contents of Report FSD16077 be noted;

(b)  the estimated transfer value payable to the Royal Borough of Greenwich Pension Fund of between £1.5m and £2m be noted as detailed at paragraph 3.7.5 of Report FSD16077; and

(c) authority be delegated to the Director of Finance, in consultation with the Sub-Committee Chairman and Vice-Chairman, to agree the transfer (following advice from the Council’s independent Pension Fund advisor) and the outcome of the actuary’s negotiations, up to a maximum value of £2m, as detailed at paragraph 3.7.6 of Report FSD16077.