The Chairman has requested an update on the solvency of the Pension Fund.
Minutes:
The Chairman had requested an update on the solvency of the pension fund as he was aware that because of the current economic climate (with spikes in inflation and gilts and bonds having issues), it was important to discuss the solvency of the fund. The Senior Accountant (Pension Fund) was in attendance to provide advice as required and assured that the LBB Pension Fund was in a good place and was one of the better performing funds.
Councillor Simon Fawthrop (who sat on the Pension Committee) provided an update regarding the CIV (Collective Investment Vehicle).
Web link: https://londonciv.org.uk/
Councillor Fawthrop expressed the view that the London Collective Investment Vehicle was not one of the best. He said that the Council had put £700,000 into the CIV and had got nothing in return. He said that the LCIV had trade union representation on the management board but apparently had not queried why the CIV was not performing well. He therefore asked the trade union representatives attending the LJCC meeting if they could ask their representatives on the London CIV to look at this.
In terms of the Bromley Pension Fund he said that Councillors acted as ‘Trustees’ and tried to maximise returns for pensioners. Every three years there was a tri annual review of the pension fund and one was due in November. The review was undertaken by an actuary and looked at the investment strategies of the fund and how it could be shaped for the future. The aim of the Pension Committee was to avoid any future financial ‘black holes’ and to make sure that pensions were protected.
The Chairman asked if the £700,000 was a management fee or if it was an investment that had been wasted in some way. It was noted that the £700,000 was made up of annual membership fees and purchased share capital. It was explained that the Council had not invested money in the schemes themselves because if they had done, the Council would not be able to determine how the funds should be invested and would probably have lost money.
The Chairman asked if there was anything that the Staff Side could do in view of the fact that there was trade union representation on the CIV Management Board. The Vice Chairman responded by saying that the Staff Side union representatives did not have the relevant knowledge and expertise to comment on the matter. However, Sara Wright offered to raise this issue with the Unison Branch Secretary to escalate it and get more information and feedback for the next LJCC meeting.
Councillor Simon Fawthrop informed the Committee that the London CIV had a shareholders committee and there was union representation on that. He said he would have expected them to feedback to the union branches. He said that there was a union representative on the Pensions Board and it used to be the case that the trade union sent representatives to the Council's Pensions Committee. It was important that they took an interest in these things as pensions was a big part of the remuneration package for Council employees. The Chairman asked the Senior Accountant (Pension Fund) to supply Sara Wright with some information and the make-up of the London CIV which may help with her inquiries. The Chairman also said that the matter should be an item on the agenda of the next meeting of the LJCC.
The Vice Chairman asked if members of the pension fund were protected from stranded assets. The Senior Accountant (Pension Fund) answered and said it was true, as reported in the press, that some funds were struggling and had lost money, largely because they had invested in liability driven investments. He said that the 2019 valuation of the Bromley Pension Fund indicated that it was 110% funded which meant there were more assets than required to meet the liabilities of the fund.
Councillor Fawthrop stated that the Bromley Pensions Committee had much foresight and a long term vision. In 37 years’ time there was a massive asset that they could call on if required. Thomas Carver said that some members of staff had opted to withdraw from contributing to the pension scheme as they needed the money to pay bills.
RESOLVED that the Pension Fund Update be noted and that a further update regarding the LCIV be brought to the next LJCC meeting.