Agenda item

Report CSD23131

The Board considered a report presenting reports reviewed at the meeting of the Pensions Committee on 11 September 2023 including the LPGS consultation response, the report on Pension Fund Performance Q1 2023/24 and its appendices, Apex (formerly MJ Hudson) Q1 2023/24 report and key developments in the Local Government Pension Scheme, and the Pension Fund Annual Report and Draft Accounts 2022/23.

The Head of the Pensions Shared Service advised that the Pensions Committee had discussed and agreed the Local Authority’s response to the Government consultation on accelerating collective pooling of Pension Fund assets, Levelling Up and Private Equity Investments.  Whilst regional pooling could be beneficial, as seen in the recent transfer of the Local Authority’s existing investment with Baillie Gifford to the London Collective Investment Vehicle which had secured a reduction in fees, a number of concerns had been identified by the Pensions Committee.  This included additional fees created by transferring funds as well as asset ownership of pools held within pools.  The Pensions Committee had also raised concerns around the proposed timescales for collective pooling which it was proposed be introduced in 2025.  This was a midway point in the triennial valuation period for the Bromley Pension Fund and was therefore likely to create logistical difficulties.  In considering other actions at this meeting, the Pensions Committee had agreed the transfer of 5% or £65M from the Baillie Gifford Equity portfolio.  These funds, previously managed through the London Collective Investment Vehicle, had been moved into a Short-Dated UK Corporate Bond fund managed by Fidelity with a view to benefitting from the increase in global interest rates and the Director of Finance had negotiated a reduction in fees for this transfer with Fidelity.  The Pensions Committee had also considered and approved the Pension Fund Annual Report 2022/23 and draft accounts which had subsequently been signed off.

The Board went on to discuss the role of the Local Pension Board which was to scrutinise the governance of the Bromley Pension scheme, including ensuring that the Pensions Committee considered all relevant issues, risks and requirements in its decision making, with due regard to appropriate advice.  In considering Environmental, Social and Governance, a Board Member highlighted the need for greater transparency in the area of climate and climate reporting.  The Head of the Pensions Shared Service confirmed that the Pension Schemes Act 2021 required schemes to adopt and report against the Taskforce on Climate-related Financial Disclosures recommendations from December 2025.  The Board Member queried whether there was a requirement for pensions fund investments to be made in line with the Paris Agreement on climate change and was advised that that the Local Authority was required to report around Carbon Dioxide emissions.  The Board Member underlined the importance of environmentally responsible investments that were in the best long-term interests of Pension Scheme members and the Senior Accountant (Pensions) explained that the Local Authority used its position as a stakeholder in the companies it invested in to change behaviour, including around environmental practices.  The Board Member requested that more focus be placed on climate risk within future reporting and the investment strategy, and further guidance on climate reporting would be sought from the Senior Advisor: Apex Group Ltd following the meeting.

RESOLVED: That the Local Pension Board note the reports considered at the meeting of the Pensions Committee held on 11 September 2023.