Agenda and draft minutes

Members are asked to declare any interest and the nature of that interest that they may have in any of the items under consideration at this meeting.

Andy Langford declared a disclosable pecuniary interest as a member of LGPS. Councillor Cathrine Russell declared that her son had been working for a bank unbeknownst to her but that he would not be working there for much longer.

RESOLVED:

That the minutes of the Investment sub-committee of 31 May 2023 be approved and signed as a correct record.

The Funding and Investment Manager advised that 2 actions were now complete. A response had been provided on Longview’s engagement with the bank in question regarding their approach to Scope 3 emissions. They believed that the bank was moving forward quickly in terms of its carbon footprint. The Passive Equity paper would be considered in private session. The Private Equity Review and Property Portfolio review were still ongoing. Good progress was being made in considering the new allocations in long lease property.

RESOLVED: That the Action Log be noted.

At the Chair’s invitation, Chris West and Jonathan Crowther from Mercer presented the quarterly performance report.

Referring to the performance over the second quarter there had been positive equity market returns driven by the United States markets. Other world returns were quite flat. Fewer than 10 stocks had made up the return of the second quarter in the United States; these were mainly technologically based. Returns were more negative in defensive bonds. On a positive note, the funding level had increased to 148% over the last quarter and it was expected that this would continue into quarter 3 also. The UK currently had high inflation and high interest rates. It appeared to be a critical time with regard to interest rates as the Bank of England had recently decided to not increase the interest rates again. The Bank of England had thrown gilts back into the market for quantitative easing. The positive performance was being driven by the gilt yields. The Committee welcomed the positive performance.

Councillor Bignell enquired if there was a downside to the high performance, Chris West considered that the reaction to a strong funding level could result in de-risking and reduced growth. In the next strategy review it was important to find the balance. The funding level increase was consistent with other pension funds. The Head of Pensions considered that the challenge would be with regard to the communication with scheme employers. As the terms of the fund were over a 20 year period there was no deficit payment. Contributions for employers had been reduced in previous years. It was highlighted that previously a decision had been made to increase gilt holdings by 5%, which was positive.  

David Crum suggested that assumptions could be tightened up, the fund could de-risk or the investment strategy could be reviewed again. Chris West advised that the equity portfolio was being reviewed so the risks would be considered and the portfolio diversified; however there was a risk that this would be against the actuary rate.

With regard to manager performance this would be covered in the private session.

RESOLVED:

That the Investment Sub-Committee noted the quarterly performance report for the period ending 30 June 2023.

The following report(s) contain exempt information as defined in the following paragraph(s) of Part 1, Schedule 12A of Local Government Act 1972.

*DELETE AS APPROPRIATE*

Paragraph 1 – Information relating to any individual.

Paragraph 2 – Information which is likely to reveal the identity of an individual.

Paragraph 3 – Information relating to the financial or business affairs of any particular person (including the authority holding that information).

Paragraph 4 – Information relating to any consultations or negotiations, or contemplated consultations or negotiations, in connection with any labour relations matter arising between the authority or a Minister of the Crown and employees of, or office holders under, the authority.

Paragraph 5 – Information in respect of which a claim to legal professional privilege could be maintained in legal proceedings.

Paragraph 6 – Information which reveals that the authority proposes;

a)    To give under any enactment a notice under or by virtue of which requirements are imposed on a person; or

b)    To make an order or direction under any enactment

Paragraph 7 – Information relating to any action taken or to be taken in connection with the prevention, investigation or prosecution of crime.

Members are reminded that whilst the following item(s) have been marked as exempt, it is for the meeting to decide whether or not to consider each of them in private or in public. In making the decision, members should balance the interests of individuals or the Council itself in having access to the information. In considering their discretion members should also be mindful of the advice of Council Officers.

Should Members decide not to make a decision in public, they are recommended to resolve as follows:

“That under Section 100A of the Local Government Act 1972, the public and press be excluded from the meeting for the following item(s) of business on the grounds that, if the public and press were present, it would be likely that exempt information falling under the provisions of Schedule 12A, Part I, Paragraph(s) XXXXX would be disclosed to them, and that in all the circumstances of the case, the public interest in maintaining the exemption outweighs the public interest in disclosing the information.”

RESOLVED:  That Under Section 100A of the Local Government Act 1972, the Local Pension Board agreed that the public be excluded from the meeting for the following items of business on the grounds that if the public were present it would be likely that exempt information under Part 3 of Schedule 12A to the Act would be disclosed to them.