Agenda and minutes

Pension Committee
Tuesday, 17th September, 2019 7.00 pm

Venue: Civic Offices, St Nicholas Way, Sutton SM1 1EA

Contact: Sharon Major, Committee Services Officer  Tel: 020 8770 4990 | Email:  committeeservices@sutton.gov.uk

Items
No. Item

13.

Welcome and introductions

Minutes:

The Chair, Councillor Jill Whitehead, welcomed those present and in particular welcomed the Independent Chair of the Pension Board Mike Ellsmore who attended as an observer.

14.

Apologies for absence

Minutes:

There were no apologies for absence.  Councillor Param Nandha was absent.

15.

Declarations of interest

Minutes:

There were no declarations of interest.

16.

Member Training - Infrastructure

Minutes:

The training presentation was delivered by David Walker, Partner Hymans Robertson.

Members raised the following queries:

Why is the Government keen for new investments to be pooled via the London CIV and how would the investment return from a CIV managed Infrastructure product compare to the performance of the current fund manager, Partners group. Members were advised that the Government had requested that from 2020 all new investments should be via the London CIV, unless the pool cannot meet the Council's strategic requirements. Richard Simpson, Strategic Director Resources, said that the Committee would need to understand that if there was a like- for- like offering from the CIV, if any new commitments were to be made to meet the required allocation, then the CIV would need to be considered.

17.

Minutes of the previous meeting pdf icon PDF 83 KB

To approve as a correct record the minutes of the meeting held on 4 June 2019

Minutes:

RESOLVED: that the minutes of the meeting held on 4 June 2019 be agreed as an accurate record.

18.

Quarterly investment performance report to June 2019 pdf icon PDF 122 KB

The report at Appendix A shows the performance of the total Fund and individual fund managers for the quarter ending 30 June 2019, performance in the last twelve months, annualised rolling three and five year performance against the benchmark. Exempt Appendix B has manager ratings by Hymans and manager fees.

Additional documents:

Minutes:

The report was introduced by Lyndsey Gamble, Head of Investment, Risk and Commercial Finance. She highlighted the background to the changes in the format of the report. David Walker, Partner from Hymans Robertson, gave some commentary on the report which showed the performance of the total Fund and individual fund managers for the quarter ending 30 June 2019, performance in the last twelve months, annualised rolling three and five year performance against the benchmark. Mr Walker commented that there had been positive returns across every asset class, overall between 6-8%. In particular he commented that Partners group returns are very strong relative to their target.

 

Richard Simpson highlighted that the new information within the report is helpful In respect of markers for asset allocation. He further pointed out that the “value” style of Schroders had performed under benchmark for some time so this may be something that Members would like to seek more clarity on when Schroders Client Management team next attend a committee meeting.

Members queried if there are other fund managers in that asset class that could be chosen instead of Schroders.  David Walker, Partner, Hymans Robertson, suggested a number of aspects to review before making a change.

 

Member feedback on the report format included the following comments:

Members like the style and asked about more details on drawing conclusions from the data provided.

David Walker, Partner, Hymans Robertson, suggested he bring colour reports to the next meeting.

It was confirmed that the committee are required to review the fund performance on a quarterly basis.

 

RESOLVED:

The performance of the total Fund and the performance of individual fund managers against their benchmarks and targets was noted

The content and format of the report was reviewed and Members and comments were provided.

19.

Presentation by Partners Group on investment performance to June 2019

Minutes:

The presentation was introduced by Courtney Benson Client Relationship Manager, Partners Group. She was supported by two colleagues, from the LGPS relationship team and the Infrastructure team.

In discussion after the presentation, Members asked for more information on the Partners group ESG policy. The presenter advised that they have a dedicated fund manager and carefully choose investments.  They have a strong team of industry people with experience in the field. The presenter also gave further clarification regarding terms Alpha and Beta performance.

20.

Investment Strategy :Private Debt pdf icon PDF 99 KB

The report at Appendix A was prepared by the Fund’s investment advisor, Barnett-Waddingham, to review the London Collective Investment Vehicle’s fund offering for private debt.

Additional documents:

Minutes:

 

 

The report was introduced by Lyndsey Gamble, Head of Investment, Risk and Commercial Finance. She reminded Members that the Committee had previously agreed to reduce equity allocation.  At the time the decision was taken there was not an offering from the London CIV for private debt.  An offering had since become available. David Walker, Partner, Hymans Robertson spoke through the report on the review of the London Collective Investment Vehicles (LCIV’s) fund offering for private debt.

The key points highlighted were:

Performance of the fund is at the required level and this type of investment comprises of senior secured debt on the balance sheet of companies.

The Fund will be suitably diversified, the investment team at Ares are well thought of. Ares are on the Hymans preferred manager lists,

Members sought clarity on:

An overview of private debt and David Walker. Partner, Hymans Robertson responded accordingly.

RESOLVED: To agree to appoint the London Collective Investment Vehicle (LCIV) as manager of the Private Debt portfolio.

21.

Update on ESG: Carbon Footprinting information, ESG investment processes and examples from fund managers pdf icon PDF 130 KB

This report provides an update on agreed actions to progress the Committee’s policy and strategy to incorporate Environmental, Social and Governance (ESG) issues into its decision making.

Additional documents:

Minutes:

 

 

This report was presented by Lyndsey Gamble, Head of Investment, Risk and Commercial Finance, she provided an update on agreed actions to progress the Committee’s policy and strategy to incorporate ESG issues into its decision making.

 

David Walker Partner, Hymans Robertson spoke through the analysis of the carbon exposure, and the metrics used to measure these.

The headline position on the current portfolio is positive on a relative scale at 37% below benchmark.  The Chair commented that this is a positive result.  Members commented that the workshop planned for 22 October to review responsible investment beliefs will be key to take this forward.

RESOLVED:

1.    The Trustco Carbon Footprint report was noted.

2.    The information received from fund managers on ESG and their investment processes was noted.

22.

Pension Fund Annual Report including Statement of accounts pdf icon PDF 123 KB

The attached Pension Fund Annual Report at Appendix A has been produced to keep scheme members and other interested stakeholders informed about the administration and performance of the London Borough of Sutton Pension Fund, and to comply with Regulation 57 of The Local Government Pension Scheme Regulations 2013 (England and Wales).

Additional documents:

Minutes:

 

 

This report was presented by Antony Huggett, Investment, Insurance and Commercial Manager.  He advised the committee that the Pension Fund Annual Report had been produced to keep scheme members and other interested stakeholders informed about the administration and performance of the London Borough of Sutton Pension Fund. Key areas highlighted were:

·         The statements included in the annual report, bring together the statutory statements required by the pension fund, and provide an analysis of financial and investment performance.

·         That a new section has been added to the report on asset pooling and making savings on Manager fees.

Members queried committee membership for 2018 /19. It was agreed that this section would be amended, and that attendance record would also be updated to show only Members from that municipal year.

 

RESOLVED:

1.    The Pension Fund Annual Report for 2018/19 including the audited financial statements be agreed.

2.    It be agreed to delegate authority to the strategic Director Resources, in consultation with the Chair of the Pension committee, to make final amendments to the annual report as required before publication.

23.

Pension Administration update pdf icon PDF 175 KB

This report provides an update on the main work streams impacting pensions administration for the period of May 2019 to July 2019.

Additional documents:

Minutes:

The report was presented by David Kellond, Pensions Administration Manager to provide an update on the main work streams impacting pension administration for the period of May 2019 to July 2019.

He highlighted that: there had been significant difficulty in recruiting to the vacant posts. The jobs had been re-advertised and the advert will close shortly.  The Pensions apprentice has been very successful. The team will look to develop existing staff more to grow capability internally going forward. 

Annual returns and valuations returns have been submitted to the actuary.  Annual benefits statements have been made available in pensions online

In respect of Pensions online line, a letter will be sent to all active scheme members to remind them of the online service with the aim of improving the number of registrations. 

RESOLVED: The report was noted.

24.

LGPS Good Governance Review pdf icon PDF 143 KB

This report provides an update on the LGPS Scheme Advisory Board’s (SAB) review of governance structures for Councils’ pension funds. The full report is in Appendix A.

Additional documents:

Minutes:

The report was presented by Antony Huggett, Investment, Insurance and Commercial Manager.  He provided an update on the LGPS Scheme Advisory Board’s (SAB) review of governance structures for Councils’ pension funds. The feedback on the 4 proposed models was highlighted to the committee.

The committee were advised that the SAB will look at how to develop the greater ring fencing option and will be firming up recommendations to the Secretary of State in November.  There will also be further consultation with stakeholders at that time.

RESOLVED: The scheme Advisory Board’s (SAB) proposals for further consultation be noted.

25.

Review of work programme pdf icon PDF 99 KB

The Work Programme set out in this report has been produced to propose agenda items to be presented and discussed at future meetings.

Minutes:

The report was presented by Lyndsey Gamble, Head of Investment, Risk and Commercial Finance.  In debate it was suggested that an agenda item should be added to the March 2020 meeting to give an introductory update on the investment strategy review. 

Members were advised that in June the CMA published their order regarding the review of investment consultancy.  That order included a new requirement that the Pension committee should set objectives for their investment consultant and measure the Manager, by Dec 2019.  This requirement will be discussed further post this meeting to decide when this should come to committee.

RESOLVED: To note the proposed Work Programme set out in this report.

26.

Any urgent business

To consider any items which, in the view of the Chair, should be dealt with as a matter of urgency because of special circumstances (in accordance with S100B(4) of the Local Government Act 1972).

Minutes:

There was no urgent business. The meeting ended at 9.15