Agenda, decisions and draft minutes

To receive disclosures of personal interest from Members in accordance with the Code of Conduct

Note:

1.     Members are requested to identify the item number and subject matter that their interest relates to and signify the nature of the personal interest: and

2.   Where Members withdraw from a meeting as a consequence of the disclosure of a prejudicial interest they must notify the Chairman when they leave.

In accordance with the Council’s Code of Conduct, there were no declarations made pertaining to the agenda.

The Chair welcomed County Borough Councillor K Johnson to his first meeting of the Committee.

To receive the minutes of the previous meeting of the Pensions Fund Committee held on the 9^th October 2023.

It was RESOLVED to approve the minutes of the 10^TH October 2023 as an accurate reflection of the meeting.

To receive a presentation from LAPFF on responsible investing and engaging.

Through the aid of a Powerpoint presentation, Mr K Bray, LAPFF provided Members with an overview of the role of the LAPFF with ‘Responsible investing – protecting shareholder value’.

Members were provided with the context of the LGPS and it was noted that the LGPS is a very significant institutional investor both nationally and internationally. Details of responsibilities, the structure and the areas of concern for responsible owners were also provided.

Mr Bray, proceeded to advise of work undertaken by LAPFF in respect of climate change, with details of a recent visit to Brazil and the work with Arcelor Mittal, with ambitions of the Spanish plant becoming the worlds first full scale zero carbon emission steel plant. Other recent successes were also provided for the benefit of Pension Fund Committee Members.

The presentation was concluded with details of the future for the organisation and the benefits of LAPFF membership and value for money.  It was confirmed that LAPFF would remain as a fund based organisation, with more collaboration and more effectiveness going forward.  

The chair thanked Mr Bray for his very informative presentation and advised that the Committee were in receipt of the Newsletters referenced, which Members found very useful.  There were also discussions of the good engagement opportunities through the quarterly engagement sessions.

The Chair advised of the Committees support to the ESCG work commenting on the positive influence on companies. The Deputy Chief Executive and Group Director – Finance, Digital and Frontline Services agreed and commented on the extent of qualitative work achieved in the background by LAPFF that wasn’t in the public domain.

Following the discussion Members RESOLVED to note the PowerPoint update.

The Deputy Chief Executive and Group Director – Finance, Digital and Frontline Services presented his report to Members, which provided the key issues being addressed as delegated functions, as specified in the Pension Fund Governance Policy Statement.

Members were advised that during the quarter ended 30th September 2023, the overall value of the Fund decreased from £4,263 million to £4,235 million.

Reference was made to the rolling 3-year performance of the Fund, with the Group Director advising of the 1.7% positive performance as compared to a benchmark of 4.3%. 

The Committee were informed of the performance within the last quarter, where it was detailed that Global Opportunities high alpha equity portfolio and UK Credit portfolio outperformed their benchmarks; Baillie Gifford Traditional Equity, Global Growth high alpha equity portfolio, Global Active Sustainable Equity portfolio and CBRE Property under-performed their benchmarks; and BlackRock Passive Global Equity (low carbon), BlackRock Passive UK Gilts and BlackRock Global Infrastructure Solutions performed in line with their benchmark. 

Through a Powerpoint slide, the Deputy Chief Executive and Group Director – Finance, Digital and Frontline Services illustrated the positive fund growth, advising that in the latest period the fund had grown in excess of its benchmark and the universe.

Members were referred to the tables within 4.6 and 4.7 of the report which provided detail of the asset allocation of the fund and the relating strategy.

With regard to infrastructure, the Committee were advised that the approach is for the Fund to invest over a number of years in order to secure and optimise opportunities across the different time periods (and vintage years) and details of such infrastructure was provided.

The Deputy Chief Executive and Group Director – Finance, Digital and Frontline Services, provided information regarding the current decline in gilt and bond prices, which had resulted in the Panel agreeing to increase the bond allocation in line with the Fund’s current strategy.  Members were reassured that the increase was funded from the Bailie Gifford exposure held outside of the pool for such purposes, to continue to implement the strategy.  This re-balancing exercise took place during October 2023, at the end of October the equity exposure had been reduced to 63%.

The Service Director Pensions, Procurement & Transactional Services continued the report by providing an administration update. 

It was advised that the Pension Fund ‘Annual General Meeting’ was successfully facilitated on 15th November, with attendees from Pension Committee, Pension Board and 24 Fund Employers.  Production of the Fund’s 2022/23 Annual Report was concluded following the approval of the audited accounts at Council on 29th November and was published prior to the statutory deadline. 

Members were informed that the Pensions Regulator (TPR) is expected to publish their new General Code of Practice imminently.  The new consolidated code will set out new governance standards for occupational pension schemes.

In respect of the Pensions Dashboard Programme (PDP) it was confirmed that the PDP were consulting relevant industry parties on proposed staging dates and it is anticipated that the revised public sector scheme  ...  view the full minutes text for item 55.

The Service Director, Finance & Improvement Services provided Members with an overview of the arrangements in place to manage risk within the Pension Fund.

The Service Director advised Members that the Fund maintains a Risk Register which is reviewed and updated on a quarterly basis and referred Members to the Risk Register attached at Appendix 1 for their consideration. Members were informed that there were no identified updates required to the Risk Register to that reported to the October 2023 Pension Fund Committee.

It was RESOLVED:

       I.          To note the arrangements in place for the management of risk within the Fund;

     II.          To review the Risk Register (Appendix 1) and consider whether they wish to receive further detail on any issues.

The Deputy Chief Executive and Group Director – Finance, Digital and Frontline Services reminded Pension Fund Committee of their role in respect of the approval process for the Pension Fund Accounts and through his report provided Members with the opportunity to discharge their responsibilities in this respect.

For the Committee’s information, the Deputy Chief Executive and Group Director – Finance, Digital and Frontline Services  advised that the Pension Fund Accounts (Appendix 1) and Letter of Representation (Appendix 2) were reported to and approved by full Council on 29th November 2023 and the outcome of the external audit, undertaken by Audit Wales, was an unqualified audit opinion (i.e. a clean audit opinion) which is referenced at Appendix 3 of the report.

The Chairman commented positively on the Accounts and thanked officers for the hard work involved in producing the statement of accounts.   A query was raised in respect of investment assets within the Net Assets Statement and the Deputy Chief Executive advised of the contributors to the £ 786,080 total,  confirming that RCT pension only invest in equity bands and property

Following discussions it was RESOLVED

1.     To note the audited financial statements of the Pension Fund for the financial year 2022/23.

Through the report, the Principal Accountant Pensions And Treasury Management provided the Committee with an update on the work and progress with regard to the Wales Pension Partnership (WPP) and Joint Governance Committee (JGC).

It was advised that the latest meeting of the JGC took place on the 20th September 2023 and the agenda had been shared with all Committee (and Board) members before the meeting.

In respect of the forthcoming meeting of the JGC on 13th December 2023, the  Principal Accountant Pensions And Treasury Management listed the annual policies and papers which were are to be reviewed.  This included items such as Host authority update; WPP Business Plan 2023-24 Q2 review, WPP Training Policy,       WPP Sub-fund Rebalancing and Alteration Policy, Stock Lending report, Operator update, Performance reports as at 30th September 2023, Responsible Investing and Climate Risk reports, Quarter 3 2023 engagement report of Robeco, the voting and engagement provide of the WPP and Risk Register quarter 3 review.

The Committee learnt of the next steps and priorities which included the Development of the Private Markets Sub-Funds and the Operator contract procurement process, and timelines for this process were provided.  The officer concluded by providing detail of the Task Force on Climate-Related Financial Disclosures (TCFD) reporting.

Members thanked the officer for the information provided and a query in respect of the joining details for the forthcoming JJC meeting was raised which the Officer agreed to forward.

Following discussions it was RESOLVED:

       i.          To note the update.