Agenda item

Presentation on pooling arrangements from representatives of London Collective Investment Vehicle

The Board welcomed Jill Davys, Client Relations Director, London Collective Investment Vehicle, to the meeting and received a presentation which incorporated an update on the Collective Investment Vehicle (CIV), Stewardship and Responsible Investment (RI).

During the presentation, the Board asked questions and made comments which were duly responded to as follows:

·                     The London CIV (LCIV) looked to identify efficiencies as authorities were spending too much on investment management fees.  A Board member commented that the longer term objective was to save money on fees and sought clarification as to how much of the £34 billion from across London would be in the CIV.  Ms Davys advised that the figures relating to passive investment outside the LCIV required updating but that the figure was approximately £20 billion.

·                     It was commented that some authorities may find that fees were lower without a CIV and that this had been raised by the Independent advisers to the Pension Fund Committee.  It would not be known for many years as to whether the CIV had met its objective.  Ms Davys advised that there had been a review of internal controls which she would circulate to the Board.

·                     The relationship between the Board and CIV required clarification and the Board needed to be clear as to what information was required in order to fulfil its remit.

·                     A Board member expressed the view that the CIV, which had been inserted into the process, regarded the Pension Board as an inconvenience and was advised that the Pensions’ Manager should be providing the Board with the necessary information.

·                     In time, the Board would need to see the Funds that Harrow invested in.

·                     Concern was expressed in relation to the governance of the CIV as it was ‘removed’ from public scrutiny.  In response, Ms Davys advised that the CIV was an FCA regulated entity and made direct reports to Pension Fund Committee Chairs across London.  There was a quarterly report on the budget and an Investment Advisory Committee established which would be attended by Harrow’s Pensions Manager.

·                     The timetable for the CIV should be adhered to.

·                     Ms Davys advised that one issue for Pension Fund Committees was that some Funds had been with the same Managers for a considerable time.  She added that the LCIV Chief Investment Officer was a former Fund Manager and that the LCIV had experienced staff on standard salaries.  A Board member sought clarification in terms of salary levels and was advised that, to the best of Ms Davys knowledge, these were below £140,000 pa.

·                     An in depth training session on the CIV was requested.

·                     The Board requested sight of the LCIV accounts and Annual Report.

Ms Davys advised that there were divergent views across London in terms of stewardship and responsible investment and she tabled the stewardship code.  A Board member stated that he was concerned that there was some pressure to use the Fund for infrastructure needs.

The Board thanked Ms Davys for her attendance and responses, stating that the future of the Pension Board in relation to the CIV was unclear.

RESOLVED:  That

(1)          the presentation be noted;

(2)          the LCIV accounts and Annual Report be circulated to the Board;

(3)          an in depth half day training session on the LCIV be arranged before the year end with the Chief Investment Officer and Risk Compliance Officer in attendance.