Agenda item

Report of the Director of Finance

The Committee received a report of the Director of Finance which provided an update on the Work Programme, the performance of Fund Managers and issues raised by the Pension Board.

An officer outlined the content of the report and highlighted the following:

-               as at 31 October 2018, the market value of the Fund was £824m.  This was a drop from £850m in September 2018.  The drop was due to a general downturn in the financial markets;

-               the transfer of the passive equity funds held with State Street Global Advisors Ltd to BlackRock, had been completed successfully and on budget except for the timelines.  The cost of the transition was 0.7%.  The final transition report would be circulated to all members of the Pension Fund Committee on request.

The Chair requested that the proportion of the Fund invested in the LCIV be reported to the Pension Fund Committee as a standing item.

A Member asked questions about the weighting being given to global equities and why there was an allocation of 50%.  He asked about the confidence in the UK market.  The same Member asked why assets had been moved to Blackrock.

In response, a representative from Aon Hewitt, stated that:

-               there was a significant (10%) allocation within global equities to the UK market. The UK market was dominated by a couple of sectors such as the pharmaceutical industry which had resulted in concentrated investments.  It was important that there was diversification.  For example, the technology sector was underrepresented in the UK market and diversification was achieved by investing globally.  Moreover, the global equity market had outperformed the UK market;

-               the main reason for moving passive funds to Blackrock was due to their inclusion in the LCIV (London Collective Investment Vehicle). There was a requirement from the government to invest in the LCIV and the Fund benefited from fee reductions negotiated by the LCIV.

Members were informed that the Pension Board had received a presentation from the Pension Regulator and this had been well received.  It was noted that the Board had reviewed the Fund’s Breaches Policy and that no breaches had been reported.

The Chair suggested that training on LDI and Infrastructure was required and it was noted that this was referenced in the report(s) on the agenda.

Richard Romain, Independent Adviser, raised the issue of the attendance of the Chair of the Pension Board at Pension Fund Committee during consideration of exempt (Part II) business.  He explained that, whilst local authorities were inconsistent in their approach, the Committee could agree to allow the Chair of Pension Board to remain in the meeting room during consideration of exempt business.  He advocated such transparency.  The Chair stated that the Members needed to adhere to the advice received from the Council’s lawyers, HB Public Law, and referred to the minutes of 7 March 2018 Pension Fund Committee, Minute 272.  Colin Robertson, Independent Adviser, pointed out that some authorities applied the same rules as Harrow.

RESOLVED:  That the Work Programme for the period up to March 2019 be agreed.

[See also Minutes 41, 42 and 44.]