Agenda item

Report of the Director of Finance.

Members received a report of the Director of Finance, together with appendices 1-5 of which appendix 4 was confidential, which set out

·                     the draft Work Programme inviting Members’ comments and agreement;

·                     a new investment and management Performance Dashboard report summarising key fund performance and risk indicators, trigger monitoring report and  PIRC Performance Indicators;

·                     the Fund’s performance to 30 June 2019.

An officer introduced the report and referred the Committee to the revised Fund Valuation and Performance – March 2019 to August 2019 schedule which replaced page 37 of the agenda (appendix 5 referred).  The revised schedule was tabled at the meeting in order to avail Members of the  Pension Fund investment value up to  31 August 2019 as this information had not been available at the time the agenda was published.  He drew attention to the performance of Pantheon and La Salle Fund Managers.  A representative of Aon, Council’s Advisers to the Fund, explained the reasons behind the uncertainty in the equity market.  However, of significance was the fall in gilt yieldsdue to the Fed’s monetary policy approach.

In response to a question from an Independent Adviser in respect of Minute 58 (resolution 1, rebalance to the Strategic Benchmark Allocation by redeeming 5% across all equity holdings and the cash holding to be held within Blackrock to sit within the London CIV) and the further discussion at Minute 78, and whether resolution 1 had been actioned, the officer stated that it had been actioned in part only.  A sum of £25m circa 3% of the value of the Fund had been moved into cash.  Discussions with the London CIV (Collective Investment Vehicle) were continuing with a view to transferring the Longview Funds held if other London Boroughs wished to invest and planned investment in the infrastructure sub-fund once it was opened for new investment.  An Independent Adviser stressed the importance of not delaying the reduction in the equity holding.

The Committee discussed the Investment Dashboard at appendix 1 to the report, including the reasons behind why the value of liabilities might have changed.  The Committee also discussed the costs associated with currency hedging.

Members were also briefed on the Harrow Pension Fund Annual Report and Financial Statements which had been audited by the Council’s external auditor, Mazars, and that no recommendations had been made.  A final audit sign-off was awaited and the Committee was of the view that the attendance of the external auditor at the November 2019 meeting of the Committee was not necessary.

In relation to the pension performance analytics provided by PIRC, appendix 3 to the report referred, an Independent Adviser questioned whether Infrastructure should be included in the benchmark for performance measurement purposes at this stage when no investment had been made and the Fund was not yet open to investment.  It was suggested that PIRC might present to the Committee at the next meeting but it was agreed that an Independent Adviser and an officer might present PIRC's findings to the Committee in the first instance.

Discussions in respect of confidential appendix 4 to the report also ensued and related to the London CIV’s action in relation to a Fund Manager and an opinion of Aon, Council’s Adviser to the Fund.  An Independent Adviser agreed with Aon’s opinion/advice.

Members were of the view that they would benefit from extending an invitation to London CIV’s new Chief Investment Officer (CIO) to attend the next pre-meeting session of the Committee in November 2019 in order to better understand the operations of the London CIV.  Members agreed to receive various documents – an overview of the CIV from officers – prior to the November meeting and an Independent Adviser offered to help frame questions for the London CIV CIO.

RESOLVED:  That, subject to comments set out in the preamble above, the Work Programme for the period up to March 2020 be agreed.

[See also Minute 91]