Report of Director of Finance and Assurance.
The Committee received the Performance dashboard and update on regular items report which had given an insight into the draft work programme, a summary of the key performance and risk indicators from the management performance dashboard report as well as the PIRC performance indicators. Finally, the report gave an update on the Pension Board.
The officer introduced the report to the Committee in brief, it was noted that the funding level went above 100%. This was mainly due to the good investment performance in 2020 along with a small downward shift in the value of the liabilities during the latest quarter because of an increase in yields which increased the discount rate used to value those liabilities.
The Officer went on to highlight:
· The fund value now at £995 million.
· Equities had been rebalanced due to £30 million being withdrawn from Longview, Blackrock and GMO, £20 million had then been invested in the London CIV global bond fund to start the process of realigning the fixed income investments agreed at the previous meeting.
· Work had been undertaken with Blackrock to get the mandates adjusted and for tax forms to be put into place. This would allow for a number of shifts to take place which would be completed by the end of quarter 3 of 2021.
The Committee raised a number of questions which were answered by the officer and an Independent Adviser as follows:
· Raised how the potential inflation risk and potential interest rate risk might impact the pension fund. It was explained that if inflation increased substantially and everything else being equal, then this would be detrimental to the pension fund as the liabilities of the fund were linked to inflation, but the fund did not have full exposure to inflation linked assets. Long-term inflation (circa 20 years ahead) would impact the pensions as opposed to the inflation rate at present. However, the fund would benefit if gilt yields rose without expected inflation rising.
· Though the fund was marginally overfunded, no action would be taken as this was not the full triennial valuation, not all the member data had been submitted, nor had the analysis that would be associated with that data been carried out.
· No specific de-risking actions beyond rebalancing back to the strategic benchmarks had taken place.
· In terms of what proportion had been invested in Environmental, Social and Governance (ESG) orientated assets there had been shifts towards investing in those areas and detail into what proportion of investments were in ESG orientated assets could be looked into.
The Committee raised a number of points as follows:
· It was not known if ESG was referenced on members’ annual benefit statement. A Member raised that this should be something to have on the benefit statements.
· That it would be beneficial to know the comparative information on ESG investment.
RESOLVED: That the report be noted and that the draft work programme for the remainder of 2021-22 be approved with the addition of a ‘meet the manager’ event.