Agenda and minutes

Members are invited to declare at this stage of the meeting, any relevant personal or discloseable pecuniary interests in any matter to be considered at this meeting.

Councillor Daly declared a personal interest in Agenda Item 9 as a Council appointed Trustee on the Edward Harvist Trust.

To confirm and approve the minutes of the previous Sub Committee held on Thursday 24 June 2021 as an accurate record.

RESOLVED: That the minutes of the previous meeting held on 24 June 2021 be approved as an accurate record of the meeting.

None.

To receive the Brent Pension Fund Q2 2021 Investment Monitoring Report.

Kenneth Taylor (Hymans Robertson LLP Investment Consultant) introduced a report which outlined the performance of Brent Pension Fund during Q2 2021. 

In presenting the report, the following were highlighted as key strategic points:

·                The Committee were updated that Q2 had involved a strong performance by the Fund, with a £45m million increase in value, which was equivalent to a 5.1% return.  This was ahead of the benchmark set for The Fund and continued the strong rate of returns being delivered reflecting the increase in economic activity as a result of the easing of restrictions as part of the global recovery from the pandemic.

·                The main driver of returns were The Fund’s growth holdings and equity investments, with the Baillie Gifford multi asset fund having produced particularly strong performance.

·                In terms of Asset Allocation and valuation the Fund remained broadly in line with the interim target allocations for growth and income assets. In terms of valuation the Fund’s assets had grown from £1032m to £1076m with £48m held in cash at the end of the quarter.  It was, however, noted that this included £30m earmarked for investment in the new BlackRock Low Carbon equity fund.

·                The proposed approach towards scaling back investment in the Capital Dynamics and Alinda Infrastructure Funds remained on track with the aim to scale up the proportion of investment held with the London CIV.  This would include the LCIV Infrastructure fund which whilst in its infancy would see an expected ramp up over the next 3 years alongside the ongoing commitment to the LCIV private debt fund.

·                The approach also being developed in relation to strategic property investment, on which it was noted a report was due to be considered by the Sub Committee later on the agenda (Min item 13 refers).

An overview was then provided in relation to manager performance of the various funds, with the following noted:

·                That total Fund return was positive during the quarter, with longer term performance also comfortably ahead of targets.

·                In growth assets, it was noted that there was very strong performance from the equity investments in global, UK and private equities. Growth assets were noted as being the main driver of returns over the quarter.

·                The Baillie Gifford multi asset Fund had posted strong performance, driven by listed equities, property and infrastructure allocations which had benefited from the ongoing economic recovery.  Strong performance had also been identified in relation to the Ruffer multi asset Fund, with the returns from both at 14.2% relative to the benchmark of 2.1%.

·                The reasons identified for the lower than expected performance in relation to the Capital Dynamics and Alinda Infrastructure funds.

The Chair thanked Kenneth Taylor for his presentation and members were then invited to ask questions, with the responses summarised below:

·                In relation to the Black Rock low carbon equity fund clarification was provided regarding the timescale for initial investment, which had been made at the start of September 21.  Further details would therefore be included as part of the next  ...  view the full minutes text for item 5.

To receive the draft Pension Fund Annual Report and audited Annual Accounts for the year ended 31 March 2021.

Flora Osiyemi (Head of Finance) introduced the report, providing the Sub-Committee with an update on the Pension Fund Annual Accounts for the year ended 31 March 2021.

The Committee noted that since publication of report the Pension Fund Accounts had been finalised with an unqualified opinion issued by Grant Thornton, as external auditor.  The key items were noted as follows:

·                During 2020/21, the value of the Pension Fund investments had increased to £1,032b, compared to £835m in 2019/20. This improvement was mainly due to strong performance from the Fund’s investment managers and bounce back in the markets as part of the recovery from the pandemic.

·                Total contributions received had been £61m, an increase from £60m in the previous year.

·                Total benefits paid to scheme beneficiaries in the form or pensions or other benefits were £42m, a decrease on the previous year’s £48m.

·                As in 2019/20 the Fund remained in a positive cash flow position as its contributions exceeded outgoings to members.

·                In terms of next steps, the Pension Fund Annual Report was due to be published on 1 December 2021, which would be subject to review by Grant Thornton, as external auditors in order to complete the audit process.

The Chair supported by the Sub-Committee took the opportunity to thank the Finance Team and Grant Thornton for their efforts in completing the Accounts and audit process within deadline, which Brent had been one of the first local authorities to achieve.

As no further issues were raised it was RESOLVED to note the current position and progress made in finalising the Brent Pension Fund Accounts 2020/21 along with the audit findings.

This report presents a detailed framework setting out the practical steps to transition to net zero and to top-up the allocation to the Fund’s existing low carbon global equity mandate.

Flora Osiyemi (Head of Finance) introduced the report, which presented a detailed framework setting out the practical steps to transition to net zero and to top-up the allocation to the Fund’s existing low carbon global equity mandate.

In presenting the report the Sub Committee noted:

·                The Net Zero Transition Roadmap which had been prepared by the Funds Investment Advisors (Hymans Robertson) and had been attached as Appendix A to the report.  This set out a series of proposed steps for the Fund to consider over the short, medium and longer term in the context of setting and achieving net zero.

·                The importance of the Fund in being able to evolve its investment strategy in order to take account of the opportunities and risks presented by climate change, in relation to its responsible investment approach, alongside the progress made to date.

Kenneth Taylor (Hymans Roberston) then went on to present the key sections and principles within the Roadmap, with the Sub Committee noting:

·                The background to responsible investment and key themes/principles that would require consideration by the Fund as part of its journey towards net zero.

·                The development of a Net Zero Framework consisting of five key areas to drive forward the strategy.  These were identified as education, understanding the baseline, evaluating alignment and setting targets, planning and implementation actions and monitoring and ongoing reporting.

·                The short and medium term roadmap for each key area within the Framework along with potential targets (both long term and interim) and outline/assessment of potential equity funds.

·                The Roadmap was noted as setting out what would be required to be analysed in the next 12-18 months to develop the plan further. This included considering what metrics would be used to measure the fund’s climate footprint.

·                In terms of targets, whilst the key aim was to achieve a net-zero position, this would require consideration of a realistic timeframe combined with shorter term targets in order to inform actions moving forward towards the longer term aspiration.

·                The management and stewardship of this fund was noted as being important, including decisions around investment opportunities and funds.

·                In relation to education, the importance in developing training and a focus around responsible investment was highlighted as key as part of the first phase in delivering the Framework during 2022.

·                In terms of investment options, the London CIV already operated a number of funds which included an Environmental, Social and Governance (ESG) criteria, which could also be developed as an approach within the Framework, also taking account of the requirements established in relation to the Taskforce for Climate Related Financial Disclosures.  These disclosures would likely need to be produced in October 2023 should LGPS (Local Government Pension Scheme) funds be required to comply.

·                It was updated that the fund’s current carbon emissions would need to be determined. The London CIV had set up metrics for this, however other fund managers outside of the LCIV arrangements would also need to supply thee details. Once this was ascertained, this could then be reported  ...  view the full minutes text for item 7.

This report presents analysis and results of investment options for the Committee to consider and agree which fund to invest in. It provides an overview of the Fund’s strategic allocation to property, an introduction to the UK property market, a summary of four potential property funds, and recommendations for investment and implementation.

In view of the main appendix to the report having been classified as exempt and nature of the investment options presented for consideration the Sub Committee RESOLVED to move this item into the private session of the meeting for discussion.

To note the minutes of the Pension Board held on Tuesday 27 July 2021.

The Sub-Committee welcomed Mr David Ewart (Independent Chair - Pension Board) to the meeting to give an overview of the Board’s last meeting.  Mr Ewart provided an outline of the issues considered at the last Board meeting, which had included the Chair’s Annual Report, an update on various pension administration matters, the new Fund administration strategy, as well as an update on the Local Government Pension Scheme. The Board also considered the Pension Fund Risk Register.  In concluding the Chair thanked all officers for their support and it was RESOLVED to note the minutes from the Pension Board and update provided at the meeting.

Notice of items to be raised under this heading must be given in writing to the Head of Executive and Member Services or his representative before the meeting in accordance with Standing Order 60.

None.

The press and public will be excluded from the remainder of the meeting as the reports to be considered contain the following category of exempt information as specified in Paragraph 3, Schedule 12A of the Local Government Act 1972, namely:

“Information relating to the financial or business affairs of any particular person (including the authority holding that information)"

At this stage in the meeting the Chair advised that the Sub Committee would need to move into closed session to consider the final items on the agenda and it was therefore RESOLVED to exclude the press and public from the remainder of the meeting as the reports and appendices to be considered contained the following category of exempt information as specified in Paragraph 3, Schedule 12A of the Local Government Access to Information Act 1972, namely;

“Information relating to the financial or business affairs of any particular person (including the Authority holding that information).”

The purpose of this report is to update the Committee on employer risk to the Brent Pension Fund and note the current position on admission agreements.

Sawan Shah (Senior Finance Analyst) introduced a report updating the Sub Committee on employer risk to the Brent Pension Fund along with the current position on admission agreements.

In considering the report the Sub Committee noted:

·                That the report had been provided for information purposes in response to previous requests for updates to be provided in relation to the management of risk.

·                The outline of the different categories of scheme employers in the Fund and how the level of risk (particularly in relation to the employers meeting their obligations to the Fund around payments) varied between each group, as detailed within Section 3 of the report.  The key categories of employers were identified as Scheduled Bodies (which included the Council and Academy Schools); Transferee Admission Body (TABs) (which included a range of outsourced contractors such as FM Conway, Veolia and Edwards & Blake) and Community Admission Bodies (CABs) (which in Brent included a small number of charitable organisations operating within or connected to the local authority).

·                The detailed approach towards the management and mitigation of employer risk had been set within the Brent Pension Funding Strategy Statement and Administration Strategy.  Members also recognised the efforts being made to address risks and issues identified in relation to specific employers on a case by case basis alongside the new powers available to administering authorities since September 2020 to review employer contributions between valuations and provide more flexible termination strategies including “deferred employer status”.

·                The background and update provided in relation to admission agreements along with the summary of current outstanding agreements and terminations relating to the Fund, as detailed in Appendix 1 of the report and action being taken to resolve and progress those outstanding to completion.

The Chair thanked officers for the update provided and with no additional risks having been highlighted it was RESOLVED to note the report.

To receive a report from the Director of Finance providing an on recent developments regarding Brent Pension Fund investments held within the London CIV (LCIV).

The Sub Committee received the latest update report from the London CIV (LCIV).  The update included the LCIV investment review for the period ending 30 June 2021 (as detailed within Appendix 1 of the report) which provided an investment summary with valuation and performance data for Brent’s ACS holdings along with a market and LCIV activities update.  Also included (as detailed within Appendix 2 of the report) was the LCIV quarterly investment review for Private Markets for the period ending 31 March 2021, which included Brent’s investments in the LCIV infrastructure fund along with valuation and performance data for the underlying portfolio investments and an update on pipeline investments.

The Sub Committee noted the LCIV net target emissions target with the commitment to become a net zero company by 2040.

With no issues raised in relation to the update provided, the Sub Committee RESOLVED to note the investment update provided by London CIV.

The meeting closed at 8.02 pm

S CHOUDHARY

Chair