Agenda and minutes

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

Councillor Donnelly-Jackson declared a personal interest in item 6 (Net Zero Transition Roadmap Update) having been involved in discussion with Brent Divest previously regarding this issue.

To confirm and approve the minutes of the previous Sub Committee held on Tuesday 5 October 2021 as an accurate record.

RESOLVED: That the minutes of the previous meeting held on 05 October 2021 be approved as an accurate record of the meeting.

None.

None.

To receive the Brent Pension Fund Q3 2021 Investment Monitoring Report.

Kenneth Taylor (Hymans Robertson LLP Investment Consultant) introduced a report which outlined the performance of Brent Pension Fund during Q3 2021.

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

·                In addition to the usual figures which were presented to the Committee in the report, the report also contained information for the first time as part of the Funds evolving Responsible Investment agenda on climate metrics within its investment strategy.  Noting the Funds commitment to disclosing and monitoring these metrics, members were advised this aspect of the report would continue to be developed over time, in order to indicate how well the Fund was performing in relation to Environmental, Social and Governance (ESG) issues.

·                The Fund had added £80m to its portfolio over this period, representing a combined return against assets of 6% (ahead of the benchmark return of 5.1%).

·                The main driver of returns were the Fund’s growth holdings with LGIM’s global equity mandate the primary contributor in monetary terms and the Global and Private Equity Funds also performing well.  Within the Fund’s Income holdings the Baillie Gifford multi-asset fund had also produced strong performance.

·                The Fund had also now made its first investment in the BlackRock Low Carbon equity fund and the LCIV private debt fund.  In addition, £15m had also been invested in the Fidelity UK Property fund consistent with the previous decision taken by the Committee with both investments to be gradually increased over the next few years.

·                Emerging market equities were noted as delivering a lower rate of return, as well as the Capital Dynamics Infrastructure Fund and Alinda Infrastructure Fund, although it was noted these had not had a significant bearing on the Fund overall, totalling 0.5% of the Fund’s assets.

·                The Capital Dynamics Infrastructure Fund and Alinda Infrastructure Fund were identified as ‘legacy’ assets involving a longer term strategy to wind them down and eventually replace with other higher performing funds such as the London CIV and other renewable assets.

·                Members were updated on the overall asset allocation with it noted that the Fund was broadly in line with its interim target allocations for growth and income assets, cash and underweight protection assets.

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

·                Members were advised that total Fund return remained strong and positive on both an absolute and relative basis with longer term performance also ahead of performance.

·                Emerging market equities had however delivered a negative return over the quarter, with both sector allocation and stock selection detracting from performance along with financial stocks driven by China and India’s zero tolerance Covid-19 policies.

Members were then provided with a summary of the climate risk analysis and carbon intensity by Fund Managers. Key issues highlighted were as follows:

·                As a starting point the Fund was reporting in line with information produced by its Pool, the London CIV.  The Fund would, however, seek to evolve its climate risk monitoring process by monitoring against  ...  view the full minutes text for item 5.

This report presents an update on progress against the Fund’s net zero transition roadmap.

Kameel Kapitan (Investment Consultant, Hymans Robertson LLP) introduced the report providing the Sub-Committee with an update on progress against the Fund’s net zero transition roadmap, as detailed within the progress update included as Appendix 1 to the report.

In recognising the focus on Responsible Investment, in particular related to climate risk, the Fund had agreed to evolve its investment strategy in order to take account of the associated opportunities and risks with progress identified in relation to:

·                Dedicated training sessions on Responsible Investment (RI) for officers and member;

·                Introduction of RI focussed investment beliefs;

·                Investment in a new low carbon mandate and a new infrastructure fund with a significant allocation to renewables; and

·                An updated Investment Strategy Statement to reference carbon goals.

Reference was also made to the agreement made at the previous Sub Committee meeting in October 21 to develop a practical “roadmap” to net zero for the Fund based on the following key principles:

·                A background to RI and key themes/principles that would require due consideration by the Fund as part of the net-zero journey;

·                Developing a Net Zero Framework in the form of 5 key areas to drive forward the Fund’s strategy;

·                A short and medium term roadmap for each key area within the framework;

·                Potential targets (both long term and interim) for further consideration and an initial list of equity funds.

The key issues noted within the progress update provided for the Sub Committee were therefore as follows:

·                The progress achieved against the short term roadmap (12 -18 months) agreed at the previous Sub Committee.

·                The key challenges facing the Fund as a result of the approach towards decarbonisation.  These included the need to recognise the difficulties in decarbonising a portfolio invested globally across diverse sectors whilst also continuing to focus on the primary obligation to support the payment of benefits to members.  In addition there would be a need to ensure a balanced approach in order to ensure the transition was fair and achieved in a timely manner, without damage to prosperity or standards of living across the world.  The switch to a low carbon portfolio over the short term would also not necessarily support a global transition to net zero.

·                The challenging nature involved in measuring climate risk effectively, particularly in private markets with a need identified to capture opportunities as well as risks and also recognise the constructive impact of engagement as opposed to just divestment as an approach given the more robust investment solutions now available.

·                The strategic context in relation to the Fund’s current carbon emissions and levers available in the form of capital allocation supported by ongoing engagement.  In this strategic context members were advised that equities were currently the largest contributor to the Fund’s carbon emissions with low carbon alternatives already identified as part of the growth assets review and the winding down of carbon intensive legacy investments and their replacement by more impact focussed funds offered through LCIV as a net zero partner of the Council.  As  ...  view the full minutes text for item 6.

This report provides an update on the 2022 valuation process, in particular on the key financial and demographic assumptions that drive the overall funding level and employer contribution rates.

Sawan Shah (Senior Finance Analyst) introduced the report, which provided an update on the 2022 valuation process, in particular on the key financial and demographic assumptions that had driven the overall funding level and employer contribution rates.

In presenting the report the Sub Committee noted the inclusion of a more detail paper included for consideration as an exempt item.  In providing an initial summary members noted:

·                The planned formal valuation of the Fund to be carried out in 2022 as part of the required three year programme under the LGPS Regulations 2013.

·                Prior to each valuation review, it was recommended best practice to review the actuarial assumptions to ensure they were relevant to the financial, demographic and regulatory environment.

·                The key assumptions which it was proposed to use for the 2022 valuation, as summarised within Appendix 1 of the report which included – discount rate, future investment returns, CPI inflation, salary expectations, future improvement in longevity and other demographic assumptions.

Members were advised that further detail on the assumptions had been provided within the restricted Appendix 2 of the report, which would need to be considered within the closed part of the meeting.  On this basis, as no further issues were raised at this stage of the meeting, it was RESOLVED to note and agree the key assumptions for the forthcoming 2022 valuation as summarised in Appendix 1 of the report.

This report presents the final version of the Pension Fund Annual Report for the year ended 31 March 2021, following the conclusion of the external audit.

Rubia Jalil (Finance Analyst) introduced the report which set out the final version of the Pension Fund Annual Report for the year ended 31 March 2021, following the conclusion of the external audit.

In presenting the report the Sub Committee noted:

·                     That Grant Thornton had given an unqualified opinion on the Pension Fund accounts and annual report with Brent Pension Fund having been the first local authority pension fund audited by Grant Thornton to have their annual report review completed.

Members commended officers for their work in completing the accounts and annual report and as no further issues were raised, it was RESOLVED to note and approve the contents of the Brent Pension Fund Annual Report 2020/21.

The purpose of this report is to summarise the outcome of the Actuarial Services tender and seek authority to procure a contract for Custodian Services and Investment Management Services.

Sawan Shah (Senior Finance Analyst) introduced the report which summarised the outcome of the Actuarial Services tender and sought authority to procure a contract for Custodian Services and Investment Management Services.

In presenting the report the Sub Committee noted:

·                    The requirement on all Local Government Pension Funds to appoint service providers in order for the Fund to carry out the following technical services as an Administering Authority under the Local Government Pension Service (LGPS) regulations – Actuarial Services, Custodian Service & Investment Management Services.

·                    Following a procurement exercise undertaken using the National LGPS Framework for Actuarial Benefits & Governance Consultancy Services (as detailed in section 3 of the report) the Fund had appointed Hymans Robertson to continue as their Fund Actuary for a 3 year period commencing October 21.

·                    The procurement process outlined in respect of the contracts for Pension Fund Custodian & Investment Management Services, with the existing contracts due to expire in June and October 22 respectively and consultation underway in order to identify the most advantageous procurement approach.

Having considered the update provided it was RESOLVED that the Sub Committee

(1)       Note the re-appointment of Hymans Robertson LLP as actuary for the Brent Pension Fund.

(2)       Approves the procurement of contracts for Custodian Services to the Brent Pension Fund and for Investment Management Services to the Brent Pension Fund.

(3)       Delegates authority to the Director of Finance to approve the pre-tender considerations set out in Standing Order 89, to evaluate bids and thereafter to award contracts to the preferred bidders in respect of the two services detailed in (2) above.

This report is for noting and presents members with an update on engagement activity undertaken by LAPFF (the Local Authority Pension Fund Forum) on behalf of the Fund. The Fund’s commitment with LAPFF and its work demonstrates its commitment to Responsible Investment and engagement as a way to achieve its objectives.

Ravinder Jassar (Deputy Director of Finance) introduced the report providing an update on engagement activity undertaken by LAPFF (the Local Authority Pension Fund Forum) on behalf of the Fund.

In presenting the report, the Sub Committee were advised how the Fund’s commitment with LAPFF and its work further demonstrated the commitment to Responsible Investment and engagement as a way to achieve its objective with the range of engagement activity having been detailed in the report.

Members welcomed the update provided and with no additional issues, raised it was RESOLVED to note the contents of the report.

To note the minutes of the Pension Board held on 2 November 2021.

The Sub-Committee welcomed Mr David Ewart (Independent Chair - Pension Board) to the meeting (as an online participant) to give an overview of the Board’s last meeting.  The progress being made in relation to service provision was highlighted as part of the Pension Administration update with the Sub Committee also noting the appointment of a new employer (non-Brent) representative on the Board.  Members were also advised of the support expressed by the Board in relation to the approach identified by the Sub Committee in relation to property investment options and the net zero transition roadmap, which had both been welcomed when presented to the Board.  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 her 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).”

Having passed the above resolution the live webcast was ended at this stage of the meeting.

This report provides the full update on the 2022 valuation process, in particular on the key financial and demographic assumptions that drive the overall funding level and employer contribution rates.

Sawan Shah (Senior Finance Analyst) introduced the report, which (following on from the consideration of the summary provided under Agenda Item 7 in the public session of the meeting) provided full detail (within Appendix 2 of the report) on the key financial and demographic assumptions identified as driving the overall funding level and employer contribution rates as part of the 2022 valuation process.

Having already noted the summary provided members were invited to identify any comments, with the following issues and responses highlighted:

·                Clarification was provided on the way that the commitment towards the Fund’s transition to net zero would be included as part of the overall investment strategy.

·                Further details were also provided in relation to the assumption included on discount rates with members assured that the assumptions identified had been subject to detailed review by officers and Hymans Robertson LLP.

Having considered the detailed supporting advice in relation to the actuarial assumptions identified the Sub Committee RESOLVED to confirm its earlier decision to note and agree the key assumptions for the forthcoming 2022 valuation as summarised in Appendix 1 and detailed in full in Appendix 2 of the report.

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

Ravinder Jassar introduced the report, which provided the latest update on recent developments regarding the Brent Pension Fund Investments held within the London CIV (LCIV).  The update included the LCIV Investment review for the period ending 31 December 21 (as detailed in 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 in Appendix 2 of the report) was the LCIV quarterly investment review 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

With no issues raised in relation to the update provided, the Sub Committee RESOLVED to note the report. 

The meeting closed at 7.38 pm

COUNCILLOR ADEN

Vice-Chair in the Chair