Agenda and minutes

Apologies for absence were received from Councillor Crabb.

Members are invited to declare at this stage of the meeting, any relevant disclosable pecuniary or personal interests in the items on the agenda and to specify the item(s) to which they relate.

None declared.

To approve the minutes of the previous meeting held on Wednesday 19 February 2025 as a correct record.

RESOLVED that the minutes of the previous meeting held on 19February 2025 be approved as an accurate record of the meeting.

To consider any matters arising from the minutes of the previous meeting.

Min 5: Deputation: Update on Pension Fund approach towards Responsible Investment

None.

Councillor Johnson (as Chair) advised that he had agreed to receive a deputation at the meeting from Sheila Guhadasan representing the Brent & Harrow Palestine Solidarity Campaign (PSC).  The Chair welcomed Sheila Guhadasan along with other representatives from the Brent & Harrow PSC who were attending in support.  Members were advised that the deputation was seeking an update on the progress with the Council’s review of investments under the UN’s Principles for Responsible Investment following the presentation of their petition divesting for Palestine at the Full Council meeting in September 2024 and subsequent deputation to the Sub Committee in February 2025.

In addressing the Committee, Sheila Guhadasan began by congratulating Brent Council on their recent decision to twin with Nablus, stating that she was pleased to see Brent receiving their first visitors from Nablus that same week.

In highlighting the ongoing situation in Gaza and the previous call on the Council to consider divesting from companies complicit in Israel’s stance against the Palestinians, the Sub Committee was reminded that the original petition submitted in support to the request made by the PSC had attracted over 2000 signatures calling on the Council to recognise what were felt to be their legal and moral responsibilities and join the growing number of Councils, public bodies and institutions divesting for Palestine.  Referring to the six divestment calls for action presented as part of the previous deputation, the Sub Committee was advised of the growing support and public commitments being made by other local authorities and companies (including those in the retail sector) towards divestment, with surveys showing that public support for such action also remained high.

In terms of wider action, it was pointed out that the Brent and Harrow PSC had also been working with Trade Unions in support of their divestment campaign, including Brent National Education Union and UNISON as a recognised partner, with the Council also called upon to fully commit to the process including consideration of the investments held in the Local Government Pension Fund.  In recognising the move toward pooled funding arrangements with the London CIV the Sub Committee was also urged to ensure the necessary assurances were sought on the ethical criteria of the investment funds operated through the CIV to ensure zero complicity in what were regarded (by the deputation) as the genocidal acts being committed by Israel in relation to their occupation of Gaza and the West Bank.  Similarities, in this respect, were drawn to the stance which had previously been taken by the Council in seeking to divest from companies implicit in the apartheid regime in South Africa.

Highlighting that the deputation represented a shared call for ethical divestment by many, including environmental campaigners, Sheila Guhadasan ended by outlining what she felt to be the clear moral and legal basis for the specific actions which had been identified.  Having referred to the work being undertaken with Brent National Education Union in support of the divestment campaign, Sheila Guhadasan advised that she had hoped to be joined in  ...  view the full minutes text for item 5.

To receive the Brent Pension Fund  Q1 2025-26 Investment Monitoring Update Report.

The Chair then moved on to deal with the remainder of the agenda and began by inviting Kenneth Taylor (Senior Investment Analyst, Hymans Robertson LLP) to introduce a report, which outlined the performance of the Brent Pension Fund over the first quarter for the 2025 financial year.  In addition to the performance update, the Sub Committee was advised the report also included an update focussed around the impact on the Fund’s assets following the US Administration’s “Liberation Day” tariff announcements in April 2025 and outlook for the main asset classes and considerations for the Fund.

In noting the outline provided in relation to market background covering the monitoring period the Sub Committee were advised in relation to total Fund performance that the Fund had posted a negative return over the quarter, ending the period with a valuation of £1,310.1m, down from £1,335.8m at the end of Q4 2024.  The Fund’s passive global equity mandates were identified as the main contributors to negative absolute returns over the quarter. UK government bonds had also detracted, as rising gilt yields led to a fall in their value. In contrast, UK equities had delivered positive returns during the period.  On a relative basis the Fund had underperformed its benchmark by 0.1%. The Fund was also behind its composite benchmark over the past 12 months and over 3 years with members noting the current target and asset allocations exposure on an interim and long term basis across growth, income/diversification and protection plus cash and reflecting the Funds Investment and diversification Strategy.  Cash held by the Fund had had decreased slightly over the period to £63.6m.  Whilst US tariffs on imports had led to material falls in equity valuations during April it was noted markets had since largely recovered.

As at 31 March 2025, the funding level was estimated to be 131% with the fall in the funding level in Q1 2025 mainly attributable to a decline in asset values driven by market movements.  Members also noted that a formal actuarial valuation was in the process of being carried out (as at 31 March 2025).

Moving on to consider performance relating to Fund Managers, members were advised that the portfolio had delivered a return of -1.6% over the first quarter of 2025 to 31 March, underperforming its benchmark by 0.1%. While performance over the past 12 months and 3-year periods remains strong on an absolute basis, returns had continued to lag the benchmark over both timeframes.  After a period of strong gains, global equities had posted negative returns in Q1 2025 with UK equities the only growth asset class to have delivered a positive return during the quarter. In contrast, emerging market funds had declined and underperformed their respective benchmark.

It was noted that the decline in global equities had been driven by renewed tariff-related uncertainty, which had weighed on investor sentiment. As a result, market participants had rotated out of high-valuation US technology stocks in favour of lower-valued names, leading value stocks to outperform growth.  ...  view the full minutes text for item 6.

The purpose of this report is to update the committee on the outcome of the Government’s Fit for the Future consultation.

Sawan Shah (Head of Finance Pensions and Housing Companies) introduced a report from the Corporate Director Finance & Resources, outlining the outcome of the Government’s Fit for the Future consultation.

In presenting the report, the Sub Committee was advised that in July 2024, the Chancellor had launched the UK Pensions Investment Review, which included proposals to improve the scale and efficiency of the UK’s defined contribution (DC) pension schemes and the LGPS. In November 2024, the Government had published its Fit for the Future consultation which included proposals in three key areas of the LGPS, namely to reform asset pooling, boosting investment in local areas of the UK, and strengthening the governance of administering authorities and LGPS pools.  Following this, the Government had published its final report on the UK Pensions Investment Review and its response to the Fit for the Future consultation and confirmed the decision to move ahead with the core proposals, setting out the final policy measures on pooling, local investment and fund governance with the key areas of focus identified as follows:

·            In terms of pooling arrangements, the London CIV had been set up as the designated pooling entity for the 32 London boroughs.  All pools had been required to submit transition plans to demonstrate how the proposed minimum standards could be met. Of the 8 regional pools originally identified, only 6 pool plans had been accepted with the government having concluded that proposals from the ACCESS and Brunel pools did not align with its vision for the future of the LGPS.  It was confirmed that this would not impact on the London CIV.

In relation to concerns regarding the accommodation of Fund specific requirements on responsible investment, the Government had stated that, to achieve scale, pools would not be expected to create a range of bespoke solutions to fit each fund’s ESG and RI requirements. Instead, funds would be expected to work together to reach a common approach although it had been acknowledged this may not always be possible, in which case more than one option could be offered. Funds would continue to set their individual investment strategy, with implementation being delegated to their respective pools. To facilitate this, members were advised pools would be required to develop in-house investment management and advisory capabilities, with a view to establishing themselves as investment managers (and therefore be authorised and regulated by the FCA).  Despite some opposition to the proposals, it had been agreed that pools would therefore be mandated to provide partner funds with principal advice on their investment strategies and whilst Fund’s would be able to procure advice from other sources, it was expected this would only be under exceptional circumstances.  Whilst the Government had originally proposed that all listed assets should be transferred to pooled vehicles by March 2026, with remaining legacy illiquid assets included, this had now been relaxed with the Government having stated that not all assets would need to be invested through a pool’s own funds (reflecting concern that it  ...  view the full minutes text for item 7.

This report presents the draft Pension Fund Annual Accounts for the year ended 31 March 2025.

George Patsalides (Finance Analyst, Brent Council) introduced the report from the Corporate Director Finance and Resources, presenting the draft Pension Fund Annual Accounts for the year ending 31^st March 2025.

In presenting the report members were advised that while the statutory deadline for publication of the draft accounts had been 30 June 2025, the Pension Fund accounts were now expected to be published by 18 July 2025. This revised timeline reflected delays arising from matters identified during the audit of the Council’s core financial statements. Although these matters were not directly related to the Pension Fund, they had a consequential impact on the timing of the accounts publication although this was not expected to affect the timing of the Pension Fund audit, which had been scheduled to commence in July.

In noting the indicative draft audit plan for the 2024/25 accounts, as detailed within Appendix 2 of the report and draft Pension Fund Annual Accounts for the year ended 31 March 2025, as detailed in Appendix 1 of the report, the following main issues were highlighted for members:

• During 2024/25, the value of the Pension Fund’s investments had increased to £1,310m (2023/24 £1,259m) with the Fund’s passive global equity exposure identified as the main driver of positive returns, along with its allocation to UK equities. The main detractor from performance was the Fund’s government bond exposure, which had fallen in value as gilt yields rose over the period.

·            Total contributions received from employers and employees had been £73m for the year, an increase on the previous year’s £69m.

·            Total benefits paid to scheme beneficiaries, in the form of pensions or other benefits, were £60m, an increase on the previous year’s £52m.

·            As in 2023/24, the pension fund remained in a positive cash-flow position because its contributions exceed its outgoings to members.

In terms of the next steps for the year-end accounts, members were advised that work had now commenced on preparation of the Pension Fund Annual Report which was due to be presented to the Sub Committee at the next meeting.

Following the update, the Chair invited members to raise any comments with the issues summarised below:

·       Details were sought as to whether the audit process was expected to include any hot review, which officers confirmed was not anticipated during the current audit process and an assurance provided in relation to the availability and provision of supporting information in response to external audit activity in order to ensure the review could be progressed within required timescales.

·       In response to a specific query, further clarification was provided on the net return and liabilities figures identified in the draft Statement of Accounts with details also provided on the impact of the triennial valuation process on the overall Pension Fund assessment as it primarily related to the Funds cash flow position.  Members were advised that valuations were dependent upon the assets held within the fund's investment portfolio.

With no further issues raised and in thanking the Finance team for their work regarding  ...  view the full minutes text for item 8.

To present members with an update on engagement activity undertaken by the Local Authority Pension Fund Forum (LAPFF) on behalf of the Fund.

George Patsalides (Finance Analyst, Brent Council) introduced a report from the Corporate Director Finance & Resources which detailed the Local Authority Pension Fund Forum (LAPFF) Engagement Update.

In presenting the update, members were advised that the LAPFF had been established to promote the highest standards of corporate governance in order to protect the long-term value of local authority pension funds and engage directly with companies in which investments were held in order to affect change, understand views on company behaviour and risks with engagement being member led and designed to advance corporate responsibility and responsible investment on the basis of collaboration strengthening the voice of Pension Funds.

In noting the summary of key engagement work undertaken by the LAPFF during Q1 2025 (as detailed in Appendix 1 of the report) the key areas of activity were highlighted in relation to Water Stewardship, the progress of banks in transitioning to net zero in relation to the financing of Fossil Fuels along withupdates on efforts to engage with UK boards on corporate governance.

Having noted the viability and advantages available through the sustained collective effort and pressure that could be applied through the LAPFF, rather than by single Pension Funds acting individually, the Chair thanked George Patsalides for presentation of the report, and then invited members to raise any questions or comments, with queries and responses summarised below:

·            In considering the remit of the LAPFF, their ability to keep investment within the local area was questioned by members. George Patsalides responded reminding members of the LGPS Fit for the Future proposals focused on local and UK based investment. As such, LAPFF was set to fulfil the role of holding these companies to account in their operations with the update provided in Appendix 1 of the report outlining how the LAPFF sought to enforce ESG principles, good governance and ethical practice from the partners they were engaged with.

With no further questions or comments, the Sub Committee thanked officers for the update and RESOLVED to note the report.

This report provides an update on provision and member progress against of the LGPS online learning facility.

George Patsalides (Finance Analyst, Brent Council) introduced the report from the Corporate Director Finance & Resources, which provided an update on the provision of the LGPS online learning facility and informed committee members of recent training developments.

In introducing the update, members were reminded of the new measures included within the Fit for the Future proposals designed to enhance governance, including a focus on the training of members involved in overall strategic direction of local authority pension funds.  This included the requirement for Pension Committee members to have the appropriate level of knowledge and understanding for their roles, with the requirements for Pension Committee and Local Pension Board members to be aligned in order to ensure they possessed the necessary knowledge and skills to effectively fulfil their roles.

In working towards this the Fund had subscribed to the LGPS Online Learning Academy (LOLA) as an online platform designed to support the training needs of Pension Committee and Board members with a training plan (attached as Appendix 3 of the report) detailing progress in completion of the required training modules within the agreed timeframe.  Members noted the training plan had been adapted to accommodate new members to the Committee whilst also allowing existing members additional time to complete the required training programme, with the current focus on those needing to complete the required sections reflected within the current learning plan and members urged to ensure they had completed any outstanding modules.

In noting the update provided on progress being made by members against the current training plan and in line with the Training Strategy, the Sub Committee was reminded of the importance in ensuring consistent engagement and progress in completion of the require modules  in order to ensure members possessed the necessary knowledge and skills in relation to their role on the Sub Committee and in overseeing the Pension Fund.

With no further questions or comments, the Chair thanked George Patsalides for his work in delivering the training plan and the Committee RESOLVED to note the plan and continue delivery of the learning programme as outlined in the training timetable.

The purpose of this report is to update the committee on the 2025 Triennial Valuation and to introduce the report from the Fund Actuaries (Hymans Robertson) on the key assumptions.

Sawan Shah (Head of Finance) introduced a report from the Corporate Director Finance and Resources updating the committee on the 2025 Triennial Valuation.

In presenting the report the Sub Committee was advised of the process, undertaken every three years, in terms of a formal valuation of the whole Fund.  The purpose of the valuation was to compare actual experience against assumptions made at the last valuation; value the assets and liabilities of each individual employer and the pension fund as a whole using data from the Fund’s administration system and financial records; set employer contribution rates, including for the Council, for the next 3 years (1 April 2026 to 31 March 2029); review the Funding Strategy Statement (FSS) and also perform a health check on the Fund’s solvency. Members were reminded that the previous valuation had taken place in March 2022 with the current valuation process to be carried out as at 31 March 2025 and the results being reported to the administering authority within twelve months of the valuation date.

Craig Alexander (Hymans Robertson Partner and Fund Actuary) was then introduced to the Sub Committee who provided a presentation on the key inputs and assumptions identified as the basis for undertaking the 2025 valuation, as set out in Appendix 1 of the report.  Members were advised that the assumptions had been designed to reflect both current market conditions and long-term expectations as well as being benchmarked against industry standards and LGPS-wide trends to ensure consistency and prudence.  The following key areas were highlighted by Craig Alexander (Hymans Robertson) in presenting the assumptions to the Sub Committee:

·            The background to the valuation assumptions, with the key focus on the discount rate (used to value liabilities to be paid out in the future); Future investment returns (the rate of return the Fund’s assets were assumed to achieve in the future); Future price inflation (CPI); Salary expectations; how long pensions would be paid for (longevity) and other demographic assumptions.

·            The funding progression and general market insights since the previous valuation in 2022, which had seen an improvement in the whole fund position.

·            An outline of the key financial assumptions, which included considerations in relation to:

Ø   the level of prudence & Future Investment Returns (Discount Rate) leading to the recommended increase in prudence level from 73% to 80% for the 2025 valuation.  In general, it was stated that Pension Funds were expected to be prudent, with most funds currently moving to minimum targets of 70%-80% or above. This was even more so the case following the recent global developments and whilst the decision was noted to be subjective to individual cases, an established process was expected to be put into place for the purposes of good governance.

Ø   Benefit & Salary Increases leading to the recommendation that the same approach be adopted for the 2025 valuation as in 2022, reflecting the current inflationary environment;

Ø   the recommended continue use of the tailored Club Vita assumptions in terms of longevity and adoption of the overall  ...  view the full minutes text for item 11.

To note the draft minutes of the Pension Board meeting held on Monday 24 March 2025.

The Chair then welcomed David Ewart (as Independent Chair of the Pension Board) to the meeting in order to provide an overview of the issues considered at the most recent Board held on 24 March 2025, as set out in the draft minutes from the meeting.

As a starting point, David Ewart took the opportunity to remind members of the function and structure of the Pension Board, which he advised was a statutory body established to review the performance of the Pension Fund and was made up of an equal number of employer and member representatives. In comparison, the Pension Fund Sub-Committee’s role focused on the investment and management of the Fund, although in practice the two bodies within Brent worked closely together and shared similar views in overseeing governance of the Pension Fund.

In outlining specific issues considered at the Board’s last meeting, members were advised of the ongoing monitoring of performance relating to administration of the Pension Fund for scheme members (including an ongoing focus on data quality and migration of the pension payroll system over to LPPA) as well as the updated Risk Register for the Brent Pension Fund Administration Service, which it was felt also provided a useful point of reference for the Sub Committee in relation to the management of existing and emerging risks.

The Chair thanked David Ewart for the update provided, and with no further issues raised, it was RESOLVED to note the minutes from the Pension Board held on 24 March 2025.

Notice of items to be raised under this heading must be given in writing to the Deputy Director Democratic & Corporate Governance or their representative before the meeting in accordance with Standing Order 60.

No items of urgent business were raised for consideration at the meeting.

The following items are not for publication as they relate to the category of exempt information set out below, as specified under Part 1, Schedule 12A of the Local Government Act 1972:

Agenda Item 6:     Q1 2025-26 Investment Monitoring Report – Appendix 2: Fund Manager performance ratings.

                            This appendix has been classified as exempt under Paragraph 3 of Part 1 Schedule 12A of the Local Government Act 1972, namely: “Information relating to the financial or business affairs of and particular person (including the authority holding that information).”

Agenda Item 11:   2025 Triennial Valuation – Appendix 2: Detailed Assumptions Advice

                            This appendix has been classified as exempt under Paragraph 3 of Part 1 Schedule 12A of the Local Government Act 1972, namely: “Information relating to the financial or business affairs of and particular person (including the authority holding that information).”

The press and public will be excluded from the remainder of the meeting as the report(s) 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 item on the agenda.

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)”.

As the Sub Committee moved into closed session the webcast was ended at this stage of the meeting

This report provides an update on recent developments regarding Brent’s Pension Fund investments held with the London CIV.

The Board received and RESOLVED to note a report that provided an update on recent developments regarding Brent Pension Fund investments held within the London CIV (LCIV).

Issues highlighted arising from the update included:

·            The value of assets invested directly through the LCIV.

·            The progress with engagement on the Pension Investment Review

·            The launch of the London CIV in-house strategy and advisory service, which included cash flow forecasting, climate analytics and triennial valuation support along with progress on the continued the process of negotiating fee savings with fund managers.

·            The progress in development of a dedicated UK residential property fund by London CIV with the purpose of increasing the supply of good quality, affordable housing in the UK and a focus on three strategies within the residential housing sector: general needs affordable and social housing, traditional supported housing and, specialist housing.

·            The update on the LCIV Fund Manager Monitoring Framework and progress in the development and launch of new Funds, with members keen to ensure a focus (in recognising the Funds fiduciary duty) in maintaining a broad and diversified approach toward the Fund’s Investment Strategy.