Agenda item
DISCUSSION AND PRESENTATION FROM LONDON CIV ON GOVERNANCE ARRANGEMENT, STEWARDSHIP AND ENGAGEMENT
Minutes:
The Board received a presentation from Kevin Cullen, Client Relations Director, London CIV. The London CIV aims to be the investment vehicle of choice for Local Authority Pensions Funds. The London CIV has a total of £6.1bn Assets Under Management (AUM) across 10 sub-funds and a £6.9bn AUM in passive outside the CIV Platform. The London CIV is undergoing a recruitment drive and will expanding their Investment Team. The Board during a question and answer session noted the following.
· The LBTH Pension Fund is the second largest investor at the London CIV and has total of £590m AUM. Wandsworth Council is the largest investor.
· The London CIV is working on the 1st Infrastructure investment Invest Fund and will be facilitating an Information Day in January 2018. An invite will be sent to Pensions Board and Pension Committee members. The Board was advised that expectations would need to be managed about when funds will be up and running and that the legal aspect takes a while to be set up.
· Members commented that a former Chancellor of Exchequer had proposed that Pension Funds be used to fund infrastructure and noted that a number of debates and discussion had been held about the above. At current there are no projects undergoing. Members raised concerns about the LCIV being used to fund such projects and noted that elections were scheduled to take place next year. The Board noted that the proposed Silver Town Tunnel in East London continued to remain a controversial subject.
· There are Quarterly Manager Review Meetings. These meetings are robust and involve challenges and the ‘write ups’ are sent to Boroughs. There is also a regular newsletter. Reports are sent automatically to client and made available in the portal. The information contained in the above are fed into the Pensions Committee Reports.
· There is continuing drive to ensure that the best products are put forward for clients. The London CIV was reported to be best in their class.
· There are Oversight and termination policies which Boroughs can redeem at any time.
· The London CIV (LCIV) is currently signed up to the Stewardship Code as a Tier 1 – Asset Owner.
· LAPFF voting alerts have been passed onto Fund Managers
· Members noted that there were no employee representation on the LCIV and noted that the body is modelled on the Government structure. Members commented that the LBTH Fund has representatives from both Employee and Active Members and asked whether this arrangement is replicated in the LCIV and questioned what challenges and scrutiny process was in place. The Board noted that three Directors were both members of the Compliance / Audit / Risk Committee and also the Remuneration Committee. The Board were advised that the LCIV Governance system Review would be published in the forthcoming weeks and that it is better to exclude beneficiaries from the above. Members commented that the exclusion of beneficiaries may cause concerns to be raised and that this may result in clients not ‘buying’ into the LCIV. The Board noted that the Chair of the Pensions Committee had raised concerns about the lack of representation.
· Twenty out of the 32 London Boroughs have investments in the LCIV
· There are wide ranges of strategies available for Fixed Income. Managers will be launching more strategies; cost savings and ease of will be considered. Members were advised that a balance needed to be sought with all investments and it would be difficult to meet clients every requirements.
· Investment Pools are now required to report to the Secretary of State
· Members raised questions about the LCIV procurement process and were advised that a formal process was in place and various factors are looked at when awarding contracts such as fees and AUM. Consultants are used in the procurement process and also a ‘scoring system’. It was reported that a Working Group reviews all information and interviews can last up to four hours.
· Members asked if only larger based Managers were invited to tender for contracts and was advised that a wider stream of managers were used when procuring for Global Equities. The Board was advised that during the above process, markings are checked alongside costs and overheads. Members were advised that new managers were happy to assist clients in meeting their individual objectives.
· Members raised questions about Fund Managers not following voting rules. The voting rules will be explained to Fund Managers. Members were advised that an explanation is sought when voting rules are not adhered to and that younger companies are given some ley way.
· Quarterly meetings are held with Pensions Committee Chairs.
· That LCIV are seeking views from the Borough; members were advised that there was to be Workshop on Growth.
Members thanked Mr Cullen for his presentation and noted that there was a LCIV Board Meeting on 11 January.
RESOLVED
1. That feedback is provided about the LCIV Governance Review.
2. That LCIV is approached about their Governance arrangements in particular about the same Directors sitting on Remuneration Committees and Compliance/ Audit/ Risk Committees; and
3. That Board Members send their views on the LCIV to Officers
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