Agenda item
REPORTS FOR CONSIDERATION
Minutes:
NOTES FROM PENSIONS BOARD 190919
Presentation: bfinance
Infrastructure
Qu: Why no standardised benching marking how long does it take to establish that bench marking?
Res: It is challenging to bring such a wide range or different types of items together as it is a very heterogeneous class, but more and more data is becoming available.
Qu: What is your knowledge of Infrastructure and what are your predictions of growth and which types are
Res: On a general position on infrastructure it’s 10% 20% and is 5% 10% of a Fund’s Portfolio, as to growth strong trajectory in Nth America (CAN) and Austrasia (AUS) and 5% 10% goes to 20%.
Qu: A lot of money going into infrastructure so prices going up by demand and direct investment directly by Funds putting them into direct competition with Fund Mgr.
Res: Over past decade has remained steady but need to look closely at risks be open to.
QU: What about the increasingly rapid change in the assets technology?
Res: We get asked a lot about the lives of these assets and it is importance to look at the strategy of those managing these physical assets and their plans for the renewal/updating of the kit e.g. making it more productive/efficient
Presentation: Quinbrook
Comment: 2018 the largest year for renewable energy coming into the market it’s a growth sector and the returns for investment is showing a positive trend.
The growth of this industry is the ecnomic growth to this area and benefits to the local community e.g. Jobs. Need to have though the figures in a standardised format of the benefits for this kind of investment so that Funds can identify the trends/benefits.
UK has a positive history on investing in renewable energy although has slowed recently and those investing in; building of and owning the kit are looking at the way ahead. Slide 6 NOTES
Qu: How quickly can monies be invested?
Res: RECORDING
Qu: Returns
Res 12% 13% Gross 9% 10% Net
Comments: Noted there is a strong appetite for a “green fund” within London Borough’s in the Collective Investment Vehicle for London Local Authorities (LLA). There is signfgicant growth and be 50% of all Funds investment in 20 yrs. to 25 yrs.
Pension Committee Noted report submitted well received.
Performance Review: Noted Pages 1&2 Pages 25 & 26 Slides & Page 41 onward Mgr. Noted Page 42 departure of Key Team Member. & noted the performance Mgt will be considered at Committee.
Qu: Page 18
Comment: Welcomed the Mercers Rpt.
Noted that ESG is becoming a very real issue across the board from investment to the Board Membership of the Fund Mgr. to the ESG in relation to the companies building are Environment Plus.
On Page 61 noted clarification been asked on the N/A to see how they have voted noted it is being pursued.
Comment As CIV takes on more fund Mgt need more clarification on who is responsible for what and whereas in the past gone direct to the Mgr. now via CIV or is go to the Fund Direct will CC the CIV into this. Noted also those investors as pursing that voting is in accordance with the LAPFF.
Page 307 Noted getting a clearer indication of costs
Noted Impact of the McCloud case on public sectors pension’s schemes and implications thereof of any back dating of benefits and t could have a big impact.
Noted that as we took a conservative view on pay evaluation so may have less of an impact.
The Scheme Advisory Board has suspended the cost cap.
Noted that the Funds have overall reduced in number so has there been a saving but don’t we lose a grip on the process by these savings?
Comment; The Saving is about Mgt Fees but per local authority not a major difference. However, the physical cost reduction minimal as resources limited but a reduction in fees.
Noted that Mgt Fees are being Mgt very closely.
Page 310 In past the Fees were embedded in the investment so had no idea really on Fund Mgr. actual Fees Charged and not easy to get clarity. But we now have with a “Pool” CIV your size gives you more leverage which has been a major driver. CIPFA and FCA been involved in the development of these changes and Fund Mgr. Now have to sign up to declare charges so we know what we’ve been charged although not quite as clear as we’d wish it to be in terms of better cost transparency. Noted FCA/CIPFA is helping Funds to gather their full costs for all asset classes.
On assurances of the quality of information FCA are working diligently to get this sorted.
Noted still work on “Pooled” Investments transparency and what Mgr. are doing will the monies that they are managing and any incomes generated by that money over and above what it was originally intended for.
Noted the fees are not truly clear and what impact does this have on us and is there a way we can get the detailed breakdown of the transaction costs.
Noted it is more complex with pooled funds as the Mgr. Not got a specific obligation to give breakdown of broker’s fees but they can be asked for. Although the details when received that they can be over whelming in terms of the volume/content. Not the position when it is one pot.
Noted CIV working on giving more detail than before although still a way to go.
P315 Risk Register.
Asked if wanted to look at 2 Factors/Mtg. e.g. Have them RAG (Red; Amber & Green) to avoid any randomness and show where there have been effective mitigations. Therefore, follow the format/methodology for PI’s.
P 321 Next Mtg. Board said that it wished to look at PEN 01/02 and any Red Flags.
P 328 Noted 3.3.3 and not unusual to be in negative as the retired members increases verses the active fund members.
Noted the £43.5 M payment INTO THE FUND as PART OF THE Councils overall contributions and got a £45 M benefit to the Fund.
The Council has responsibility for Employer Contributions and makes its contribution as it feel appropriate to pay it.
Comment: Can we afford to do this.
Response it’s a cash flow deficient not a contributions deficient and it is a fully funded scheme.
Also our pensioner’s out number our active members but as not a closed scheme so getting new money/members on monthly basis.
Also the Funds’ Assets increased by £22 M which exceeded the given target also the actuary has been very prudent even though we have monies coming in on daily basis.
Noted Chairs Rpt 539 etc.
Noted P 564 November Mtg Items
Page 567 Pensions Admin
Noted Page 583 & 574
On Training MA happy to provide training and access to training so be helpful to understand gaps in knowledge.