Ms Miriam Adams, Interim Head of Pensions and Treasury introduced the report and stated this was the draft unaudited Statement of Accounts and Annual Report for the LBTH Pension Fund for year ending 31^st March 2021. She said the report was attached at appendix A. She said the audit of the Pension Fund Account had commenced and referred Board Members to page 8 of the supplementary agenda. Ms Adams referred to several sections within the report such as the performance of the Fund at page 17 of the agenda and the list of investment managers at page 18. She said the membership of the Fund fluctuates daily and said the changes in the market value of investments, page 39 of supplementary agenda, had been impacted due to Covid-19.

In response to comments and questions from Board members the following was noted:

• The Board commented on the thoroughness of the report and said this was truly comprehensive and commendable. They thanked Ms Adams and her team for producing the report.
• Referring the covering report and the introduction to the annual accounts report, Mr Thompson said that whilst they acknowledged the accounts to be true and fair statements, the accounts had not been signed off, for the last three years. He asked what progress had been made? Ms Adams responded stating the accounts for the Pension Fund were complete however the external auditors were not able to sign off the accounts or issue and opinion until the main accounts for the council, were completed.
• Mr Nisar Visram, Director for Finance, Procurement and Audit informed members that the Audit Committee had signed off the 2018/19 and 2019/20 accounts at their meeting in January 2022. He said the 2020/21 accounts were available in draft format online and he hoped these would be signed off shortly. He said the Pension side of the work was more stable, but there was this co-dependency with the Council accounts.
• In response to what the Pensions Regulators position was concerning the delay, Ms Adams said the regulator had been informed.
• In response to where the growth of assets had occurred, Ms Adams confirmed this was mainly due to the Baillie Gifford investments. She said equities had done extremely well. She said the returns from LGIM and the diversified group fund had also performed well but unfortunately the fixed income mandates had not done so well. She said the Pensions Committee had agreed to take out an Equity Protection Plan and said the windfall from this was £20m.
• Ms Adams confirmed that a training log was kept on the training attended by members of the Board and the Committee. She said additional training provided by CIPFA and LGA training is also sent to members, as well as third party training.
• Referring to administration costs, Mr Thompson asked if these were benchmarked against others, other than CIPFA? Ms Adams responded stating the Pension Fund has recently joined the CIPFA Benchmarking Scheme and said whilst this would be a big exercise, it was important that the Pension Fund recommenced this. She said in addition the Fund would be subscribing to the CEM investment benchmark, that will compare various authorities across the investment manager cost component.
• Referring to LCIV, the collective vehicle for the pooling of investments, Mr Thompson asked where savings had been made in relation to administration costs. Ms Adams said the membership numbers for the Fund were very fluid with a lot of factors feeding into this. She said it was not as easy to look at percentages and equate this to the number of actives in the fund. She said many people were ‘starting’ and ‘leaving’ the fund and there was a high opt-out rate.

• ACTION: The next set of information on LCIV costs and the LCIV annual report to be circulated to the members of the Board.

• Referring to the table on page 24, and the investment management costs, Mr Gray asked if the figures would be considerably less or like the previous years, prior to the introduction of pooling. Ms Adams responded stating the investment management fees were calculated on a percentage basis. So, if the value of the investment increases, so does the fee.

• ACTION: The Chair asked that the Board and the Committee receive a report on the management fees and costs and if these costs are lower due to pooling. He said this was essential to ensure transparency.
• ACTION: The Chair asked the that Training log for the Board be shared with the members.

The Pensions Board RESOLVED to:

Note the recommendations being made to the Pensions Committee who were to consider this report at its meeting of 10^th March 2022.

The Pensions Committee is recommended to:

1. Note the contents of this report;
2. Approve the Pension Fund Annual Report and Accounts (Appendix 1); and
3. Note that the 2018/19 and 2019/20 audit will not be concluded until the council’s main accounts audit have been concluded.