Agenda item

Patrick Rowe (Pension Fund Manager) introduced the report which presented the draft Pension Fund Annual Report and Statement of Accounts for the year ended 31 March 2022.

Marian George (Independent Advisor) encouraged members to fill out their training needs forms. She also discussed the recent London CIV conference, noting that the sessions would be available online shortly and recommended members to watch them and attend the conference next year. Phil Triggs (Director of Treasury and Pensions) also recommended some online training and said officers would forward links to the Committee.

ACTION: David Abbott / Phil Triggs

Councillor Florian Chevoppe-Verdier asked if the skills and staffing shortage noted on page 29 had been flagged to the Council’s recruitment team. Patrick Rowe said it was a potential risk, but not currently an issue for the pensions team.

Councillor Chevoppe-Verdier asked for more information on the risk about increased life expectancy on page 30. Patrick Rowe said it was a liability risk, the valuation took many factors into account, one of which was life expectancy. Phil Triggs added that the fund had recently switched actuaries to Hymans who had very granular data on life expectancy down to individual postcodes – there was huge variation in life expectancy across the country, which the actuary would explain at the next meeting.

Councillor Chevoppe-Verdier noted the report showed £58m more being paid out of the fund each year than was going in. He asked when that would become a problem if it continued at that rate. Patrick Rowe said net cashflow was negative and the net effect was around £11m per year. To mitigate that, managers had been allocating more capital to income generating assets, but cashflow was not a significant risk at current levels.

Councillor Chevoppe-Verdier asked if the number of admitted bodies varied over the past year and how much by. Patrick Rowe said it did vary but only by small numbers (single digits).

Councillor Chevoppe-Verdier, in reference to the table on communications to residents on page 107, asked how often the publications were sent out and the total volume of paper being sent. Patrick Rowe said that related to pensions administration. David Hughes said the communications strategy was being reviewed and would be presented to the Committee shortly. Committee members encouraged a transition to electronic communications. David Hughes said he would feed that back to the Administration team.

ACTION: David Hughes

Marian George noted that some of the strategies in the appendices should have been tagged with publication dates for clarity.

ACTION: Patrick Rowe

Councillor Chevoppe-Verdier felt the governance of the London CIV was unclear and asked how members were appointed. Phil Triggs said the CIV’s governance had evolved over its life. He would provide information on the appointment process in an update.

ACTION: Phil Triggs

Councillor Chevoppe-Verdier said the resolution of the tables on pages 136 to 143 made them difficult to read. He asked officers to ensure reports were clear and accessible and suggested they follow the WCAG web accessibility standards.

Councillor Adam Peter Lang noted the pound had fallen to a 37 year low against the US dollar and asked what the implications were for the fund. Kevin Humpherson (Deloitte) said that over the long-term currency was not a major factor in investment returns.

Councillor Adrian Pascu-Tulbure raised concerns about rising inflation and asked if the H&F fund was at particular risk with its investments. Kevin Humpherson suggested the Committee look in more detail at interest rate exposure, inflation risk, and currency risk following the actuarial valuation outcome. Marian George agreed that inflation was something to consider when looking at investment strategy and suggested training would be useful in that area.

The Chair requested some training on currency exposure and inflation.

Councillor Chevoppe-Verdier asked that officers sent any recommended training opportunities to them – and suggested a standing agenda item on upcoming training sessions.

ACTION: Phil Triggs

Councillor Pascu-Tulbure, in reference to the graph on page 20, asked for views on how quickly costs could be reduced to the benchmarks. Patrick Rowe said he expected costs to come down in the next year.

RESOLVED

The Committee approved the draft Pension Fund Annual Report for 2021/22 and delegated approval of the final version to the Director of Treasury and Pensions in consultation with the Chair.