Agenda item

This paper provides the Pensions Board with a summary of the Pension Fund’s overall performance for the quarter ended 30 June 2024.

This item includes appendices that contain exempt information. Discussion of the appendices will require passing the proposed resolution at the end of the agenda to exclude members of the public and press.

Sian Cogley (Pension Fund Manager) provided a summary of the key points. It was noted that the paper provided the Pensions Board with a summary of the Pension Fund’s overall performance for the quarter ended 30 June 2024. Since the agenda was published additional information had become available and Sian Cogley was able to verbally update the Committee that over the quarter to 30 September 2024, the market value of the assets increased by £3m to £1,374m. The Fund had underperformed its benchmark net of fees by 0.4%, delivering an absolute return of 1.23% over the quarter.  The total Fund delivered a positive return of 10.29% on a net of fees basis over the year to 30 September 2024.  

Councillor Nikos Souslous requested further clarification on the Pension Fund Committee’s request to align the risk register with the format of the Audit Committee. Sian Cogley outlined the changes and explained that these related to a quarter-to-quarter comparison of the scores and assigning a lead director to each risk.

Referring to page 45 of the agenda pack, the Chair enquired if Aviva had paid all the redemption monies back to the LBHF Fund. In response Sian Cogley noted that final redemption payments totalling £13.9m were made in September 2024, circa £3.4m or 15% lower than the estimated figure of £22.7m (excluding redemption charge), if the full redemption had been received on time. Aviva representatives would attend the next Pension Fund Committee on 26^th November 2024, to provide additional updates.

Andy Sharpe (Co-opted Member) asked a follow up question. He enquired if an independent market valuation had been carried out to ascertain the market 18 months ago when Aviva was due to make the redemption. Sian Cogley noted the Fund’s investment advisers had reviewed the valuation and macroeconomic factors for the market over that period. However, she would investigate further and provide an update.

Action: Sian Cogley

Referring to appendix 4, the Chair noted that the Pensions Board had not been offered training under risk 41. Patrick Rowe (Strategic Finance Manager) noted that it was important that Pension Board members felt that they had adequate training to carry out their duties and scrutinise the administration of the Fund, which included the governance around investments and decisions being made. It was noted that the training sessions took place twice a year and invites are extended to Pension Board members. Recordings of the training session that took place in September 2024 can be shared with any members of the Pensions Board who were unable to attend.

Action: Sian Cogley

Referring to appendix 4, risk 1 (Asset and Investment Risk) the Chair highlighted the current geopolitical and economic uncertainty and asked how often dialogue with investment managers took place. Sian Cogley noted that Officers met with fund managers on a quarterly basis to address these concerns. Additionally, Patrick Rowe explained that the Fund’s investment advisors were regularly monitoring performance of the underlying fund managers and investment strategy in different asset classes.

Andy Sharpe (Co-opted Member) noted that, at a previous Pension Fund Committee it was mentioned that the Fund held investments in the United States. He enquired whether an analysis had been conducted on the potential impact of tariffs and how this might affect the Pension Fund. He asked if there had been assurances provided by ISIO on any additional exposures to the Fund.

Sian Cogley explained that a specific one based on tariffs had not taken place. However, the investment advisors were regularly monitoring the macroeconomic environment and reporting this back to Council officers. Patrick Rowe explained that most exporting companies would be impacted by such tariffs, but there was limited appetite to conduct an analysis at this stage, as officers were still working to understand the scope and specifics of potential tariff applications. However, Andy Sharpe emphasised the importance of conducting an analysis as soon as possible given the rapidly changing economic environment.

The Chair noted that, according to the report, LCIV had underperformed over the last quarter and that the CIO had resigned. He enquired if this was a cause for concern. In response Sian Cogley noted that the LCIV appointed an interim CIO (Rob Treich), alongside some new appointments across the Team. Officers were monitoring this situation closely and attended their quarterly update meetings. Officers were not currently concerned with any of the Funds holding with LCIV.

RESOLVED

The Pensions Board noted the contents of this report.