Agenda and minutes

Pensions Advisory Panel - Wednesday 22 December 2021 1.00 pm

Venue: Online/Virtual via Microsoft Teams

Contact: Andrew Weir on 020 7525 7222 or email: andrew.weir@southwark.gov.uk

Items
No.	Item
1.	Apologies Share this item To receive any apologies for absence. Minutes: There were apologies from Barry Berkengoff, Pensions Manager and Councillor Rebecca Lury.
2.	Confirmation of voting members Share this item Voting members of the committee to be confirmed at this point in the meeting. Minutes: The officer voting members present were confirmed. As there were no elected voting members present, Duncan Whitfield, the Strategic Director of Finance and Governance suggested that the meeting should proceed informally and that no decisions would be taken. Those present, agreed to this suggestion.
3.	NOTIFICATION OF ANY ITEMS OF BUSINESS WHICH THE CHAIR DEEMS URGENT Share this item Minutes: There were none. At this point Duncan Whitfield welcomed Roger Stocker, the newly elected representative for retired members. Everyone then introduced themselves.
4.	DISCLOSURE OF INTERESTS AND DISPENSATIONS Share this item Members of the committee to declare any interests and dispensation in respect of any item of business to be considered at this meeting. Minutes: There were none.
5.	MINUTES Share this item To agree as a correct record, the open minutes of the meeting held on 29 September 2021. Supporting documents: Draft Minutes , item 5. PDF 251 KB Minutes: That the minutes of the meeting held on 29 September 2021 were noted. The minutes would be agreed at the meeting that would be scheduled for later in January 2022, when elected members of the panel would be present.
6.	CARBON FOOTPRINT UPDATE Share this item Supporting documents: Item 6 - Carbon Footprint PAP Report , item 6. PDF 946 KB Minutes: Jack Emerey, Chartered Institute of Finance and Accountancy trainee, presented the report. He advised that the results for September 2021 show that the fund has reduced its weighted carbon exposure by 50% since September 2017. The movement of equities during the quarter to September 2021 from BlackRock passive emerging market holdings into the Comgest Global Emerging Markets Plus Fund had predominantly driven the reduction since the end of June 2021. There was a discussion regarding measuring the carbon intensity of index linked gilts and also the fund’s property investments. Caroline Watson, senior finance manager, advised that she received quarterly updates on the fund’s direct property investments. RESOLVED: That the fund’s carbon footprint at 30 September 2021 be noted.
7.	QUARTERLY INVESTMENT UPDATES Share this item - DAVID CULLINAN - AON Supporting documents: Item 7(1) - David Cullinan - Quarterly Report - Sep 2021 , item 7. PDF 861 KB Item 7(2) - LB Southwark - Quarterly Investment Dashboard , item 7. PDF 261 KB Minutes: David Cullinan updated the panel. He advised that the Fund had performed in line with the index. Over the year the fund had returned 16% and over the past ten years had returned around 10% per annum. Colin Cartwright from Aon addressed the panel. He advised that the markets had performed well but warned that inflation was a concern and that interest rates were expected to rise. Jonathan Taylor from Aon added that there was overweight in Newton. There was a discussion regarding the underweight of property in the fund. It was noted that property valuations tended to be conservative and that the real value of property investments was likely to be higher than stated. There was also a discussion regarding the Competition and Markets Authority Order. Duncan Whitfield advised that Caroline Watson should consult with Mike Ellsmore, chair of the local pension board, regarding this matter. RESOLVED: That the quarterly investment updates be noted.
8.	LAUNCH OF NET ZERO CARBON INVESTMENT STRATEGY Share this item Supporting documents: Item 8(1) - Investment Strategy Covering Report , item 8. PDF 136 KB Item 8(2) - Final Draft ISS Southwark - November 2021 , item 8. PDF 584 KB Item 8 (3) - Investment Strategy , item 8. PDF 899 KB Minutes: This item was deferred to a future meeting, to be scheduled for later in January 2022.
9.	ESG PRIORITY ALLOCATION - UPDATE ON IMPLEMENTATION OF NEW INVESTMENTS (VERBAL UPDATE) Share this item Minutes: Caroline Watson gave a verabal update on the ESG priority allocation. She advised that by January 2022 the fund will have moved £485 million to low or zero carbon products. There was a brief discussion. David Cullinan updated the panel. He advised that the Fund had performed well in the June quarter. It was noted that the Fund was in the top quartile of local authority pension funds. He advised that it had been a challenging six months but the fund was moving in the right direction and that the investment strategy was good. Colin Cartwright from Aon addressed the panel. He advised that the markets had performed well but warned that inflation could lead to more volatility. He added that overall the fund was well positioned. RESOLVED: That the ESG priority allocation verbal update be noted.
10.	PENSION FUND STATEMENT OF ACCOUNTS 2020-21 Share this item Supporting documents: Item 10. (1) Pension Fund Statement - covering report , item 10. PDF 304 KB Item 10(2) - SoA 2020-21 Pension Fund , item 10. PDF 247 KB Item 10(3) Audit Findings for London Borough of Southwark Pension Fund , item 10. PDF 7 MB Minutes: Caroline Watson, senior finance manager presented the pension fund statement of accounts 2020-21. It was noted that the accounts were still to be signed off. Mike Ellsmore informed the panel that it was a great achievement for Caroline to have got to this position. David Cullinan updated the panel. He advised that the Fund had performed well in the June quarter. It was noted that the Fund was in the top quartile of local authority pension funds. He advised that it had been a challenging six months but the fund was moving in the right direction and that the investment strategy was good. Colin Cartwright from Aon addressed the panel. He advised that the markets had performed well but warned that inflation could lead to more volatility. He added that overall the fund was well positioned. RESOLVED: That the pension fund statement of accounts 2020-21 be noted.
11.	QUARTERLY ACTUARIAL FUNDING UPDATE Share this item Supporting documents: Item 11. (1) - Actuarial Funding Update - covering report , item 11. PDF 133 KB Minutes: Jack Emerey presented the report. The funding level at 30 September 2021 was 114% (114% at 30 June 2021). The surplus had decreased by £4 million in the quarter to September 2021. This small change was due to a slight fall in the net discount rate increasing liabilities. This had however mostly been offset by better than expected asset returns. Roger Stocker asked if the fund was on a buyout basis. It was confirmed that it was not. RESOLVED: That the updated funding position at 30 September 2021 be noted.
12.	LOCAL PENSION BOARD UPDATE (VERBAL UPDATE) Share this item Minutes: Mike Ellsmore gave a verbal update. He advised that there had been a training session on additional voluntary contributions at the last meeting. He advised that he had requested Barry Berkengoff to do some communications with the members of the fund on this topic. He further advised that the code of practice had also been looked at and that the conflicts of interest policy was gathering momentum. He also confirmed that he had been re-elected as the chair of the local pension board. RESOLVED: That the local pension board verbal update be noted.
13.	PENSIONS SERVICES UPDATE Share this item Supporting documents: Item 13(1) Pensions Services Update - Report , item 13. PDF 154 KB Item 13(2) - Appendix , item 13. PDF 417 KB Minutes: Barry Berkengoff had sent apologies. The report was noted. RESOLVED: That the pensions services update be noted.
14.	ANY OTHER BUSINESS Share this item Minutes: There was a brief discussion regarding outcomes from COP26 and the impact that this would have on the level of new products available.