Agenda and minutes

To confirm as a true record the Minutes of the meeting held on 16 February 2022.

RESOLVED:

THAT the minutes of the meeting held on 16 February 2022 be confirmed.

To invite Members to declare any interest they might have in the matters on the agenda.

No declarations were received.

Questions may be asked without notice but to guarantee a full reply at the meeting, a question must be put including the name and address of the questioner by delivery in writing or by email to democratic.services@iow.gov.uk, no later than two clear working days before the start of the meeting. Therefore the deadline for written questions will be Friday 20 May 2022.

No public questions were received.

To receive and note the draft minutes of the meeting of the Local Pension Board on 6 April 2022.

The chairman of the Local Pension Board advised that the board membership recruitment exercise had been completed following Liz Kingston’s appointment as a scheme employer representative (Wootton Bridge Parish Council), and the committee received the draft minutes of the meeting of the Local Pension Board on 6 April 2022. Discussion took place regarding the Boards’ comments related to the geographic allocation of the Funds’ investments within the context of the Levelling Up agenda.

RESOLVED:

THAT the update from the Local Pension Board be noted.

To receive and note the update on employers of the Fund. 

The Pension Fund Manager presented the report which provided information on the employers within the Fund; including membership numbers, compliance with data and contribution submission deadlines, changes to employers during the financial year ended 31 March 2022, and future known and potential changes. Discussion took place regarding school academisation and the impact this may have on operational capacity.

RESOLVED:

THAT the information provided on employers within the fund be noted.

To receive a verbal update on current issues, including consideration of the forthcoming consultation from the Department for Levelling Up, Housing and Communities.

The Pension Fund Manager provided a verbal update on current issues, including consideration of the forthcoming consultation from the Department for Levelling Up, Housing and Communities expected in Autumn 2022 which would cover climate change, pooling, and levelling up. Consultation is also likely to include the replacement of the current CMA order (in respect of setting objectives for consultants) with LGPS regulations, the requirement for funds to take “proper advice” from FCA regulated advisers, the Scheme Advisory Board’s good governance, and the Boycotts, Divestment and Sanctions bill.

There was a concern that the 12-week consultation period may fall between scheduled committee meetings and it was therefore suggested that an additional informal meeting be arranged if necessary.

RESOLVED:

i)               THAT the legislation and regulation update be noted.

ii)              THAT an additional informal meeting of the Committee be arranged to consider the consultation from the Department for Levelling Up, Housing and Communities, if necessary.

To receive and note the update on training and development activities undertaken by committee members since the last meeting, and to receive a confidential report and verbal update from Cllr Vanessa Churchman on her recent visit to a vertical farm.

The committee received the record of training and development activities undertaken by committee members since the last meeting, and the Pension Fund Manager provided a verbal update on committee members’ completion of the Pension Regulator’s online toolkit. No comments or questions were raised at this stage, and the update was noted.

RESOLVED:

THAT the knowledge and understanding update be noted.

Cllr Churchman provided a verbal update on her recent site visit to a vertical farm and outlined the social and environmental benefits of the long-term investment opportunity with the build of multiple indoor projects to grow short-rooted crops. The Investment Consultant of Hymans Robertson provided information on the Gresham House Specialist Asset Fund, particularly within the context of the Levelling Up agenda. Additional information was requested regarding Gresham House’s ESG/RI credentials.

Questions were raised regarding the viability of expanding to other projects and genetically modified crops. Additional information on this was requested and it was suggested that the Fund’s stance on this matter could be reflected within the investment strategy statement.

RESOLVED:

THAT the update be noted.

To receive and note the update, and confidential appendix, from the Fund’s actuaries on the progress with the triennial valuation.

The committee received the update from the Fund’s Actuaries at Hymans Robertson on the progress with the triennial valuation; which included a summary of proposed assumptions, the valuation process, why and how set assumptions are set, the financial, longevity and demographic assumptions, reporting the funding level, and decisions and next steps. Questions were raised in relation to employer data collection, morbidity statistic modelling, and the protective pension age.

RESOLVED:

THAT the report and presentation from Hymans Robertson be noted.

To receive and note the reports from the fund’s investment consultants:

The Investment Consultant of Hymans Robertson presented the investment performance report for the quarter ended 31 March 2022, which included a summary of market returns, capital market outlook, asset allocation, fund performance, and fund manager analysis. Consideration was given to the fund’s investment assets as at 31 March 2022. No questions were raised and the update was noted.

RESOLVED:

THAT the investment performance and funding level be noted.

To receive a presentation from Schroder Investment Management Limited on the Fixed Income (Bonds) and Property portfolios.

The committee received a presentation from Schroders on the Sterling Broad Market Fund (fixed income portfolio), which included a performance summary as of April 2022, and information on the discrete 10-year performance, performance attribution, evolution of duration exposure and non-government sector allocations, an outlook for Q2 2022, and climate and sustainability reporting metrics. No comments or questions were raised, and the presentation was noted.

RESOLVED:

THAT the fund manager presentation be noted.

The committee received a presentation from Schroders on the Schroders Capital UK Real Estate Fund (property portfolio) which included an overview of its role in the portfolio, the long-term outperformance track record, key areas of strategic focus, a forecast of total returns, and the approach to sustainable investments. Questions were raised in relation to industrial warehouse assets, responsible investments, and engagement with tenants.

RESOLVED:

THAT the fund manager presentation be noted.

To receive and note the draft financial results for 2021-22.

The Pension Fund Manager presented the report which provided an early draft of the financial results for the Fund for the year ended 31 March 2022, including the change in the fund’s net assets and change in membership numbers. It was advised that, as a result of resource constraints at the external auditors, the pension fund audit had been significantly delayed and was not due to start until mid-December 2022. This meant that the Fund would not achieve its statutory deadline for publishing its annual report and accounts before 1 December 2022. The committee noted that the breach of the law had been self-reported to the LGA and would be recorded on the breaches log but was not deemed significantly material to report to the Pensions Regulator.

RESOLVED:

THAT the Fund’s draft financial results for the year ended 31 March 2022 be noted, and the final year-end position (subject to external audit) be presented to the Committee at its next meeting on 27 July 2022.

To note the items circulated to committee members since the papers were published for last committee meeting, for information:

a)         Sent 14-Feb-22: Invitation to Local Authority Responsible Investment Seminar on 28 April 2022.

b)         Sent 18-Feb-22: Update on ACCESS scheme member representation discussions.

c)          Sent 01-Mar-22: Hymans Robertson: Russia-Ukraine macro-economic update.

d)         Sent 02-Mar-22: LGPC Bulletin 220

e)         Sent 02-Mar-22: IWC Pension Fund exposure to Russian investments.

f)           Sent 03-Mar-22: Appointment of Local Pension Board independent chairman

g)         Sent 04-Mar-22: Heywood: heightened cyber threat assessment.

h)         Sent 05-Mar-22: ACCESS JC - Russia: draft statement & proposed additional risk

i)           Sent 05-Mar-22: ACCESS JC meeting 7 March 2022 agenda briefing

j)           Sent 08-Mar-22: Place holder for ACCESS/Link virtual investor day 13 May 2022.

k)          Sent 09-Mar-22: Local Pension Board appointment of scheme member representatives.

l)           Sent 15 Mar-22: Hymans Robertson: Monthly round up.

m)        Sent 15 Mar-22: ACCESS - news release on Joint Cttee decision on Local Pension Board observers.

n)         Sent 16-Mar-22: Invitation to Barnett Waddingham Overview of LGPS April training webinar.

o)         Sent 22-Mar-22: Hymans Robertson: Welcome to your LGPS 2022 Valuation Hub.

p)         Sent 24-Mar-22: Economic Update - Inflation Data and Interest rate forecast.

q)         Sent 31-Mar-22: LGPC Bulletins 221 and 222

r)           Sent 05-Apr-22: Liontrust acquisition of Majedie Asset Management

s)          Sent 07-Apr-22: Hymans Robertson: Your April edition of The Edit

t)           Sent 07-Apr-22: LAPFF: Anglo American and Glencore webinar invite

u)         Sent 07-Apr-22: Aon webinar invite: navigating climate risks and opportunities

v)          Sent 22-Apr-22: Inflation data for March 2022.

w)        Sent 29-Apr-22: LGPC Bulletin 223

x)          Sent 06-May-22: Hymans Robertson: Your May edition of The Edit

y)          Sent 13-May-22: Hymans Robertson: Monthly round-up

The committee noted the items circulated for information since the last meeting. No questions were raised at this stage.

RESOLVED:

THAT the items circulated for attention be noted.

To receive and note the workplan for the Isle of Wight Pension Fund Committee and Local Pension Board for the 2022-23 financial year.

To receive and note the workplan for the Isle of Wight Pension Fund Committee and Local Pension Board for the 2022-23 financial year. No comments or questions were raised and the update was noted.

RESOLVED:

THAT the workplan be noted.

To guarantee a reply to a question, a question  must be submitted in writing or by email to democratic.services@iow.gov.uk no later than 10.00am on Monday 23 May 2022. A question may be asked at the meeting without prior notice but in these circumstances there is no guarantee that a full reply will be given at the meeting.

Cllr Churchman asked a question in relation to benchmarking. The Investment Consultant advised that all managers have standard benchmarks which are agreed at the time of appointment, and cannot be varied without the committee’s express consent..

To consider passing a resolution that, under Section 100(A)(4) of the Local Government Act 1972, the public and press be excluded from the meeting for the following item of business, namely agenda item(s) 16 to 19 on the grounds that there is likely to be disclosure of exempt information as defined in paragraphs 3 of Part 1 of Schedule 12A of the Act and in all the circumstances of the case, the public interest in maintaining the exemption outweighs the public interest in disclosing the information.

RESOLVED:

THAT the public and press be excluded.

Prior to the three-hour point in the meeting, the chairman proposed that the meeting be extended for up to thirty minutes (to allow sufficient time for the remaining agenda items to be considered) under Part 4B(6) (Duration of meetings) of the Council’s Constitution.

RESOLVED:

THAT the meeting be extended by up to thirty minutes.

To receive the confidential report from the Fund’s investment consultants on the UK Equity sub-funds available under the ACCESS pool.

The committee received a confidential report from the Fund’s investment consultants on the UK Equity sub-funds available under the ACCESS pool.

RESOLVED:

THAT the Funds investment consultants be authorised to progress with the next stage of detailed due diligence, and BlackRock to be invited to the next meeting of the Committee in July 2022. 

To receive and note an update on activity with the ACCESS pool since the last meeting.

The committee considered the report on recent ACCESS pool activities since the last meeting. Discussion took place regarding the exploration of the pool becoming a signatory to the UK Stewardship Code, and the potential resourcing issues for the local fund. It was agreed that Cllr Andre would raise the matter at the next meeting of the ACCESS Joint Committee.

RESOLVED:

THAT the ACCESS update be noted.

To receive and note the confidential update on procurement and contract management activities since the last meeting.

The committee received the report on procurement and contract management activities undertaken since the last meeting.

RESOLVED:

THAT the contract management and procurement activity undertaken (since the last report in February 2022) be noted.

To receive and adopt the report, and confidential appendices, on the draft risk register for the pension fund; and to agree the future reporting process for updates.

Consideration was given to the draft risk register and the process for future reporting.

RESOLVED:

i)               THAT the draft risk register be adopted.

ii)              THAT a summary risk register (showing changes from the previous report) be presented to the committee at each future meeting.

iii)            THAT a detailed report on progress against all “red” risks be presented to the committee at each future meeting.

iv)            THAT the Local Pension Board be asked to maintain oversight of the risk management framework and risk register, to be reported to the committee at each future meeting.