Agenda item

This report provides updates on the Pension Fund’s performance for the quarter ended 30 June 2021:

·         Independent advisor’s market commentary

·         Investment asset allocation

·         Investment performance

·         Funding position update

·         London Collective Investment Vehicle (LCIV) Update

·         Update on the Fund’s accounts and annual report

The Head of Pensions and Treasury introduced the report which provided an update on the Pension Fund and performance for the quarter. It was noted that the report included market commentary from the independent advisor and the annual report and statement of accounts.

It was explained that the Pension Fund’s investment assets currently had a market value of approximately £1.7 billion which was an increase of 4.72% since March 2021. This was likely due to the reopening of economies, after the most severe periods of the Covid-19 pandemic, which had a positive impact on financial markets. It was added that this was the highest value since the Covid-19 pandemic began. It was noted that the funding position for the Pension Fund was approximately 110% but that this might be subject to change following the full actuarial assessment in 2022.

It was noted that the Pension Fund allocation to equities had been increased several years’ ago and it was enquired when the strategic allocations would be reviewed, particularly in case of any inflation over the next year. Alex Goddard, Mercer, noted that inflation was a known risk which had been factored into some recent discussions, such as retaining the allocation to index linked gilts at 7% within the portfolio and allocating to the London Fund, property, and renewable energy to provide some resilience to and protection against the impact of inflation. It was highlighted that the Pension Fund was a long term investor and was therefore likely to make fewer tactical calls in the shorter term but that the allocation could be considered and rebalanced where necessary. It was acknowledged that the allocation to equities was currently overweight and that this could be considered for rebalancing; this was agreed by the Committee.

It was enquired how quickly the Pension Fund could change its allocations if required. Alex Goddard, Mercer, explained that, if there was a serious market event, it would be possible to raise this with officers and the Pensions Committee and Board at an urgent meeting which provided more immediate protection for the Pension Fund. This was consistent with the experience during the Covid-19 pandemic, when Mercer held calls with officers to discuss whether any changes should be made.

Cllr Dennison noted that the governance section of the annual report, which stated that no members of the Pensions Committee and Board were members of the Pension Fund, would need to be updated to reflect the fact that he was a deferred member of the Pension Fund.

The Committee enquired whether it would be possible to include the net asset value as at the last valuation by investment manager and asset class as part of the quarterly report so that this could be compared against the most recent quarterly valuations. The Head of Pensions and Treasury noted that this could be considered.

RESOLVED

1.    To note the information provided in respect of the activity for the quarter ended 30 June 2021.

2.    To review and rebalance the allocation to equities and to report back on this at the meeting of the Pensions Committee and Board in December 2021.

3.    To amend the governance section of the annual report to reflect that one member of the Pensions Committee and Board was a deferred member of the Haringey Pension Fund.