Agenda item


This report provides the following updates for the quarter ended 31 December 2021:


·         Independent advisor’s market commentary

·         Investment asset allocation

·         Investment performance

·         Funding position update

·         London Collective Investment Vehicle (LCIV) update

·         External audit update


The Head of Pensions and Treasury introduced the report which provided an update on the Pension Fund performance for the quarter ended 31 December 2021.


It was noted that, in the quarter, the market value of the Pension Fund’s investment assets was £1.818 billion, which represented an increase of 5.62%. The total funding level as at 15 March 2022 was at 110%. It was noted that the next valuation exercise was due to be undertaken in March 2022 and new contribution rates would apply from 1 April 2023.


In relation to the London Collective Investment Vehicle (LCIV), it was confirmed that, as at 28 February 2022, 30 of the 32 London Boroughs had agreed to amendments which were intended to resolve a technical issue regarding the accounting classification of the LCIV’s regulatory capital and had signed the written resolution to effect the change. The LCIV was engaging with the two remaining boroughs and the Financial Conduct Authority (FCA) had been informed of the current position.


Some members noted that the recent geopolitical issues in Russia and Ukraine would likely have a significant, long term effect on markets such as commodities and suggested that it would be appropriate to re-examine the Pension Fund’s investment strategy. The Head of Pensions and Treasury explained that the upcoming actuarial valuation of the Pension Fund’s liabilities would inform the investment strategy. The Independent Advisor noted that the use of more active managers had been considered by the Pensions Committee and Board in the past and could be revisited.


An update on the external audit was provided by David Eagles, BDO. It was noted that the audit had been expected to conclude in advance of the Pensions Committee and Board meeting in March 2022 but that some evidence and explanations were awaited, a number of which related to investments (which was a key area), bank reconciliations, and some benefits work. It was noted that there had been some delays in the benefits work due to software access issues. It was stated that all parties were working to complete the work as soon as possible and it was aimed to present the finalised audit to the Pensions Committee and Board in July 2022. It was added that it was not possible to sign off the Pension Fund accounts until the main Council accounts were finalised and that the main Council audit was subject to a national issue on the accounting treatment of infrastructure assets which would require additional time to resolve.


Some members enquired whether anything could be done to assist with the delays in obtaining information for the audit. The Head of Pensions and Treasury explained that one of the key issues was the type of query and whether it relied on third party input as this would inevitably take longer. In addition, it was noted that all of the outstanding queries were subject to further requests for information from the external auditors until satisfactory assurance had been obtained. It was added that officers were doing as much as possible to forward and follow up on outstanding queries.


The Pensions Committee and Board noted the report.

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