Agenda item

This paper provides an update on the Fund’s risk register and an opportunity for the Pensions Committee and Board to further review the risk score allocation.

The Head of Pensions and Treasury introduced the item which provided an update on the Fund’s risk register and an opportunity for the Pensions Committee and Board to further review the risk score allocation. It was noted that the area of focus for review at the meeting was Investments.

It was clarified that the scoring set out in the risk register had been conducted by officers but that the Pensions Committee and Board could amend the scores if required. It was explained that two key risks had been added in relation to high levels of inflation and increased risk of a downturn. It was noted that the Pensions Committee and Board had recently reviewed the Pension Fund’s property allocation and committed additional funding to property which would provide some protection against high inflation levels. Officers were also monitoring the situation and engaging with investment managers and that, if required, a report would be presented to the Pensions Committee and Board.

It was enquired whether the risk register could be presented in full at each meeting, as well as the specific area of focus. The Head of Pensions and Treasury explained that the full risk register was quite long and could distract from the specific area of focus at the meeting. It was suggested that a summarised version of the key risks could be provided alongside the specific area of focus which was set out in more detail; this was agreed by the Pensions Committee and Board.

Some members noted that there had been a previous risk on the frequent turnover of elected members on the Pensions Committee and Board. The Chair noted that this was sometimes the nature of elected representatives. The Acting Committees Manager explained that this issue had been discussed at recent meetings and that the Chair had written to the Chief Whips to ask that the membership of the Pensions Committee and Board was as consistent as possible over the four year term of the Council.

In relation to risk INV03, it was noted that legislation and guidance on reporting and managing climate-related risks was anticipated and that this could lead to increased scrutiny on Environmental, Social, and Governance (ESG) issues and possible reputational damage. It was queried how much exposure the Pension Fund had to fossil fuels. The Head of Pensions and Treasury explained that there was no direct investment in fossil fuels but that there could be some exposure through the Pension Fund’s investments in index tracker funds; it was asked that this detail was requested from managers. Alex Goddard, Mercer, noted that previous analysis of the Pension Fund’s carbon footprint had shown good results but that this could be a useful area to consider as part of the Investment Strategy Statement review.

It was enquired whether the Pension Fund was exposed to investments with companies that did not pay tax. It was noted that a company’s tax policies were considered as part of Environmental, Social, and Governance (ESG) issues which were addressed through the engagements undertaken by Legal and General Investment Management (LGIM) as the Pension Fund’s investment manager and monitored by the Pensions Committee and Board through the Local Authority Pension Fund Forum (LAPFF). The Head of Pensions and Treasury noted that there were no specific enquiries at present.

RESOLVED

To note the Pension Fund’s risk register.