Agenda item

This report provides the following updates for the quarter ended 30 June 2022:

·         Independent advisor’s market commentary

·         Investment asset allocation

·         Investment performance

·         Funding position update

·         London Collective Investment Vehicle (LCIV) update

·         2021/22 Statement of Accounts Update

The Head of Pensions and Treasury introduced the report which provided updates for the quarter ended 30 June 2022 in relation to the independent advisor’s market commentary, investment asset allocation, investment performance, funding position update, London Collective Investment Vehicle (LCIV) update, and 2021/22 Statement of Accounts update. It was noted that, as at 30 June 2022, the investment assets of the Pension Fund had a market value of £1.687 billion. This was a decrease from the previous quarter and was driven by uncertainty in the global economic outlook as central banks increased interests rates to tackle inflation. It was noted that some volatility was expected over the coming months.

In response to a query, it was noted that Multi-Sector Credit and Multi-Asset Absolute Return were listed separately as they did not correlate to other asset classes. Alex Goddard, Mercer, noted that the Multi-Asset Absolute Return portfolio aimed to generate positive absolute returns despite market conditions; it was disappointing that the figures had reduced in Quarter 2 but performance overall had been positive and had provided meaningful downside protection where other asset classes had been significantly impacted. In relation to Multi-Sector Credit, it was explained that there were allocations to a wide range of high yield asset classes and the majority of returns over time were from income. It was noted that, generally, it was expected that there would be a correlation with equities and overseas equities were currently down by about 20%. It was stated that overseas equities generally represented a large portion of Local Government Pension Scheme investments. The Haringey Pension Fund was quite well-positioned with diversifying asset classes and the Investment Strategy Statement (ISS) was performing as expected during challenging market conditions. Some members commented that, given the returns from other sectors, the Pension Fund performance numbers were reasonably good.

In response to a question about changing the current asset class allocation, it was noted that the ISS was due to be reviewed in the context of the actuarial valuation. Alex Goddard, Mercer, explained that the Pension Fund was relatively defensively positioned and it was not considered necessary to accelerate the review at present.

The Head of Pensions and Treasury provided an update in relation to the 2021-22 statement of accounts. It was noted that the deadline to publish the draft statement of accounts, including the Haringey Pension Fund accounts, was 31 July annually and the Council had given notice that this would be delayed. It was explained that the delay was due to a number of factors, including the Covid-19 pandemic, the complexity of the external audit, and the increases in workload for auditors nationally. The delays in completing the external audit meant that there was a delay in publishing the draft accounts but it was noted that this was not a unique position and a number of other boroughs in London had yet to publish their accounts. It was highlighted that the deadline to publish the Pension Fund annual report was 1 December. The proposed approach was to use the latest draft statement of accounts to inform the annual report and to publish a revised annual report once the statement of accounts was finalised.

It was aimed to present the draft annual accounts and annual report to the November meeting and to publish them by 1 December 2022. Members stated that, if the reports were ready and needed to be published by 1 December 2022, it would be useful to circulate them to the Pensions Committee and Board in advance of the next meeting. It was noted any reports for the next meeting would be included as part of the meeting agenda or, if relevant, could be circulated by email.

RESOLVED

To note the information provided in section 6 of the report in respect of the activity for the quarter ended 30 June 2022.