Greenwich Council

Agenda and minutes

Venue: Committee Room 5 - Town Hall, Wellington Street, Woolwich SE18 6PW. View directions

Contact: Jasmine Kassim  Email: jasmine.kassim@royalgreenwich.gov.uk tel 020 8921 5146

Items
No. Item

1.

Apologies for Absence

To receive apologies for absence from Members of the Panel.

Minutes:

There were no apologies for absence.

2.

Urgent Business

The Chair to announce any items of urgent business circulated separately from the main agenda.

Minutes:

There was no urgent business.

3.

Declarations of Interest pdf icon PDF 51 KB

Members to declare any personal and financial interests in items on the agenda.  Attention is drawn to the Council’s Constitution; the Council’s Code of Conduct and associated advice.

Additional documents:

Minutes:

Resolved –

 

That the list of Councillors’ memberships as Council appointed representatives on outside bodies, joint committees and school governing bodies, be noted.

4.

Minutes pdf icon PDF 54 KB

Members are requested to confirm as an accurate record the Minutes of the Pension Fund Investment and Administration Panel meeting held on 16 July 2018.

 

No motion or discussion may take place upon the Minutes except as to their accuracy, and any question on this point will be determined by a majority of the Members of the body attending who were present when the matter in question was decided.  Once confirmed, with or without amendment, the person presiding will sign the Minutes.

Minutes:

Resolved -

 

That the Minutes of the meeting of the Pension Fund Investment & Administration Panel held on 16 July 2018, be agreed and signed as a true and accurate record.

5.

Funding Update Report pdf icon PDF 71 KB

The Panel is requested to note a funding update report from the pension fund actuary, Barnett Waddingham as at 31 March 2018 (Appendix A).

Additional documents:

Minutes:

A report about the Royal Borough of Greenwich’s Pension Fund (“the Fund”) as at 31 March 2018, was introduced to the Panel by the Acting Finance Manager.  The Panel welcomed information that the Fund’s assets achieved an estimated 10.9% return since the valuation in the same period in 2016/17.  It was noted that in order to determine the financial assumptions, funding level in the next triennial valuation in 2019/20 would be dependent on the investment performance of the fund, as well as future market conditions.

 

In response to questions raised, the Acting Finance Manager advised the Panel that the funding calculations in the period for each month had been rolled forward from the formal valuation to provide an approximation of ‘smoothed’ and ‘unsmoothed’ levels of 98.9% and 97.5% respectively.  It was clarified to the Panel that the calculation to achieve the current projected ‘smoothed’ level was based on an estimate of the average position over a six-month period spanning the report date, whereas ‘unsmooth’ represented the level of a specific asset at a particular date.

 

The Panel

 

Resolved –

 

That the report on funding update from the Pension Fund Actuary, Barnette Waddingham as at 31 March 2018, attached as Appendix A to the report, be noted.

6.

Investment Strategy Statement pdf icon PDF 53 KB

The Panel is requested to agree the Investment Strategy Statement (ISS) – attached as Appendix A.

Additional documents:

Minutes:

The Panel received a report on the Investment Strategy Statement  (ISS) of the Royal Borough of Greenwich’s (Royal Borough) Pension Fund (“the Fund), introduced by Paul Potter, a representative on behalf of Hymans Robertson LLP.  Information that the Fund’s assets had been translated into objectives against strategic benchmark was welcomed by the Panel.

 

In response to questions raised, the representative advised the Panel that risks specific to the Fund were set out in the ISS, as there was substantial cost per transaction in the market place.  Thus, it would not be advisable to trade each time a deviation occurs from actual objective target.  Instead, a sustainable performance of the Fund could be maintained by striking a reasonable compromise between generating a satisfactory long-term return on investment against target.  Therefore, any decision prior to trading of the Royal Borough’s assets should take into account the volatility in the market, the risks, and the nature of the Fund’s liability.

 

The Acting Finance Manager also responded to a question about the Council’s delegated decision-making in relation to the Fund, advising that a revision would be made in subsequent reports to reflect the current position, as the councillor vacancy on the Panel that existed prior to 31 March 2018 had been filled.

 

The Panel

 

Resolved –

 

That the Investment Strategy Statement, attached as Appendix A to the report, be agreed.

7.

Statement of Compliance with UK Stewardship Code pdf icon PDF 74 KB

The Panel is requested to agree the Statement of Compliance with the UK Stewardship Code for Institutional Investors.

Additional documents:

Minutes:

The Panel received a report about the Royal Borough of Greenwich’s (Royal Borough) Statement of Compliance with the UK Stewardship Code for Institutional Investments.  The report was introduced by the Acting Finance Manager.

 

In response to a question, the Acting Finance Manager advised the Panel that the Royal Borough had to explain how it meets the requirements of the Code, therefore, it was necessary to demonstrate in the Statement of Compliance how it would adapt to subsequent revisions.

 

The Panel

 

Resolved –

 

That the Royal Borough of Greenwich’s Statement of Compliance with the UK Stewardship Code for Institutional Investors, be agreed.

8.

Pension Fund Quarterly Accounts as at 30 June 2018 pdf icon PDF 53 KB

The Panel is requested to note the draft Pension Fund accounts for the period ending 30 June 2018 (Appendix A)

Additional documents:

Minutes:

The Panel Acting Finance Manager introduced the report to the Panel, highlighting activities in the draft Pension Fund (“the Fund”) accounts for the period ending 30 June 2018.

 

In response to questions raised, the Acting Finance Manager advised the Panel that the slight difference in the closing balances demonstrated that assets increased in the first quarter of the year, and subsequently dipped in the second.  Notwithstanding that, the Fund had performance well in the market, and there had been a steady rise in the UK commercial property. 

 

The Panel

 

Resolved –

 

That the draft Pension Fund accounts for the period ending 30 June 2018, be noted.

9.

Fund Manager Performance to 30 June 2018 pdf icon PDF 82 KB

The Panel is requested to note a report on the performance of the Royal Borough of Greenwich Pension Fund’s (‘the Fund’) investment managers for the period ending 30 June 2018.  To consider the information detailed in the Exempt Appendix to the report in closed session under the provisions of the Local Government Act 1972, Schedule 12A, Paragraph 3 “Information relating to the financial or business affairs of any particular person (including the authority holding that information)”   To agree that the information detailed in the Exempt Appendix to this report be not subsequently released to the press or public.

Additional documents:

Minutes:

The Panel received and noted a report in relation to the Pension Fund Manager performance to 30 June 2018.  The report, which was part-exempt, was introduced by Paul Potter, a representative on behalf of Hymans Robertson LLP.

 

In response to questions raised, the representative advised the Panel that volatility in the market place could be triggered by events in individual company and/or country.  It was stated that ‘Brexit’ sentiments’ in recent months, and a fall in the value of Pound Sterling, had led to a boost in investments into the UK market.  However, UK emerging businesses were experiencing a downturn in trade because of increased value of the US Dollar.  It was stated that threats of trade wars between the US and China was also creating instability in the market place.  Furthermore, the divergence in the UK property market was mainly due to a strain in high street retail, however, there had been a strong income recovery generated from commercial properties.

 

The Panel also noted clarification by the representative that the selling of assets and the buying of bonds in response to each round of volatility in the market place could be deemed irresponsible, as substantial cost was involved in trading activities.  However, it would be a concern in Fund investments if it was found that managers’ activities were undermining good performance.  Thus, a 5% tolerance range had been set to minimise risks.

 

The Panel

 

Resolved –

 

That the report on the performance of the Royal Borough of Greenwich’s Pension Fund investment managers for the period ending 30 June 2018, be noted.

10.

London Collective Investment Vehicle (LCIV) Update pdf icon PDF 50 KB

The Panel is requested to receive a presentation given by representatives from the London Collective Investment Vehicle (LCIV).  To note that the presentation will be held in closed session under the provisions of the Local Government Act 1972, Schedule 12A, Paragraph 3 “Information relating to the financial or business affairs of any particular person (including the authority holding that information)”.  To agree that the information considered in closed session be not subsequently released to the press or public.

Minutes:

The Panel received and noted a report in regard to London Collective Investment Vehicle (LCIV).  The report, which was part-exempt, was introduced by Kevin Cullen and Will McBean, representatives on behalf of LCIV.

 

Information that the LCIV would be launching a programme aimed at meeting individual London borough’s asset allocation pooling was welcomed by the Panel.  It was noted that the LCIV would also be providing updates on target assessment allocations.

 

In response to questions raised, the representatives advised the Panel that the LCIV’s Board comprised of independent non-executive directors, with a mandate to provide stewardship in the interest of shareholders.  However, the LCIV could not give a guarantee about the ethnic diversity of its board members because it was not involved in the selection process.  Notwithstanding that, as part of the revised governance structure, the LCIV had agreed that there should be a London representative on the board, and treasurers would be nominated, in addition to a trade union observer.

 

The Panel

 

Resolved –

 

That the presentation on progress made by the London Collective Investment Vehicle, be noted.

11.

Training- Actuarial Methods, Standards and Practices pdf icon PDF 37 KB

The Panel is requested to receive training from Hymans Robertson on actuarial Methods, Standards and Practices.

Minutes:

Resolved –

 

That it be noted that the Panel received training from Douglas Green, representative on behalf of Hymans Robertson LLP on actuarial methods, standards and practices.