Agenda and minutes

Apologies for absence were received from Councillors Jenny Mulholland, James Slater and Shiva Tiwari.

To note the Terms of Reference of the Pension Committee

RESOLVED –

(i)         THAT the Terms of Reference of the Pension Committee be noted.

There were none.

Broadcast of the meeting

The Chair to announce the following: ‘In addition to the rights by law that the public and press have to record this meeting, I would like to remind everyone that this meeting is being broadcast live by the Council to the Internet and can be viewed on our website for twelve months after the meeting. After that time, webcasts are archived and can be made available upon request.

If you have asked to address the meeting, you are deemed to be consenting to having your contributions recorded and broadcast, including video when switched on, and to the use of those sound recordings and images for webcasting and/or training purposes.’

Any other announcements

Webcasting

The Chair announced that the meeting was being broadcast live to the internet and would be capable of repeated viewing and copies of the recording could be made available to those that requested them. Those seated in the Chamber were deemed to be consenting to being filmed. Anyone wishing to avoid appearing on the webcast should move to one of the galleries.

Vote of thanks

Councillor Madlani informed the meeting that this would be Nigel Mascarenhas, Head of Treasury and Financial Services last Camden Pension Committee meeting, after working for Camden Council for 15 years. He was moving on to pastures new, having worked with the chair as lead officer to the Pension Committee for 10 years.

The Chair, on behalf of the Committee, thanked Nigel for his incredible service to the Committee and the borough informing members that a proper send-off was being arranged.

The Chair also welcomed Nigel Keogh Interim Head of Treasury and Financial Services and Priya Nair Treasury and Pension Fund Manager who were new members of the team and taking over from Nigel Mascarenhas. They each introduced themselves.

Priya informed the Committee that she had moved to Camden from the City of London Corporation where she had worked for about 4 years taking care of their financial investments while Nigel was joining the organisation on a temporary basis supporting Priya and also supporting the process to find a replacement for the outgoing Head of Treasury and Financial Services. He had worked in local government pensions for over 20 years working with London Boroughs and County Councils.

The Head of Treasury and Financial Services thanked the Chair and Committee saying that it had been a real privilege to serve the Committee he had enjoyed working with members and would be delighted if the members of the Committee in his new role were at least half as tuned in as Camden members were.

Requests to speak at the Committee on a matter within its terms of reference must be made in writing to the clerk named on the front of this agenda by 5pm two working days before the meeting.

The Chair informed members that two deputations had been received and accepted, copies of the deputation statements were included in the supplementary agenda.

The 2 deputations related toethical Pension Fund Investments and were from:

·       Liz Wheatley (Camden Unison)

·      Luca Salice – (Camden Palestine Solidarity Campaign)

The following responses were given by the deputees to members questions:

• The Unison Observer on the Committee regularly attended Pension Committee meetings remotely but did not have voting rights and attended the meetings as an observer.
• Committee members could introduce themselves and meet the Trade Union representatives after the meeting.
• The International Court of Justice (ICJ) had made it clear that genocide had probably occurred in Gaza.
• There was a strong debate about the actions of certain companies which were deemed illegal such as the expansion of illegal settlements in the West Bank as well as the activities of the arms industry, Unison strongly felt that Pension Fund money should not be invested in war, occupation and death.
• There was the feeling that investing in these companies made Camden Pension Fund complicit in these activities.

A member commented that along with the Vice Chair of the Pension Committee they had attended the Local Authority Pension Fund Forum (LAPFF) conference earlier in the day at which one of the main topics of conversation had been about human rights and conflict dynamics. An outcome of the conversation was the proposal to send a letter to all Financial Times Stock Exchange (FTSE) 100 index companies asking them to answer certain questions which would provide Local Authority Pension Funds with a better understanding of the basis on which investments were made and maintained.in times of conflict. The member asked if the deputees could provide comments on the type of questions they would like to be put to the companies.

In response Liz Wheatly commented that she would like the FTSE companies to be asked about:

·       Their links financially supporting and investing in the occupation of Palestine and wars in Sudan, Yemen and the Democratic Republic of Congo given that United Nations experts and the Human Rights Council had asked nation states to cease the sale and transfer of arms, munitions and other military equipment to Israel; and

·       With regards to the Fossil Fuel Industry what the companies’ plans were for transition from fossil fuel and whether the transition was supported by training and developing people’s skills as well as adequate pensions and rights for workers involved in those transitions.

Nigel Mascarenhas Head of Treasury and Financial Services and Lara Blecher, Pension and Investment Research Consultants (PIRC) made the following comments in response to the deputations and members questions:

• Camden as the LGPS Administering Authority was under a duty to act in the best interests of scheme members, its investment powers must be directed to achieving what was best for the financial position of the funds with the precise choice of the investment being influenced by Environmental, Social and Governance (ESG) factors so long as that did not materially  ...  view the full minutes text for item 5.

There was none.

To approve as a correct record the Minutes of the meeting held on 5 March 2024.

RESOLVED –

THAT the minutes of the meeting of the Pension Committee held on 5^th March 2024 be approved and signed as a correct record.

Report of the Executive Director Corporate Services.

This report presents the performance of the Pension Fund investment portfolio and that of the individual investment managers for the quarter ended 31 March 2024.

Consideration was given to the report of the Executive Director Corporate Services.

The Head of Treasury and Financial Services introduced the report which outlined the performance of the Camden Pension Fund investment portfolio and the individual investment managers for the quarter ended 31 March 2024.

He highlighted that global markets had generally showed strong returns for equity, with the FTSE All World increasing by 9.1% in the quarter with only Asia and emerging markets lagging behind, other regions were showing strong growth in the one-year period. The retail price index (RPI) looked to

have settled down in the quarter with the sharp inflationary spike now appearing to have abated and central banks thinking about policy easing. The overall fund value was just below £2.1billion. The overall fund performance this quarter achieved a 4.3% return just behind the target of 4.8%.

Karen Shackleton, Independent Investment Advisor, provided the committee with an overview of her comments on the financial markets and provided detail on the performance of the individual Investment Managers, as set out in Appendix A to the report.

She highlighted that:

Baillie Gifford, the growth global equity manager had a better showing this quarter with a return of 9.8%, outperforming Harris by nearly 6%. Although over the 3-year period they still had a lot of ground to make up. The best performing stocks in absolute terms were the tech stocks adding 6 new positions making 12 sales pointing out however that smaller holdings were adding less value than was the case previously.

Harris, the Global Equity Value Manager underperformed during this quarter which was due to poor stock selection.

Legal and General – there were no issues with the tracking of these funds and no concerns. Though to be noted that the Sustainable index did not do as well as the broader market Cap index in the quarter.

CBRE – the portfolio of commercial property funds. The main detractors from performance in this quarter were Airport Industrial’s, Ardstone UK Regional Office and Standard Life Long Lease Property Fund. The top contributors to returns for the quarter were Unite UK Student Accommodation, M&G Secured Property Fund and Fiera Real Estate Opportunity Fund IV. The split of the different fund returns showed the benefit of diversification. The Fund Manager had warned that residential yields were beginning to peak in prime locations and London had seen falls in rental growth.

Partners – This was a Global Property Manager investing in 3 different funds. that Camden Pension Fund was invested in. The 2009 Fund was now in realisation and was winding down.

The 2013 fund had realised half of its investments and had distributed 92% already so was doing okay. The 2017 fund was 61% drawn and had got 14 assets below expectations which required some monitoring.

HarbourVest – This was a Global Private Equity Manager. This fund had provided strong returns in the past but were now facing some challenges with a quarter of the portfolio now behind expectations due  ...  view the full minutes text for item 8.

Report of the Executive Director Corporate Services.

This report confirms the exit, known as the cessation, of Citizens Advice Camden as an employer in the Fund.

Consideration was given to the report of the Executive Director Corporate Services.

The Head of Treasury and Financial Services introduced the report informing members that it confirmed the exit otherwise known as cessation, of Citizens Advice Camden as an employer from the Fund.

Members were informed that:

·       Citizens Advice Camden (CAC) were exiting on terms set out in the Funding Strategy Statement agreed by the Committee in December 2022.

·       CAC’s last employee left the Fund in November 2023 and under the Funding Strategy Statement this meant, as they had no active employees, it had triggered their cessation in the Fund.

·       It had been a planned exit with good communication between the Fund and the charity approaching this event for over a year.

·       The actuary had done a cessation calculation and calculated the exit payment as £490k (on a low-risk basis).

·       The Executive Director Corporate Services had agreed the terms of their exit in March and CAC paid this amount in full in April.

The Committee was asked to ratify the decision.

The following responses and comments were provided to Committee members questions:

• When there are no active employees in the fund, it automatically would make them a ceased employer. The £490k was calculated based on the difference between their assets and liabilities in the fund.
• There were broadly 3 categories of employer in the fund, scheduled bodies such as schools who were generally well funded and could afford to be in the fund, admitted bodies such as contractors that worked for the Council their contribution rates were set so they did not fall behind with payments, the third category were the charitable admitted bodies the cost of which was significantly higher for these bodies. Lots of charitable organisations did not have the reserves to meet the cessation price tags which was difficult. This was something that needed to be looked into at the next triennial evaluation.

The Vice Chair commented that the CAC cessation was well managed and a really good outcome because there had been occasions when the payments had been significantly higher and very difficult for a lot of Voluntary organisations

The Chair thanked the Head of Treasury and Financial Services and his team for keeping up with the regular dialogue and close track of all the risks around these issues.

RESOLVED –

THAT it be agreed that Citizens Advice Camden ceases as an employer in the Fund.

Report of the Executive Director Corporate Services.

This report presents an update to the risk register for the Pension Fund, with an action plan stating how risks will be managed.

Consideration was given to the report of the Executive Director Corporate Services.

The Head of Treasury and Financial Services introduced the report informing members that this was an annual report assessing the risks in the fund from a liability and asset perspective.

·       The risk ratings were set out in table 1 which showed the risks scored in terms of impact and probability.

·       All risks were RAG rated, red, amber and green. Details of each risk and changes from last year were shown in appendix 1 of the report.

·       The risk map was similar to last year after being reviewed by officers, the Actuary and Independent Investment Adviser.

·       The mitigations controls and updates had been updated throughout and it was for members to comment on anything considered to be scored incorrectly or not captured.

The following responses and comments were provided to Committee members questions:

• The Environmental, Social and Governance (ESG) risks appeared in everything that was looked at and it was the risk register that brought all these risks together.
• With regards to the inflation risk – the Actuary and Independent Investment Advisor were comfortable with where the inflation risk was on the register. This was considered as part the triennial valuation as well as the Investment Strategy Review in July 2023 resulting in the move towards inflation related mandates such as Affordable Housing and Real Estate Long Income Funds.
• If there were no inflation risked investments the Pension Fund would be facing bigger risks. However, as a concerted effort had been made to get more inflation protection into the portfolio this had mitigated the risk.
• With regards to modelling risk and scenario modelling that was a question for the Actuary who had discussed modelling as part of their triennial valuation presentation to the Committee in December 2022 and would be discussing this again during the triennial valuation in December 2025.
• The Head of Treasury and Financial Services informed the Committee that he would ask the Actuary to comment on the slides from the Business meeting about Modelling Risk and scenario modelling send the response by email to Committee members.

Action By: Head of Treasury and Financial Services

• Climate risk modelling was a complex topic, it depended on the assumptions going into the models as to what output resulted. Evidence and data were required to support any actions. Ultimately there was the need for the Committee to discuss what the implications were for the portfolio of some of the headline scenarios and whether any mitigating action was required to be taken.
• Employers’ cessation from the fund or their financial standing was a risk and worry for the fund which was the reason why the Employer’s Register was brought to the Committee every year.to agree.

RESOLVED –

THAT the Risk Register as set out in Appendix 1 be agreed.

Report of the Executive Director Corporate Services.

This report brings Members up to date with engagement activity undertaken by the Fund and on its behalf by LAPFF (the Local Authority Pension Fund Forum) since the last Committee meeting.

This work is important to the Fund’s ambition to be a fully engaged investor and demonstrates its commitment to Responsible Investment and engagement in Environmental, Social and Governance (ESG) issues as the Fund works to maximise returns on investment.

Consideration was given to a report of the Executive Director Corporate Services.

The Head of Treasury and Financial Services informed the Committee that this was a regular report presented to Committee Members updating them with engagement activity undertaken by the Fund and on its behalf by the Local Authority Pension Fund Forum (LAPFF) to promote good governance and behaviour in environmental and social issues.

He also highlighted that:

• A LAPFF business meeting had taken place today which some members had already provided some update on to the Committee.
• The LAPFF Business meeting in April 2024 had considered options and implications for decarbonisation of steel production and steel recycling.
• Finalising the LAPFF work plan.
• An item on task force and on climate related financial

The Chair reminded and encouraged Committee members to attend the business meetings informing them the conference and business meetings were open to all members as well as them being keen to get more political diversity at some of the LAPFF events.

RESOLVED -

THAT the contents of the report be noted.

Report of the Executive Director Corporate Services.

This report provides a quarterly update on developments at the London Collective Investment Vehicle (CIV) in creating sub-funds for the spectrum of asset classes, on-boarding of assets and development of the CIV’s staff resource. Progress with the London CIV contributes to the Government’s pooling agenda and drive to reduce costs in the Local Government Pension Scheme (LGPS).

Consideration was given to a report of the Executive Director Corporate Services.

The Head of Treasury Management and Financial Services introduced the report informing the Committee that it provided an update on developments at the London Collective Investment Vehicle (CIV) including the Shareholder Committee meeting held on June 21^st attended by Councillor Madlani who also chaired the shareholder meeting.

It was highlighted that the CIV:

·       Had been busy launching several new products such as the Nature Based Funds, the New Private Debt Fund and a Global Equity Value Fund.

·       Hit their targets for asset growth in 2023/24.

·       Were developing a property offer

·       Had recently made key appointments to the Chief Risk Officer and Chief Proposition Officer posts although the Chief Investment Officer would soon be leaving.

The Chair commented that the next conference was coming up in September and asked if officers could circulate the dates to members encouraging members to attend.

Action By: Interim Head of Treasury and Financial Services / Treasury and Pension Fund Manager/all Committee members.

The Head of Treasury Management and Financial Services also reminded members of the ongoing consultation that was still open and initiated by the previous government but still wanted Pension Funds to provide a response.

RESOLVED –

THAT the contents of the report were noted.

Report of the Executive Director Corporate Services.

This report sets out items scheduled for future agendas of this Committee together with a record of training/ meetings attended and a list of future training opportunities.

Consideration was given to a report of the Executive Director Corporate Services.

The Committee noted the items scheduled for future agendas of this Committee together with a record of training sessions and meetings attended and a list of future training opportunities.

The Chair advised that the meeting with Manulife formerly CQS and Pimco had been moved from 1^st July to 29^th July due to the General Election. Invites would be sent to members diaries.

RESOLVED –

THAT the contents of the report be noted.

The next meeting of the Pension Committee will be held on 19 September 2024.

Thursday 19^th September 2024 at 6.30pm.

There was none.