Agenda and draft minutes

Pensions Panel
Tuesday, 5th March, 2019 9.30 am

Venue: Ivanovo Room - County Buildings. View directions

Contact: Mike Bradbury  Email: michael.bradbury@staffordshire.gov.uk

Items
No. Item

37.

Declarations of Interest

Minutes:

Carolan Dobson (Independent Advisor) informed the Panel that she had joined the Aberdeen Standard Fund Managers Board.

38.

Minutes of meeting held on 4 December 2018 pdf icon PDF 126 KB

Minutes:

RESOLVED – That the minutes of the Meeting of the Pensions Panel held on 4 December 2018 be confirmed and signed by the Chairman.

39.

Dates of Future Meetings

14 June 2019

11 September 2019

3 December 2019

3 March 2020

 

All meetings are scheduled to start at 9.30am at County Buildings, Stafford

 

Minutes:

RESOLVED – That the dates of future meetings of the Panel, as set out below, be noted:

 

·       14 June 2019

·       11 September 2019

·       3 December 2019

·       3 March 2020

 

(Note: All meetings are scheduled to start at 9.30am at County Buildings, Stafford.)

40.

Pension Fund Performance and Portfolio of Investments as at 31 December 2018 pdf icon PDF 276 KB

Report of the Director of Corporate Services

 

Additional documents:

Minutes:

The Director of Corporate Services submitted a summary of the performance of the Pension Fund, together with a portfolio of the Fund’s investments, as at 31 December 2018.

 

The Panel were informed that the Fund had a market value of £4.8 billion as at 31 December 2018 which had since increased to £5.047 billion as at 4 March 2019.  Over the quarter the Fund returned -6.8%, matching its strategic return benchmark.  The best performing asset class relative to its benchmark was the Alternatives portfolio. Equities were the main detractors from performance, with UK equities in particular faring the worst.

 

The Panel noted that the Fund had outperformed its strategic return benchmark over the 1, 3, 5 and 10- year periods. Annualised returns over the 3, 5 and 10-year periods were more than 8% per annum, well above the investment return assumptions used by the Actuary as part of the triennial valuation.

 

RESOLVED – That the Pension Fund Investment performance and the portfolio of investments for the quarter ended 31 December 2018 be noted.

41.

Approved Investment Strategy for Pension Fund Cash 2019/20 pdf icon PDF 409 KB

Joint Report of the Director of Corporate Services and Chief Financial Officer (S151)

Minutes:

The Director of Corporate Services reported that previously Administering authorities were required to formulate a policy for the investment of Pension Fund cash by the Local Government Pension Scheme (Management and Investment of Funds) Regulations 2009; as a result, the Fund produced a separate AIS for its cash balances. The more recent 2016 regulations, infer policies for Pension Fund cash should form part of the Investment Strategy Statement (ISS). However, the Fund considered it good practice to continue preparing a separate AIS for cash balances, with reference made to it within the ISS.

 

The Panel noted that the Pension Fund had a small strategic asset allocation to cash of 1%, recognising that cash balances were needed for the day to day management of the Pension Fund. This cash was managed by Officers in the County Council’s Treasury and Pension Fund Team, to provide liquidity and pay bills as they arose.  The management of this cash would continue to remain with the Fund and would not be transferred to LGPS Central under the LGPS pooling agenda.

 

The cash held increases from time to time, pending investment in other major asset classes e.g. property and private debt. The proposed AIS therefore needs to allow for such situations occurring and the Panel would need to review the strategic asset allocation benchmark to cash on a quarterly basis, together with any associated ranges.

 

The proposed main objectives for the AIS were to invest cash prudently, and to have regard to the security and liquidity of its investments before seeking the highest rate of return, or yield. The objective when investing cash was to strike an appropriate balance between risk and return, thereby minimising the risk of incurring losses from defaults but also taking into account the risk of receiving unsuitably low investment income.

 

To allow for the practical management of the treasury transactions each day, it was proposed that the change in investment limits and the choice over the investments made be delegated to the Chief Financial Officer (S151), who chairs the SCC Treasury Management Panel. Outside of this, the Pensions Panel would need to assess any specific requirements and consider any changes that may be required to the AIS.

 

With regard to risk. The Panel were informed that cash was only a small component of the overall investments of the Fund and the wider aspects of risk were considered in the ISS, where cash was shown to form a small part of the Fund’s Strategic Asset Allocation.  Looking at cash in isolation, treasury management usually recognised that the two prime risk areas were security and liquidity. It was considered that focussing primarily on these two risks was appropriate for the Fund’s relatively low 1% allocation to cash, for day to day cash management purposes. However, the AIS provided the flexibility to consider higher yields using Non-Standard Investments. Should the Pensions Panel decide to make a higher strategic allocation to cash at some point in the future, where seeking a higher return would become  ...  view the full minutes text for item 41.

42.

Exclusion of the Public

The Chairman to move:-

 

‘That the public be excluded from the meeting for the following items of business which involve the likely disclosure of exempt information as defined in the paragraphs of Part 1 of Schedule 12A of the Local Government Act 1972 (as amended) indicated below’.

Minutes:

RESOLVED - That the public be excluded from the meeting for the following items of business which involve the likely disclosure of exempt information as defined in the paragraph of Part One of Schedule 12A of the Local Government Act 1972 (as amended) indicated below.

 

PART TWO

 

The Panel then proceeded to consider reports on the following issues:

43.

Exempt Minutes of the Meeting held on 4 December 2018

(Exemption paragraph 3)

Minutes:

(Exemption paragraph 3)

44.

Pension Fund Performance and Manager Monitoring for the quarter ended 31 December 2018

(Exemption paragraph 3)

 

(Report of Portfolio Evaluation Limited for the quarter ended 31 December 2018 enclosed for information)

 

Minutes:

(Exemption paragraph 3)

45.

Strategic Benchmarking Review and Monitoring

(Exemption paragraph 3)

Minutes:

(Exemption paragraph 3)

 

a)              Economic and Market Update

b)              Review of Position as at 31 December 2018

 

46.

Responsible Investment (RI) Report Quarter 4 2018

(Exemption paragraph 3)

 

Report of the Director of Corporate Services

Minutes:

(Exemption paragraph 3)

47.

Draft Response to MHCLG on Asset Pooling

(Exemption paragraph 3)

 

Report of the Director of Corporate Services

Minutes:

(Exemption paragraph 3)

48.

Property

(Exemption paragraph 3)

 

Property Investment Strategy for the year commencing 1 April 2019

 

Presentation by Colliers Capital

 

(Report of Colliers Capital for the year commencing 1 April 2019 enclosed for information)

Minutes:

(Exemption paragraph 3)

49.

LGPS Central - Corporate Bonds Sub-Fund

(Exemption paragraph 3)

 

Presentation by LGPS Central

Minutes:

(Exemption paragraph 3)