Issue - meetings

44.1     The Committee considered a report by the Chief Finance Officer introduced by Russell Wood, Pensions Manager: Investments and Accounting and Iain Campbell, Head of Local Government Pension Scheme Investment (Hymans Robertson) together with exempt information set out in a later agenda item.

44.2     The following points were highlighted to the Committee:

1)    There is uncertainty around the agency of the Pension Committee going forward in terms of pension reform.

2)    There are projects currently being developed by ACCESS and Border to Coast Pension Partnership focussing on the changes that are required to be implemented.

3)    The Fund continues to have below benchmark performance despite the positive absolute return over the quarter.

4)    During the quarter, the Fund’s asset value increased to give a Fund Value of over £5 billion.

5)    Asset allocation remains overweight for growth and protection and underweight for income and actions are being undertaken to address this.

6)    Over the last three years, despite volatility and uncertainty, global markets have produced a 13.2% return led by North America.

7)    Higher energy and food prices have impacted the market in terms of inflation seeing a greater-than-expected rise.

8)    The Bank of England cut interest rates over the last quarter and there has been volatility in UK government bond yields.

9)    North America and the Technology sector were the areas driving returns during the quarter and equity markets are up approximately 9% this quarter.

10) Investment Manager WHEB Active Impact Equity underperformed their benchmark due to investment in pharmaceuticals and funding cuts to scientific research.

44.3     The Committee discussed the potential risks going forward noting possible complacency in the market and impacts of potential North American tariffs.

44.4     The Committee discussed the increase in gold prices and Fund’s current investment in the gold market noting that it is generally seen a safe asset when there are challenging market conditions.

44.5     The Committee discussed the future of investment decision-making following the move to 100% pooling with a new pool and noted that there a review of the Fund’s investments will need to be undertaken in light of pooling changes and the strategic position of the Fund.

44.6     The Committee requested that a report is considered at the November meeting of the Pension Committee in relation to the investment strategy statement following the publication of new pension regulations.

44.7     The Committee RESOLVED to:

1) note the report;

2) approve the amended asset allocation set out in paragraph 4.11 of the report; and

3) approve the Investment Strategy Statement as set out in Appendix 4 of the report.