Agenda and minutes

The Chair welcomed everyone to the meeting.

Apologies for absence were received from Tracey Adnan, Alison Cannur, and Julie Barker.

Apologies for lateness were received from Paul Bishop.

Cllrs Alev Cazimoglu and Ahmet Oykener were absent from the meeting.

To receive any declarations of interest.

Pauline Kettless declared a non-pecuniary interest as she is in receipt of a LGPS Pension from Enfield.

Pauline Kettless was reappointed Chair of the Local Pension Board

Cllr Chris Joannides was appointed as Vice Chair of the Local Pension Board.

To agree the minutes of the previous meeting held on 13 March 2024.

The minutes of the meeting held on 13 March 2024 were AGREED.

Tim O’Connor (Exchequer Manager Pension) provided an update on current pension issues, developments and performance highlighting the key points from the report.

There has been a welcomed new structure to create balance within new senior officer hires. New wording has been made to the benefit statements. Data cleansing to be done and mortality screening to note any deaths that are not logged on the database.

The Scheme Advisory Board (SAB) issued a short opt out survey which closed on 7 June 2024 amongst local government employers to improve the understanding of LGPS membership and why some people choose to opt out.

There has been investment in resources which will help the dashboard, McCloud which will be a standing item until completion, and valuation for the following year.

ACTION: Tim O’Connor to speak with HR at the Local Government Association on findings from the opt out survey from employees.

The report was NOTED.

The Pension Board are recommended to note the contents of this report and the attached appendix.

Ravi Lakhani (Head of Pension Investments) presented this item and highlighted key points from the report.

The Pension Fund has approximately £1.5b of assets which is built up by employer and employee contributions and that is required to pay benefits in the future. The fund employs a diversified portfolio of assets, including equities, bonds, property and alternatives to achieve its objectives.

The Fund has a paramount duty to seek the best possible return on its investment taking into account a properly considered level of risk. A well governed and well-managed pension fund will be rewarded by good investment performance in the long term. The primary tool for achieving investment returns is Strategic Asset allocation (SAA). PPIC recently reviewed it’s SAA and agreed to a new allocation at the January 2024 meeting of PPIC. The strategic asset allocation is based on the results of the asset-liability modelling exercise, the risk appetite of the PPIC, and the expected returns and risks of the asset classes.

The report was NOTED.

The Pension Board are recommended to note the contents of this report and the attached appendix.

Ravi Lakhani (Head of Pension Investments) presented this item and highlighted key points from the report.

The overall investment performance for the Fund in 2023/24 was 8.8%. This compares to a –5.5% in 2022/23. The 3- and 5-year annualised performance was 4.0% and 5.7% respectively.

Equites was the best performing asset class for the Fund in 2023/24 at 18.2%. There were a few underlying factors that led to this positive performance: - Monetary pauses by the major central banks and increasing expectation of rate cuts. A handful of US technology stocks that have been boosted by the Artificial Intelligence theme, Not only has this driven the performance of the US market, but it also skewed the results for the MSCI World index. Infrastructure assets had a small decease in the year due to valuations decreasing in the light of a rising interest rate environments. Similarly, the high interest rate environment during the year meant that the Fund earned a 6% return on the cash it was holding.

The report was NOTED.

The Pension Board are recommended to note the contents of this report and the attached appendix.

(This item contains exempt information as defined in Paragraph 3 (information relating to the financial or business affairs of any particular person – including the authority holding that information) of Schedule 12A to the Local Government Act 1972, as amended).

Dan Menna (Finance Manager – Pension Investments) presented this item and highlighted key points from the report.

The total investment management expenses for 2023/24 were £7.2m, representing 0.46% of the Fund’s total nets assets as at 31 March 2024. This was a decrease of £1.8m or 0.17% from the previous year, when the investment management expenses were £9.0m (0.63% of the Fund’s net assets as at 31 March 2023). This total reduction in fees was primarily driven by the Fund’s divestment from the Davidson Kempner and Stratus Feeder Hedge fund investments in the final quarter of 2022/23. Although some of these proceeds were reinvested across the portfolio, The bulk of it has been earmarked to cover commitments made to Infrastructure investments which have yet to be called. Whilst these proceeds are held in cash, investments management expenses are lower. When the impact of the hedge fund divestment is excluded, fees for most managers has increased compared to last year – this was to be expected as the value of the underlying investments increased.

Management Fees are split into different categories;

Management Fees: In the context of the LGPS, management fees refer to the charges levied by investment managers for the administration and active management of the fund's assets. These fees are typically calculated as a percentage of the assets under management and cover the costs associated with making investment decisions, executing trades, and providing regular reports on fund performance.

Transaction Fees: Transaction fees within the context of the LGPS and investment management fees are costs associated with the buying and selling of securities within the fund. These fees are important to consider as they can impact the overall return on investment for the fund. There are two types of transaction costs: Explicit costs and Implicit Costs.

Performance Fees: Performance fees are fees paid to investment managers based on the performance of the investments they manage. These fees are designed to incentivise the manager to achieve returns that exceed a predefined benchmark or target.

The part 1 report and part 2 appendix were NOTED.

The Pension Board are recommended to note the contents of this report and the attached appendix.

Ravi Lakhani (Head of Pension Investments) presented this item and highlighted key points from the report.

London CIV Responsible Investment and Stewardship Outcomes report aims to incorporate environmental, social, and governance (ESG) factors into investment decisions. The strategy is aligned with the Fund's investment beliefs and recognises ESG factors as central themes in measuring the sustainability and impact of its investments. The Enfield Pension Fund has approximately 47% of its assets in the London CIV pool.

Paul Bishop advised that he has received queries with regards to Enfield LGPS investment in occupied Palestine territories. Pensions Team to provide a response to address these concerns.

ACTION: Ravi Lakhani (Head of Pension Investments)

The report was NOTED.

The Pension Board are recommended to note the contents of this report and the attached appendix which give details on the LAPFF company engagements for the quarter.

Ravi Lakhani (Head of Pension Investments) highlighted key points from the report.

LAPFF engaged with various companies on different topics including Human Rights, Climate change and Governance.

The highlights from the report were Engagement with banks on climate change, including meetings with HSBC and Barclays; Updates on LAPFF’s continued engagement with Drax Energy; Water Stewardship engagements with UK water companies; Mining and human rights and Human rights risk in the luxury goods sector.

The report was NOTED.

To note the minutes of the last Pension, Policy and Investment Committee held on 20 March 2024.

The minutes of the Pension Policy and Investment Committee meeting held on 20 March 2024 were NOTED.

Alison Cannur is due to retire in August so the Board will need a replacement from the Employer Side.

ACTION: Ravi Lakhani (Head of Pensions Investment)

The Chair gave apologies for the upcoming Board meeting in September so the meeting will be chaired by Cllr Chris Joannides (Vice Chair).

To note the dates of the future meetings:

Wednesday 18 September 2024

Wednesday 04 December 2024

Wednesday 12 March 2025

NOTED the next meeting dates as follows:

18 September 2024

4 December 2024

12 March 2025

To consider passing a resolution under Section 100(A) of the Local Government Act 1972 excluding the press and the public from the meeting for the items listed as part 2 on the agenda on the ground that they involve disclosure of exempt information as defined in those paragraphs of Part 1 of Schedule 12A to the Act (as amended by the Local Government (Access to Information) (Variation) Order 2006).