The Pensions Committee was scheduled to consider a number of reports that provided updates on the financial and administrative performance of the Hackney Pension Fund¹, as well as on the progress of various projects and initiatives. The Committee was also scheduled to consider the Fund's admission policy for small employers².

Hackney Pension Fund’s quarterly performance

The Committee was scheduled to receive a report on the Hackney Pension Fund's performance in the first quarter of 2024. The report covers governance, funding, investment, and pensions administration and communications. The report pack includes an update from the Fund's actuary, Hymans Robertson, on the funding position as at 31 March 2024. The estimated funding level of the fund has increased to 133%, up from 106% at the last valuation date of 31 March 2022. The estimated surplus of the fund has increased to £510m, up from £100m at the last valuation date. This is largely due to the increase in gilt³ yields since the last valuation.

The report also includes an update from the Fund’s investment consultants, Redington, on the investment performance of the Fund in the first quarter of 2024. All of the funds in which the Hackney Pension Fund invests returned positive returns over the quarter except for the Columbia Threadneedle (formerly BMO) Bonds Mandate, which delivered -1.4% and the Columbia Threadneedle Low Carbon Property Fund, which delivered -3.0%. The Low Carbon Property Fund is now in wind-down, with the underlying properties being sold.

Quarter 1 of 2024 saw robust global equity returns mainly off the back of the resilience of the US economy that avoided recession posting better than expected data, tempered slightly by above expectation CPI. This combination has pushed back expectations of Federal Reserve interest rate cuts.

The Committee was scheduled to discuss the Local Authority Pension Fund Forum (LAPFF)⁴’s engagement activity in the first quarter of 2024, which is detailed in the report pack. The LAPFF engaged with several companies on a variety of topics, including climate change, human rights, and corporate governance.

The Committee was also scheduled to discuss the Department for Levelling Up, Housing and Communities’ (DLUHC) recent letter to all council Chief Executives regarding the efficient management of LGPS funds, and to note the Council's response, which was cleared by the Chair and Vice-Chair of the Committee.

Investment strategy

The Committee was scheduled to receive an update on the implementation of the Fund's revised investment strategy, which was agreed in April 2023. The update was scheduled to cover the implementation of the multi-asset credit mandate⁵, changes to the bond mandates, and rebalancing of equities. The Committee was also scheduled to receive an update on the latest position on the development of impact property and nature-based solutions products being developed by the London Collective Investment Vehicle (LCIV) ⁶, which is Hackney Pension Fund’s chosen asset pool.

Small employers admissions policy

The Committee was scheduled to consider a report on a new Small Employers Admissions Policy for the Hackney Pension Fund. The policy was scheduled to be implemented immediately after being approved. The policy sets out the administering authority's approach to admitting small admission bodies, which are defined as new employers with 20 or fewer employees, into the fund on a pass-through basis. Under a pass-through arrangement, the letting authority (the Council or the school) retains the main risks of fluctuations in the employer contribution rate and the risk that the employer's assets may be insufficient to meet the employees' pension benefits at the end of the contract. The default contribution rate for small employers will be the Council’s contribution rate, which is currently 27%. The advantages to the Fund of introducing the pass-through arrangement are a reduction in the governance burden and also the avoidance of exit credits in respect of these employers.

Responsible Investment Working Group update

The Committee was scheduled to receive a verbal update on the work of the Responsible Investment Working Group (RIWG), which is a sub-committee of the Pensions Committee that is responsible for advising the Committee on responsible investment matters. This update included information on plans to recruit a dedicated Responsible Investment Officer.

Other matters

The Committee was scheduled to consider a number of other matters, including:

• a report on the performance of the CTI (formerly BMO) bond mandate
• an updated Exit Credit Policy for employers leaving the Fund, which was agreed at the previous meeting.

The reports pack does not tell us what was actually discussed, or whether any decisions were actually made.