Transcript

REED Good evening, ladies and gentlemen. My name is Norman Marshall. I'm the chair of the Joint Pensions Committee, and I want to welcome everybody who's come along this evening. I particularly want to welcome Aisha Shah and Michael Stone, who we're going to be hearing from a little bit later, and also everybody in the public gallery. It's quite unusual for us to get this many people. When we get on to the agenda item about the Audit Committee meeting, you'll find out exactly why we never normally get anybody here, but this is a very, very serious matter. I don't want to make light of it, and we very much welcome and value your input. I just want to say a few words about the process that we're going to be following so everybody understands how we're going to be running things this evening. There are some procedural matters which we're going to just cover off for a few minutes, and then we're going to get on to the presentation of the petition. Have you decided which one of you wants to go first? Michael will go first, then Aisha will go first. Each of them will have five minutes. That's a number that's enshrined in custom and tradition. The Councillors have five minutes to speak about anything. We have a little traffic light system. There are some lights out there. There will be orange light after four minutes and a red light after five minutes. Soon after that, I'll be hoping that you will stop. There are electronic sanctions that can be taken if it goes on very much longer than that. They don't involve vaporising you but do involve your microphone not working any more. I'm sure we won't come to that. Once they've spoken, then there will be an opportunity for the members of the committee to ask Michael and Aisha questions. Once those are done, I'll be asking you to return to the public gallery. At that point, members of the committee will be asking questions of the officers present who I'll introduce in a second. That's where we stand. I would just like to say that we're not taking questions from the gallery but that's not part of the process. I noticed the request to ask questions but that's not part of the process. I think I speak for everybody here that we are all deeply, deeply affected by events in the Middle East and whatever we can do from where we're sitting to help matters, we would like to. What is possible remains to be seen and we hope to learn more this evening from you. I'm sorry I can't take contributions from the gallery. Moving on, first of all, members of the committee will now call your names in alphabetical order. Would you please switch on your microphone to confirm your attendance? Councillor Caddy. Good evening. Councillor Craigie. Evening. Councillor Crookedake. Good evening. Councillor Dickard. Good evening. Councillor Gasser. Good evening. Councillor Ireland. Councillor Pridham. Good evening. I think Councillor Serra is probably delayed in traffic and will come along later. I don't think we've received apologies from him. We have a number of officers present who will introduce themselves when they address the committee. The item 1 is the minutes of the meeting of the 26th of March 2024. Members, are there any objections to confirming the previous minutes of 26th March as a correct record? No objections. Item 2, Disclosable Pecuniary Interests. I've got to announce that I'm a member of the Palestine Solidarity Campaign, which is relevant to the deputation tonight. Are there any other interests to declare? Councillor Gasser. I'm a member of the scheme because I have a very, very tiny pension pot from when I was a Councillor many years ago. Thank you. So now we move on to the presentation of the petition. We've received the official tally that I've got is 2,360 signatures from ones with friends of Palestine and a deputation request from the group to speak on this item. So I'd like to formally propose to members that we accept that deputation and ask them to speak. Is that agreed? The floor is yours. Thank you. I speak as co-chair of ones with friends of Palestine, representing the now 2,500 adults in the borough who have signed our petition calling on the council to disinvest from companies that invest in Israel. We have particularly strong support among our Muslim residents who, in common with all signatories, look in horror, not only at the unimaginable brutality and cruelty of the actions of the Israeli forces in Gaza, but also feel utter dismay at the failure of UK politicians across the spectrum to condemn what Israel is doing. So what is it doing? Let's hear from the mother of three-month-old Anwar. I was displaced along with my husband and my only son. There was no formula milk due to the Israeli siege, and there was no milk in my breasts due to the lack of nutrition and the prevention of the entry of aid. My son cried all night from hunger. His temperature rose, and he started having convulsions. Four days later, Anwar was among a growing number of children to have died from malnutrition. Defense for Children International reports an incident in which Israeli forces detained around 50 Palestinians, including 12-year-old Karim. I say again, 12-year-old Karim. Israeli soldiers forced them to take off their clothes and bound their hands before forcing them to walk in front of Israeli tanks. Let's hear the words of Karim.They insulted us, slapped me on my face and kicked me in my stomach and waist. I almost died from the beating.13-year-old Ibrahim described his interrogation.They kept telling us they were killers, killers all and unleashed dogs on us. One of the detainees with us was bitten by a dog. We heard him scream in pain as the dog bit him. Israeli forces hit his mother with a rifle, unleashed dogs to bite detainees, insulted them with vile words and threatened them with rape. 13-year-old Shehada told her father,Dad, I saw death with my own eyes. The soldiers were debating in front of me whether to crush me under the tank chains or to let the dogs eat me alive.In the last 48 hours, and here I quote the BBC, an Israeli attack on a school used to shelter displaced Palestinians has killed at least 22 people, including 15 children. Earlier, five children were killed by a drone strike while playing on a street corner in northern Gaza. Graphic images from the scene show the bloodied bodies of what appear to be young teenage boys. One of them looked to be clutching several glass marbles in his hand. The situation in northern Gaza is desperate, the UN says. It has also condemned thelarge number of civilian casualtiesin recent days. I know there will be enough intelligence and compassion in this space tonight for us not to be confronted with the ridiculous accusation that we are defending terrorism. This seems to be the lazy get-out card of every morally redundant naysayer who seeks to oppose our desire for peace. Let us be clear, the daily acts of terrorism in Gaza and beyond are those being perpetrated by the government of Israel. Each additional death deepens not only the heartbreak but the anger, the growing hatred and the inevitable desire for revenge. We march through London every few weeks in part to say to the people of Gaza that the horrors being done unto them are not being done in our name. We want to send them hope, solidarity and love. You tonight have the opportunity to take practical action that will help these people. I hope you will take that opportunity for moral reasons. I say also, though, that companies that invest in Israel are facing mounting global criticism. As such, these companies do not represent the sensible, secure, long-term investments that well-run pension funds require. Therefore, in addition to the moral outrage I hope you all feel, and your recognition that continued investment is unacceptable to many of your electors and your employees, and your recognition that it is utterly incompatible with the Council's policy on ethical investments, continued investments in companies that invest in Israel is also not financially astute. What we need from you tonight is a clear, absolutely unequivocal statement of opposition to the genocide in Gaza, and commitment to divesting funds from companies that invest in Israel. What then happens cannot be done overnight, but it can be done. The London Borough of Waltham Forest, a co-investee in your fund, has already taken strides in this direction, as has the London Borough of Islington. We know it will not be easy. We want to work with you to achieve it. Failure to take this opportunity or to seek to fob us off… Can I just ask you to start wrapping up, please? Yes, last paragraph. Failure to take this opportunity or to seek to fob us off with some half-hearted, mealy-mouthed, trite form of words that does not totally condemn what is happening will be unacceptable to the 2,500 residents who signed our petition, and to a large number of voters who will need to face in 18 months' time. It will, much more importantly, be unacceptable to the children of Gaza, who so very desperately need your help. Thank you. Thank you. Sharpe. Good evening, Committee. Chair, Councillor Marshall, thank you for giving me the opportunity to speak today. I am Aisha Sharpe, Branch Officer of Richmond, Twickenham and Kingston Palestine Solidarity Campaign. The branch formed in the 1990s and has a member and supporter base of 5,000, and now a youth division and collaboration with other groups. We are fast growing in our local community. I sit here confident in the knowledge that I am representing not only local residents who are supporters of Palestine and who want peace and justice for all, but we also have the support of the TUC and its members, the 300,000 supporters of national PSC and the general public. Unions have called on the government to immediately recognise Palestinian statehood, end the arms trade with Israel and demand a permanent ceasefire in the Israel-Gaza conflict. The TUC passed motions calling for the release of all hostages and Palestinian political prisoners, and a renewed focus to advance the strategy of boycotts, divestment and sanctions, and all unions to make themselves apartheid-free zones. Local GMB and Battersea and Wandsworth TUC have also recently passed motions to support us today in our endeavours. It is obscene to continue being complicit in arms sales and profit from the sale of arms when two senior Israeli leaders stand accused of crimes against humanity. But let's not just end it here. Let's go broader. More than 70% of the British people support an immediate ceasefire in Gaza. Among those who voted for the governing Conservative Party in 2019, 67% backed an immediate ceasefire, according to polls released on Friday and commissioned by Medical Aid for Palestine and the Kabul Council for Arab-British Understanding. 86% of Labour voters backed the call. 40% of Conservative voters believed the UK should stop selling weapons. Only 24% opposed it. As for the Labour Party voters, 74% favour the UK halting deals, compared with only 7% who opposed the call. As of June 2024, the State of Palestine is recognised as a sovereign state by 146 of the 193 member states of the United Nations, or just over 75% of all UN members. So my point here is that the support for our demands is growing, not only locally but nationally and globally. Pressure is rising on all institutions to boycott, divest and sanction. This is something that none of us can ignore, and all of us need to play our part in finding solutions to end the oppression and the genocidal intent to erase the race of people and counteract the uncertainty it is creating in the world. The rhetoric of Israel defending itself no longer exists, and the need for divestment grows. For decades, Israel has violated international law, including UN resolutions and ICJ orders. This year alone, it has bombed dozens of UN premises in Gaza, killed hundreds of UN staff, accused UN officials of terrorism and anti-Semitism among others. Now it is attacking peacekeepers in Lebanon. It is a scandal that the deferred wages of local government workers are being invested in companies enabling Israel's grave human rights abuses. Your scheme members who are aware do not want their money being invested in killing innocent civilians. The UK, as a state party to the Genocide Convention, has a legal responsibility to take action to deter and prevent genocide in another state. You providing the money to do that may be seen as being complicit. In a judgment handed down on 29 April 2020 by the local government pension scheme advisory board Supreme Court, the Law Commission and specifically Lord Wilson noted that there is a general acceptance that administration authorities may take non-financial consideration where scheme members would share the concern, at the same time as looking at the financial returns. The hurdle of the Economic Activation and Public Bodies Bill has been removed earlier this year. Just the other day, credit ratings agency Moody's downgraded Israel's investment rating for the second time in the last year. One more downgrade and Israeli bonds will officially be consideredjunkand no longer its investment grade. It's clear to even global financial experts that Israel is a bad investment. Two minutes. Just the last paragraph please. Finally I say to you, the UK, US and Israel were the last to end support for South Africa. Divestment was one of the most effective tactics in ending South African apartheid. What have we learnt from history? History will judge us. Is this what our local community wants to be remembered for? We have a moral and a financial obligation so let's work together to end this madness and we cannot and we will not let public money be used in this way. Thank you. Thank you very much for those very eloquent and impassioned speeches. The strength of your feeling is abundantly clear. I'm now going to ask members to put any questions they want to Michael or Aisha. Sorry, with respect chair, I've been working on this for three months. The council website says the question should come to the whole deputation. I've been working with the clerk of this committee. He was under a mistaken impression. Mr Cairns, I'm very sorry. You're under a mistaken impression. This meeting is not open to comments from the gallery. Whatever impression you may have formed, I'm afraid that's not the case so I must ask you to be silent. Mr Cairns, I must ask you to be silent. I'm afraid if you can't be silent, you will have to leave. I'm very sorry but that's the case. Mr Cairns, I'm afraid you will ask to be leave unless you can. I'm afraid you're mistaken in your assumption and with every respect, we are not following whatever process you've read or thought you've read. I'm afraid I will have to ask you to leave. I'm very sorry about that but please can you be silent. I'm afraid that's not the case. I'm afraid I simply can't allow you to carry on disrupting these proceedings. I respect your point of view but on a procedural matter, you're simply wrong and I will have to ask you to leave. Please, I'm asking you with every respect, please can you sit and listen to the questions and allow the process to follow. Thank you. Members, could you please put your questions to Michael and to Ayesha? I'm going to ask questions directly to the people who have given the deputation because I'd like to hear your feedback. I was particularly interested in what you said about the legal imperatives around Alistair from Israel. The Lord Wilson report, could you expand a little bit more on that please? Sorry, Councillor Dickenham, you need to repeat the question, I couldn't quite hear you. So I was interested in what Ayesha was talking about, the legal imperatives because we haven't heard much about that, so it would be useful to get some feedback on that. So, as I said before, the judgment was handed down in 2020 by the Local Government Pension Scheme Advisory Board that general acceptance that administrative authorities may take non-financial consideration where scheme members share the concern and look at financial returns. So this is in response to the anti-protest and anti-boycott bill that had its second reading and did not pass. The motion did not pass in parliament. Up until that point, councils were reticent in sharing, in divesting and in actually making decisions. Now they have – the path is clear, there is no hurdle in councils actually making decisions to divest. Thank you. Councillor Crook-Daker. Thanks. I'd like to ask Mr Stone, what's your view of us asking central government to consider sanctions prohibiting all funds from holding these assets to sort of create maximum impact? I think if you could persuade the national government to act in this matter, I think that would be absolutely fantastic. I have to say that I don't fancy your chances of doing it, but I wish you every success. I mean, yes, let's ask national government to do this. The point is that in advance of that, it would be a very powerful statement that the London Borough of Wandsworth has decided to disinvest all of its pension fund from Israel, and it has done so because of its outrage at the genocide that is taking place in Gaza. So the two things are not mutually exclusive. I continue to ask you what we've asked you tonight, and I would very much welcome your support in making that appeal to the government. Thank you. Councillor Gasser. Yes, thank you very much for coming and talking to us. I'm interested in, you mentioned about a couple of other councils, Waltham Forest, and I've forgotten which other one. Just I wondered what they've been able to do along the road to responsible investment and what we might be able to learn from them, what has actually been achieved so far? I think the key thing is that what they have done is made a clear commitment that they wish to disinvest in Israel, or disinvest in companies that invest in Israel, and they want to work with their pension fund managers to ensure that that happens. The thing that can happen this very evening is that you can make that statement. Now the practicalities, some of the pension fund arrangements have time constraints. It is not that you would make that commitment this evening and we would be on your doorstep in the morning saying, but you're still investing. It is that you would have given a clear commitment to disinvest at the earliest opportunity and a clear commitment to disinvest because of the horror of what is taking place in Gaza. Obviously, I understand the people from Waltham Forest, or some of the people from Waltham Forest are willing to work with you and cooperate with you and to guide you. Perhaps Aisha can say a little more about that. What they have asked and what the council is committed to is to disclose and publish all current investments in an open and transparent way. They're also making a timeline for divesting from companies complicit in the human rights violations and war crimes. We know this is not an overnight step. It will take time. We know what is involved in that and we're willing to work with you to achieve that as long as we have access to current investments that you have and it aligns with the information that we have. They have also agreed to make a public statement, Waltham Forest Council, on the committee's plans for divesting from war crimes and also to report quarterly on divestment as a standing item on the pension committee until the divestment goals are reached. They have also had somebody from their committee go on to be on the London CIV as a sustainability group and so an officer from the committee has joined that group and will be willing to work with us and with Waltham Forest and yourselves. I think collaboration between councils will be very good and it will give us that power to actually make things happen. Thank you. Could I just say one more thing in response to the same question very briefly? Ayesha has given much more detail of the practicalities. The statement matters too. There is a statement being made outside this building where the flag of Ukraine flies above the town hall. That presumably is looking to tell local residents that you support the citizens of Ukraine which has been invaded by a hostile neighbour. Why is the flag of Palestine not flying above the town hall? What is the difference and can you imagine what a powerful statement it will make to your electors? When word – and I promise you it will reach the citizens of Gaza – when word reached the citizens of Gaza that one of the most high profile local authorities in the country has taken an absolute commitment to disinvest in Israel because of the horror of what it has done. Imagine what it will feel like to the people who saw those children burn in tents over the last 48 hours. Thank you. If there are no further questions I would like to thank you both very, very much for joining us and if you would not mind taking your seat in the public gallery now, thanks to all the committee. Thank you. We appreciate the opportunity. Thank you. Thank you so much. The moment now as we are now moving on to questions from the members of the committee to the officers. And I'd like to start – I'm sorry, I'm now going to ask the officers if you could please remove the gentleman who's continuing to talk after. I've given you several polite requests to stop interrupting this meeting. Could you please ask the gentleman to leave. Can you please – please, those two gentlemen, Mr Cairns and the gentleman in the middle. I'm sorry, we cannot carry on giving you warnings that are not ignored – that are not followed. Genuinely – genuinely, I'm like hands up, I'm completely confused. The deputation is the people that sit there. If you guys were with the deputation, I just don't understand why you weren't sitting with the deputation. Gentlemen, ladies and gentlemen, if you want to continue here, please can I ask you to either sit down or leave, but at this rate, I'm simply going to have to ask the gallery to be clear and then that will be the end of that discussion. You'll have to watch the rest of it on television. So please can you not put us in this position. Your deputation has had ample opportunity to speak and answer questions, so can you please either now take your seat and not interrupt proceedings or leave. Otherwise, I'm going to have to ask the gallery to be cleared with great regret because this has been a very good discussion so far. Thank you. Thank you very much. So now the members are going to ask the officers some questions. I've got one which I'd like to start with, which I think is helpful just to clear, because it just sets out in my mind what some of the constraints that we face are. There are some practical matters here, but I'd like to ask Mr Gelotti, who is our Deputy Director of Finance and runs the pension fund, effectively, could you please outline the difference between the investments that we make through our pension funds and the more usual process of investing in shares in companies? Certainly, Chair. As a pension fund, we invest through individual investment managers and most of those are directed through our pool, which is the London CIV. We don't actually own underlying stocks, so all of our assets are indirectly invested within that. By that, I mean that if we had, for example, a £100 million investment in a global equity manager which had 20 equal weighted investments, i.e. £5 million of each, if he wanted to exit one particular share, i.e. £5 million, we're not in a position to do that because we don't own those underlying £5 million worth. We own the £100 million, so in order to alter and change that type of investment, we would need to exit the full £100 million. Historically, in the past, prior to pooling, when you had segregated mandates and you owned the underlying shares, you were able to make those decisions, but in pooled investments, you don't have that ability. To address this issue, can I ask you the same question I asked previously? What would your view be as asking central government to reconsider sanctions prohibiting all funds from holding these assets, creating maximum impact, but also getting around this problem of having to sell a lot to divest what is a relatively small amount? As an officer, I can't give a political comment. The clearest I can say on that is to explain the difference between Russia and another sovereign entity. With Russia, the government has made particular sanctions in relation to how we invest and what companies can or cannot be invested. That means that the underlying investment managers cannot invest in them. It is not a decision for any one individual or any one individual fund. That is the strength in having a government lay down those sanctions and lay down that in legislation, rather than individual funds making decisions in their own right. I am also interested in what other local authorities are doing in London. Should we be collaborating across London? Would that be helpful to us? There are 32 London funds operating in different ways. They will have differing views and profiles in relation to their investment strategies. I have had wider discussions. In relation to what they are doing, it is not for me to ask to respond as to what has been said today and necessarily what they are able to do and what they will be doing, what advice they have been given, so I am not going to answer directly in relation to that. What I can say is London as a whole are talking to one another. This isn't something that is in isolation for this committee alone. Petitions have been put in front of several funds. All of those funds have made different decisions, but what we are doing is we are working collaboratively. As you have heard, not just in this committee but in previous meetings, we invest through a collective investment vehicle. We don't invest directly on our own. The investment regulations have been very clear in the direction that we need to do, what we are obliged to do. It may well be grey as to exactly what timelines we need to work to before all of our funds are pooled, but that is what both the previous government and this government have sent a clear message. We need to pool our investments. That means any decisions that we are able to make on a pragmatic and a long-term basis will need to be through that pool. Could you please outline what an understanding of a path to responsible investment might look like? What are the barriers and obstacles if we are to go in this direction as a local pension fund? Your role here, your quasi trustees, the pension fund is not just for the current individuals. We roughly have just over 3,000 active members, but there are about 40,000 members all in all, when you take into account those that are currently working, those that have worked previously and are no longer in the pension scheme, and those who are drawing down on their pension. There are a number of employers in the scheme, Richmond and Wandsworth are not the only employers, so you can see there is a very large range of stakeholders whose interests that you as trustees should be looking into. As was mentioned earlier in the deposition, the committee are able to make non-financial decisions. However, and this is the however, it has to be under very clear and proper guidelines, procedures, and they are set out in all of the guidances that have been issued, both by the Schema Advisory Board and by others and set down in the regulations as well. That is that any non-financial decision can only be made subject to having received proper advice, that following that advice you can understand that the impact of such decision does not create any significant risk, and that you have the belief that your members will support the actions that you are taking. So there is very clear pathway that you need to go down in order if you wish to make any non-financial decisions. Have we ever balloted our members in that or gone out to consultation with our members on something? Is there any precedent for that? Have we done that before? We have not made any non-financial decisions. The decisions that have been made here, even when they are taking other issues and other matters into account, have been evidence that they are in the financial interest of the fund to do that. Councillor Ireland. Thank you, Mr Giuliani. Just following on from that, how does this situation differ from the challenges we faced when we took the action on climate change? The climate change is fundamentally different in the sense of where we are currently today. When we went out to look towards that pathway, substantial training was provided to members to understand the implications of making such decisions. We actually sought proper advice from MRSA, our investment consultants, who did a lot of detailed analysis, looking at the impact the portfolio would have had if temperatures were to rise on a two-three-four degree basis. That analysis was presented back to this committee. And rather than actually be a detrimental impact by making those changes, it showed it was positive, it was in our financial interest to do so, and if we were not to do so, then it would have a detrimental impact. That showed that it was not a non-financial decision that when you were making that call, it was in our financial interest. Even with that, we still took it back to the local pensions board to show them the evidence that we had in front of us and why those actions were being taken. I would also say that in that matter, as we invest through the pool, there are investment opportunities today that we are able to do, to invest with those tilts. Our passive investments that we moved to have a targeted tilt, and that therefore was options that were available to us. We have got assets such as our energy transition infrastructure mandates, our renewable infrastructure mandates, that are already in existence that actually target those agendas. With something of a disinvestment approach or others different to something like this particular petition, the opportunities out there for investments as of today do not exist in the same way that they do for doing our net zero climate change target, which is a 2050 target. It is a transition approach, which is why it is easier to implement, and was evidence that it was in our financial interest to do so. Councillor Caddy. Thank you very much. Do I take it that should we take into consideration any non-financial factors such as humanitarian issues, that it would have to be looking at generic humanitarian issues rather than any specific conflict? Members can make the targeted decisions if they choose, but I go back to the idea of it has to be subject to three matters. Proper advice, the impact it would have, and whether members would support it. You are able to make any decision that you wish. However, if you are looking at it on a more specific, more narrow window, it would be more challenging to see how that could be kept long-term and sustainable long-term as the world changes, as things move. A more general approach may well enable you, again I go back to having received proper advice, have something that managers could have investments that could be kept long-term, rather than it being something that would need to be changed more frequently. But you would only know the outcome of that, if and when you receive proper advice accordingly. Thank you very much. In September of this year, the Scheme Advisory Board released a statement where they cite a Supreme Court judgement which, as part of it says, that it is not appropriate for political preferences, whether local or national, to take precedence over what is required under fiduciary duty. Now, if we were to go forward with something akin to what is being proposed tonight, is it just about making sure that the members are comfortable with that process? Is that the only thing that we would need to do in order to comply with that? No, you would need to get advice to understand what the impact on any decision that you made would have, and that you would need to be able to demonstrate that any decisions that you made were not going to have a significant impact on the financial position of the fund. If we were to receive advice, hypothetically, which said that it would have a significant impact on the fund, and we were to nevertheless choose to divest, that would be against that judgement. Is that correct? It would be against guidance. I am not a lawyer, and I would want to get legal opinion if you wish to go down that pathway. It was just to say that, presumably, as well as significant financial detriment, or no significant financial detriment, it would also have to have the support of the scheme beneficiaries one way or the other. Correct. Like I mentioned, I think it was either in this answer or a previous answer, there were approximately 40,000 scheme members, and there are numerous employers. So if we did not satisfy ourselves that that was the case, then we would be in breach of our fiduciary duty? Again, if you wish to make that decision, I would defer to legal to get legal opinion on that. But I think it is very clear in all the guidance, and not just from the scheme advisory board, but back in 2016, when the statutory guidance on the investment regulations for which this is outlined, were very, very clear. That says that yes, you can make these decisions, subject to. That subject to is key, and there are three things, not one that you only need to do one of the three. You need to fulfil all three aspects in order to make this a compliant approach. But like many things, unless they are tested in law, I cannot sit here and say exactly what the implications will be. Councillor Dickerton. I think a lot of people will be watching this online, because it has been publicised. So to put it into layman's terms, we have discussed this at length. We don't own shares. So the shares that get raised with us, we don't actually own those shares. So we can't make a decision to sell those shares, because our funds are pooled into a collective fund with lots of other councils. So we wouldn't even own a share within that fund. We would own a proportion of the shares. And then we allocate the selling and buying of those stocks and shares, which could be happening within seconds or minutes, based on the decisions of those fund managers. So when I ask my question about the pathway, in your professional opinion, what does that pathway look like, if that is the framework through which local government pensions work? Is it that you have a chat with the fund managers? Is it that you have a chat with the sieve? Like what is the best route through which we would come up with a pathway? So there are two different styles and two different approaches. You have got passive mandates, and you have got active. Passive is more challenging, because they invest against the whole element or the indices that you wish to do so. But you could, those indices could if they wanted, set up a separate sleeve that would exclude certain individual stocks or geographical areas or sectors that are out there. We have some tilts already, like the Future World investment. That is a tilt, it is passive, but it is tilted towards more environmentally friendly approaches. But we are not a fund of one. Setting up a fund of one would be very, very expensive. What you need to be able to do is come to some common consensus across numerous investors to make it economically viable for funds to set something up. And that is what exists with cluster munitions, for instance. So I remember when I first came on this committee, I learned that there are certain arms and munitions that we have always had a kind of ethical red line on. So is that what you are talking about? That we would have to introduce a new set of normative frameworks that are similar to the ones on cluster munitions? Is that...? Broadly, yes. I mean, the Future World fund, I think, excludes those. And if you look at what the London CIF would do, that is the aspect of where it would be. It would be broadening their definition of humanitarian aims and whether or not you would have one fund or several, because you have got 32 London funds. And this is not just a London issue, this is an LGPS issue with the 80 plus and a much more global approach. The funds and what really achieves real outcomes is engagement, whether it be engagement on a fund level, whether it be engagement on a local independent company. When you own shares and you sell them, they don't disappear. They are still there. And so to get the approach and the understanding around how things are to do a proper genuine pathway, it is trying to work together, have a common goal, common consensus, collaboratively, because that won't mean that you have just got the £3 billion of Wandsworth. You have got a much more bigger weight, which makes it much more financially attractive for investment managers to set up something that is in line with a more general collaborative approach. If there are no more questions, thank you all for contributing. Thank you for coming along, members in the gallery, visitors in the gallery. I do want to reiterate that we are committed to a responsible investment policy. We genuinely want to pursue this where we can. You have heard, for example, how we sought to align our pension fund with the goal of achieving net zero, which did come at a financial cost, and we changed the weighting of our investments accordingly. That has been successful, but it took several years. That was a much less complex issue than the one that has been brought to the committee today. It really is very technically and legally complicated for us to align our policy with what is being asked. What we do want to do is evaluate our options. What I would like to propose to the committee is that we ask the officers to go away and evaluate all our options and assign some risks and possibilities of success to each of those options, and bring them back to a future meeting, hopefully not too long from now, so that we have a full understanding of the options that are actually available to us, that we can then proceed with. I think that is absolutely part of the remit of considering what the different options are available to us. We cannot realistically do this by ourselves and have the impact that we would like to, but working with central government, working with other London councils has to be part of the way forward. The minutes of the local pension board, item number five. I would like to ask Mr Gelotti to introduce this. I think it is more there for— Mr Gelotti I hope you have all had a chance to have a look at the minutes of the local pension board. Can I just ask you to note that report for information? Thank you. I think we have Ben from EY to be able to present, and I have also got Coral Baxter who leads on our accounts, so if there are any technical questions on the accounts, don't be surprised if I defer it over to her. I will let EY present and introduce unless Coral wanted to say anything in particular first. I will take the report as read, but I will draw a few points. This is a draft audit results report on the 23/24 pension fund audit. It is an audit that is absolutely on track and is actually substantially complete, so in a very positive place. Huge thanks to management and all involved behind the scenes in helping us get to this positive position. On page five of the report I noted at the time of writing a number of outstanding items that were still being concluded. They have all moved in the right direction since writing this report, so the internal quality reviews piece on our side continues to move in the right direction and nothing significant has come out of that. There is a couple of technical bits and pieces that are just kind of getting over the line, but again there is nothing I feel I need to bring to your attention around any of that. I think the thing you will probably be quite interested in is just the how do you now get to the point where you sign these accounts and you will be aware that from previous conversations the 22/23 accounts are also at the moment unsigned for the pension fund. That is related to those historic backlog issues across the wider local authority sector, and as you will know the ones with borough council 22/23 accounts are in the process of navigating their way towards a signing, but that will be a disclaimed audit opinion. There was quite a momentous moment on the 30th of September where the key legislation that needed to work its way through government was passed to enable us to enact a disclaim opinion, so that will allow the 22/23 financial statements for the council to be signed in that way, that will then allow us to get on with the work of actually signing the 22/23 and the 23/24 accounts by the relative backstop dates that were brought in by that legislation. So hopefully that makes sense to the committee because that is something we have been talking about for a little while, but the key takeaway here is the piece of legislation that we needed from government to get these audits finally back on track and get back into the sort of typical way of doing audits in a typical timeframe has now passed, so we are just working through the technical pieces around that. But for you as a pension fund committee I would reiterate for both years that we are talking about here you are having a clean unqualified audit opinion, it is that link through to the council that is the tricky bit here and we have not yet got any ability to disentangle those two things, so your accounts continue to sit in the council accounts, but we have got that key piece of legislation now, so in terms of next steps there will be a finalised 22/23 final top-up procedures just to get that work up to date, there are some final inquiries that we do right up until the date of signing and then we will be able to sign that set of accounts we expect either later this month or into November. We will then be able to issue a final version of this report that you see today that just closes down any outstanding procedures but also moves to the audit opinion stage and again we absolutely are able to do that before the backstop date of 28 February. That will mean that you have got a 22/23 and a 23/24 set of accounts signed and we move into 24/25 planning in what is a much more normalised timetable and what you will have seen in previous years. Appreciate quite techy and it is a sort of catch up of things, but the key takeaways are clean audit work across both years for the pension fund and ability now through that legislation to be able to actually sign the documents because of that link is through to the council. The other things I would bring to your attention in terms of the work that we have done is there is no significant audit differences or errors that we have identified through the work today, we continue to be independent as your external auditors, I think that is important to note for the minutes. The work that we have done around particularly level 3 and level 2 assets is quite judgemental and quite tricky work, so really encouraged I think to see management assumptions and work behind that that we are really comfortable with including our specialists who look at this stuff across the sector and absolutely are comfortable with all of the conclusions, assumptions and methodologies you have come to arrive at those asset valuations. I will pause there and take the rest of the reporters read, but I am of course happy to take questions. Councillor Caddy. Thanks very much, it was just on page 5 of your report, I wondered what you were waiting for from the monitoring officer, whether you got it and what that issue was. That is a relatively standard enquiries letter that we send to essentially ask the monitoring officer if there is any sort of information they feel we should be aware of as external auditors, so it asks a sort of standard set of questions. As of this morning we hadn't yet received that letter, so I think we are still waiting on that, but Coral may tell me it has come in the last 24 hours. I am slightly surprised because it sounds like that would be the kind of straightforward thing that we would be able to get to you fairly rapidly without having to have it in a report like this, so I don't know if we can take that away and investigate it, why that is so delayed. Thanks. I will note that point and discuss that with Mr Gelotti. If there are no further comments, then Councillor Crook-Dake. Thanks. I just noticed in terms of your level 3 investments, you did a sort of range test of plus or minus 15%. I just wondered why you picked 15%. It didn't seem to me. That will largely come down to the materiality level we set. There is a materiality methodology that we follow that is quite standardised across types of organisations and pension funds will have a certain percentage of assets that we will use as our materiality level. We can scope that slightly differently depending on the level of risk and error in an organisation in previous years, so we might make it lower if we think there is a higher risk or higher if we think not, so there is a scale of materiality level that we are allowed to go down to, and that then drives a sort of acceptable window that we will use to drive the methodology around that, but that is quite a specialist-led set of procedures that are quite routine across our methodology. Just some follow-up on that. If we invested much more in unlisted investments, that percentage could rise quite considerably? It could do. The way in which we will look at the split between level 2 and level 3, for example, is level 3 are non-observable in terms of the valuation, so they are trickier to value. That might mean that we go down a more cautious route in testing those assets if the shift in terms of level 2 to level 3 proportions change significantly, because there is a sort of inherent risk in that categorisation that is higher than if it were a level 2 or certainly a level 1 where the valuation is more simplistic. Thanks. I just want you to check the funding levels. I note that a couple of places you said the funding level had been going up, so 2019 I think it was 105%, 2022 116%, and then on page 825, if you just do the calculation, it seems now to be about 136%. Is that correct? I don't really want me to answer that one on the funding levels. The last valuation that had, I think, did come in at the 116, that was after we took -- we have an asset shock reserve, so I haven't got the exact numbers right in front of me, so the slight nuance that we do here is that we put 10% of the assets into an asset shock reserve, so that if there was a black swan moment that you have that sort of buffer, and where that came beneficial really was during COVID, where there was those big drops, and so some funds might have been having to review and have a look at what would happen, and bearing in mind we're coming into evaluation. This is where that sort of thing would really, really be prudent, because what you don't want to have is the setting of valuation at a time where there's peaks and troughs, and especially the trough, so yes, I know it's a very long-winded way of saying our funding levels are not quite reduced in the same way as they might be for other funds, because we have that buffer. If there are no more questions, then I'd like to thank you very much, Ben, and we need to, as a committee, note the draft report and the audit, and approve the published statement of the pension funds accounts, and authorize me to sign the pension fund accounts and letter of representation once the outstanding audit work is completed. Are you all content? Thank you very much. Item 7, pension fund annual report. Mr Cholossi. Okay, thank you. So much of what you see in this annual review is stuff that you would already have seen before during the course of the year. It outlines how we've delivered on performance, whether it be investments, and also in what our administrative teams have been able to deliver on their key targets, and it also sets out the funds accounts as well. It is very long, and I don't intend to really go into the detail other than to throw it open to questions from yourselves, noting that I might defer to Coral if it's for some of the accounting terms, and I've got Martin Doyle, who is the assistant director for the pension shared service, who should be online. If there are any specific questions in relation to his team and how they've operated in regards to the performance of dealing with scheme members. Councillor Cryptane. Thanks. I suppose I've only got one point, and it actually harps back, I think, to the funding level, which I just mentioned previously. So on page 173 at the bottom, when you're talking about the overall position, and you say on balance, we estimate that the funding position is slightly weaker when compared on a consistent basis to 31 March 2022, well, given the details in the accounts and those calculations that we can make on page 85, I think that referred to earlier, it doesn't seem to be in a weaker position. And I just wondered why you felt the need to put that in. Going back to page 85, the table you're looking at in the accounts on page 85 is actually on a different basis. So that's the IAS 19 valuation, which is an incredibly techie way of looking at it, but it ignores all the assumptions that the actuary comes up in the triennial valuation that are specific to our fund, and it uses the assumptions that are required in the accounting standard, so it's less useful. It goes in the accounts because it makes figures comparable across all pension funds everywhere, and it's an international reporting standard, so it is literally everywhere, but it's not as specific to the fund, and the actuary's statement that you're looking at in the annual report is specific to the fund, and I believe it takes the March 22 valuation and rolls it forward. So in terms of the cash flows of the fund, the actuary statement is probably the one to focus on more, but it is on the actuarial, triennial valuation basis and not on the same basis as the IAS 19 one. It is confusing to have two different valuation bases used in the statement of accounts, but we're required to report on the international standard as well as what our actuary has assessed, and that's why you're getting differences, because we're required to use different assumptions in some of the notes. Sorry, that's quite technical. Is that clear? That's fantastic. Can you just point me then to where the relevant value is that I should have used to do the calculation in these two documents? I think it will be in the table just after or just before off the top of my head. Sorry, I'm on the upper page in the accounts now. So we do put the triennial review is in there, in the note before on page 83, and that is the figures that you're used to seeing from the actuary in the triennial valuation. There won't be figures that match the actuary statement in the annual report, because that's new for the annual report, but in the accounts we published the last triennial valuation, which is by its nature slightly out of date at this point, and then the required accounting basis. So if you're looking for an updated triennial, that will be the actuary's statement on page ... I'm sorry, the page you were looking at in the annual report. Page 173, I think you said. So that's the actuary's estimate without doing the detailed work of what the triennial valuation would be if we did it today, I think. So that value on 173 is the value. I mean, valuation levels, I should say, really, when we set them, it's over every three years. We're about to enter into the next one when we set our contribution rates. They're not a science. I really would not get significantly bogged down with looking at the interim and intermediate funding levels. For us, the biggest challenge that we face is cash flow. We're a cash flow negative fund, and therefore, our investments are geared up to ensure that we try to be a little bit more prudent in our approach when we're looking at our investments to try to maintain that funding level. But again, any concerns that you have, we've got that 10% buffer. Secondly, we are one of the most well-funded schemes in the country, so funding level is not a key issue for us. We're quite fortunate in the position that we've had. We've had very much of a growth approach. I think when we're talking about growth and we look at the performance paper later on, when we come around to that agenda, asset allocation review, we might want to think about changing some of those styles going forward because of the position we are in our funding level and not to expose ourselves to as much risk, which might potentially be detrimental to that situation. Thank you, Mr Gilotti. Is that a question, Councillor? I read somewhere that our equities are not performing as well as we'd like, and we searched on it really quickly in the training. I didn't understand the response, so this may not be the right time to ask, but can I at some time ask about the equities? Yes, I think that's on the next paper. That's on the agenda I made when we talk about the performance of the underlying managers. Can I just ask the committee if you are happy to approve the publication of this report? Thank you very much indeed. We're now on to another 23 minutes before we need to break for the reserve matters. We're on to the quarterly investment performance report, item 8. Again, Mr Gilotti, if you could introduce this report. Yes, this is a standard item that you see at each cycle. This obviously details the overall performance of the fund and also that of the underlying managers. Overall, this quarter, the fund is not delivering where ideally we would like it to be. Longer term, we have actually had some good general performance because if you look in paragraph 3, the one-year performance to date, the ones the fund has achieved a 12.8% return against the local authority average of 11.1. That would imply that we are doing extremely well, but if you then compare it to how well we should have delivered, if our fund managers were meeting their benchmark allocations, it would be 15%. If we really want to get into the granular details, the strategies that we are coming up with certainly have been the right ones when compared to our peer group, but some of the managers that we have through the London CIF have not necessarily met the levels which we would expect them to do, had they met their customised benchmark. I will leave it as that. I think one of the things that just jumps out at this for me is the difference between the passive and the active mandates. As Mr Gelotti has explained to me, there is actually a 30 basis point difference, i.3 of a percent in terms of the costs that the active mandates, which are being run by highly paid fund managers versus the passive mandates, which are being run by AI, largely, so it's more expensive. That amounts to £30,000 a year in costs just right there, and if there is a difference in performance as well on top of that in bad years, then we would have been in this last year a lot better off if we had been in passive mandates, if I have understood correctly. I just wanted to ask Mr Gelotti to clarify what the officer's stance is on the difference between passive and active and how we might go forwards to take more advantage of a passive stance. This will be a decision for what members will want to consider. It's part of a risk appetite. Clearly, with a passive, you just follow the benchmark. You're not taking any additional risk, so in theory, and I say in theory because there can be some minor tracking errors, if you invest in a global equity passive mandate, the return that you should get would be that of the benchmark, whereas if you take an active approach, you're hoping that the highly skilled individuals who we are paying substantial sums of money for will rather than have to invest in the weighted average of a lower performing stock, will actually invest more in those that they think will actually outperform. Historically, active management has delivered well for the fund. Part of the reason we are in the positive funding level position is that we have actually had good excess returns through those managers. In more recent times, that has not been the case. They have not been delivering. That could be for several reasons. That could be linked to, A, the quality and the skill set of the individuals and managers in their skills to pick underlying shares, but it could also be the style bias of any particular approach that we make, whether it's value, whether it's growth, whether or not it's something slightly different. We have had responsible investments. We've had ESG approaches and tilts towards our managers. Those funds have not been delivered as well as those that don't have some of that style. RBC, which I think is the sustainable equity manager, you'll see in there as well, looking at their performance. That's the range of things. When we come around to doing our asset allocation review, which will come next year, what are the considerations that you would need to consider if you wish to continue with an active approach or switch to a passive? Councillor Dickerton. Yes. Just on the ESG question, because the passive funds are linked to the benchmarking, you're saying that there's, in terms of their portfolios, they're just much more tied to non-ESG-based market trends, right? Is it that our current policy means that in order to meet our ESG requirements, we have a good spread because we still manage to compare ourselves well to other councils? If we move more towards passive, would that go against our long-term strategy in terms of our divestment? Not necessarily, but the investment we have is through the future world mandate. Sorry? It's in line with our strategy anyway? Yes. Okay. I think, just to clarify, passive simply means you take an index, and that index can be as narrow or as broad as you like. You can have a world index fund that just covers all listed equities across the world and try to mimic that, or you can have a very ethical North American fund, but you just decide which of the companies in that, and then you don't make any investment decisions, you just track that. It's extremely tailorable. It's simply whether or not you're paying somebody to make decisions as to whether Nestle is going to do better than Unilever this year and invest accordingly, or a computer program that's just going to say you've got 100 shares, you can invest in trying to mimic the performance of these 1,000 shares. It's slightly terrifying. It's fairly clear that the AI is performing a lot better than real people. Is that the norm that we're seeing across most of the ... Councillor Craig, you've got a professional point of view on this. Well, yeah, I think as Mr. English, you might like to chime in in a second. I think for some context, to keep it non-technical language, the dumber your money's been invested for the last two or three years, the better it's done. If you've just had market cap weighted, you've invested in the biggest companies, Apple, Nvidia, they've just gotten bigger and bigger and bigger. Almost all active managers take a arguably lower risk approach than that and don't overweight. At the moment, if you put a global equity tracker onto the books, you'll end up holding something like 6% or 7% alone in Apple, which actually is arguably outside of normal risk tolerance because you've got such a concentration in North American technology stocks. Active managers have actually been arguably lower risk than some of the passive stuff is now because it's so overweight North American tech. Unfortunately, that has penalised performance against benchmarks that are largely passive. It's more the benchmark's gone whoosh than our fund managers have gone badly, though Bailey Gifford has had a toy with time, to be honest. They have done just badly. That's the big seven that Mercer mentioned in the meeting before, the seven big tech companies that are basically charging the market. Okay, understood. Councillor Caddy. But presumably, it's not just a choice between active or passive. We could change the active managers. That's another option. Or not because we're in the London SIV. You answered the question for me. There are different managers on the SIV. Is non-performance a way of getting out of it? Are we able to say,Well, we're unhappy with the performance. Therefore, we want to choose someone else"? We're not alone in trying to say to the SIV that we need to engage with those managers. Active managers that are on the platform are still highly rated by not only the SIV, but by also our investment consultant. Tony, you want to pass a comment necessarily on some of the ones that we've got on, like Bailey Gifford, for example. Thank you, officer. There's probably a limit to what I can say in the public meeting on Mercer's ratings, but just some comments I'd make on active management more broadly. Effectively, all investors in aggregate defines the market. Your starting point should be that actually investors in aggregate will return the market return, i.e., active management is effectively a zero-sum game, you could argue. Really, the question is, do you think you've identified a manager who can outperform other investors? For every stock that you buy that wins, the person you bought off is lost, effectively, so it's that they offset. That's one of the questions you need to ask. Or is it a market that you think there's some participants in that market who aren't actually seeking profit? Some people would argue some central banks, for example, might create opportunities in currencies, but effectively, this comes out of investment beliefs. It may be something to consider for the committee to actually review their investment beliefs. The only other point I'd say, just generically, is, of course, some of your assets you cannot manage passively. Your property, your infrastructure, you can't manage those assets passively. Private debt, you can't manage passively. This is more we're talking about the equity, the listed assets, the equities and the bonds. The other thing I'd caution is that actually, whilst we say passive, passive used to mean a buy and hold strategy, but particularly as people look into embed climate transition objectives, net zero objectives, where you've actually got target decarbonization, that means the benchmark actually has to turn over to meet those objectives, so you're actually selecting what I would define as a quantitative investment strategy. It's not actually necessarily as simple as you might think. Passive used to be something as simple to choose, low cost. It's definitely still low cost, passive much more low cost, but it's not as simple perhaps to choose because effectively, you've got to choose a quantitative process that meets your objectives, which will be investment objectives, climate objectives, ESG objectives, et cetera. I think to summarize, we do need to keep an eye on this. Obviously, our officers and our advisors are doing exactly that. We are deliberately not an agile fund. We don't hop in and out of different investment strategies. We have quite a slow process of when we change investment allocations, and that's coming up in a year's time. This is not something to act on today, and I don't think it would be right for us to be switching simply on one quarter's results, but we are going to be keeping an eye on this. With the Committee's approval, I'd just like to ask the officers to continue to report back to us on this and to continue to advise us, but to feed this into the next allocation review, which will be coming up in…? The exact date, I can't say, but it follows the Tranale valuation, which will be at the end of the 31st of March 2025. Once we've got the results, we will then engage Mercer to work with us on it. It will be during the course of the next financial year. Mr. Giuliani, I note that two infrastructure funds, Octopus and Sandbook, recently on, are selected. When are they going to have deployed the capital we've given, so we'll start seeing the investment come back on that? Some of it's already deployed. As you will be aware, the investment period for these types of funds are quite long, and it would be even longer for Octopus when we were the cornerstone investor. When we invested, we were the only one. We had put 40 million in, so they would not have been looking to deploy all of that. Otherwise, it would be a very highly concentrated portfolio. The investment periods for Sandbrook has certainly expired. They still are looking to raise more capital for Octopus, so the Octopus fund will take still quite a while longer before they'll be deployed. Sandbrook, I would hope, will be ramping up now that they've got the full amount of money that they require. But some of our private debt funds were still deploying. That sort of period is not unusual for it to be three to four years before you can actually have all your money deployed. Just a couple of technical things that we are asked to note. Firstly, I think we've noted the investment performance, but we also need to note that the Global Focus Fund is above 15% of the fund, and cash is also above the higher benchmark threshold. But I believe those are not matters of concern to the officers. Particularly, I think in the other paper, when we're given an update on bonds, et cetera, explaining some of the things that we're doing to rebalance those sort of issues. But clearly, when we are looking at what we do with our equity portfolio next year, the overweight with the Global Focus Fund will be something that we would want to look at. And finally, will the committee be amenable for Mr Gelotti to circulate some ideas as to which managers we'd like to attend the next meeting? And we'll pass those around and just get a feedback from the committee as to who you'd like to see, rather than debating that this evening. Has anybody got a strong view on a particular manager they'd like to mention now, or can we leave that to a later point? Good. Well, if we're happy with all that, then let's move on to Item 9, General Matters, including training. Okay. If I take this in segments, really, because obviously there are sort of discrete items, and then if members have any particular questions on it, I'll either be myself or I'll direct it to other individuals to answer. So first thing is in relation to the polling and our bonds. I think as we've mentioned here before, the direction that we've been obliged to going is to put more of our liquid assets into the pool. And this is what we've brought to members, and the SIV come and present was the buy and hold all maturities mandate for bonds. We're pleased to say that that now has been completed. When we came, we said that we would be looking to exit all three of our existing managers, subject to due diligence on the transition and costs. But what we found was to move the money in legal and general, which is in the passive approach, A, costs would go up, and B, the transactional costs were quite large, really, for moving £41 million worth of assets. So in consultation with the Chair and the Vice Chair, we elected not to move them. They are pool compliant because they are overseen by the pools, so those figures still can be included in those numbers that we report. And secondly, we were slightly underweight, so we've used some of the cash in order to top up that investment. So before I move on to the next section, is there any questions on that part? Nope? Okay. So next, we can talk about one of the property managers. Again, it's been here to this committee, both in public and in private session, about some of the challenges that we've got. As has been previously mentioned, the fund is at a stage, because of some redemptions, that it would have been wound up. We didn't think it was in our financial interest for that to happen, so you'd ask us to go away and try to see if we could find an alternative, including somebody else procuring those assets, and that has been done. The first vote has taken place, and the results were reported back to this committee. We're now coming into the final sort of stages, with the technical aspects being conducted between Naveen and the preferred manager. That is now coming to fruition. In addition to the work that's gone on in relation to the two managers, I've been working alongside co-investors. You'll note that the best offer was 99 per cent of NAV, so to try and compensate for a 1 per cent loss, which is still much better than it would have been had we had to exit, I've negotiated an arrangement where we will be a strategic partner of another pool. That would enable us to get preferential fee rates, but all of this is still subject to final due diligence, at which point, assuming that all of the legals and the go-ahead is committed between the two funds, we will engage with MRSA just to get their view on the fund. They know the fund well, but as with all of these cases, until we put the request in and we get the formal report from them, we won't obviously sign on the dotted line. You delegated to myself to do the previous negotiations, and I think one of the recommendations on this paper is that I am delegated to obviously push ahead with this if it's in our financial interest to do so, but if there's any questions, I'll happily take them. I'll be very brief, bearing in mind we've only got three minutes before we're supposed to go into closed session. GAD, which is basically the national approach to auditing, so it's the global standards for which they're looking at it. When they do their section 13 report, we talked about assumptions, we talked about funding levels. All of those are based on our own individual actuary, determining and setting those parameters. When GAD getting involved in it, they use a common set and that is what was carried out in their review. They also score the fund and if there are any issues, we'll raise red flags. All of the reports that we got from them came out as though we were green and obviously showing that we are extremely well funded in relation to that. The details of the report and the review is attached as appendix A. I don't understand why the GAD figures are different to our own figures. Are they looking at different things? They use different assumptions, so they will have different discount rates, they'll have different mortality rates, they'll have different investment return rates. In reality, we don't really use it because they're not bespoke to our fund, they don't really show anything. If they highlighted some red flags, then I would be potentially concerned, depending upon what was being said. You'll see from the report, we got green throughout. Just going back, I suppose, to this point that we are actually very, very well funded. I think that was confirmed, wasn't it, in, as you say, appendix A. That matches the percentages that we talked about earlier. These are actuarial values, aren't they, including all the actuarial assumptions that you spoke about earlier on. They are, but they're not ours. The assumptions that are used are not set by us. They're set by a common set, whereas our actuary will set them based on our investment strategy and set them based on our underlying scheme membership when looking at the liabilities. They are common. You'll note that the funding level using the GADS scheme shows us even another number, and that's why I don't like using numbers because it's another one to confuse you. That's saying 138.7, but using the same assumptions that what they're saying is over the three-year period, using their levels, it's increased by six and a half percent. That's the only thing I'll show you. That shows our funding levels, using those on a common thread, is going up in line in a positive way. Sometimes the reasons why people sometimes like them is it stops, shall we say, certain funds or actuaries using certain techniques to either inflate or deflate any particular level. Any further questions? If we then move on to the approval for the discretion's policy, I will be, again, very, very brief on this to say that I've got Martin on line if there's any particular questions, but there are no real changes to it. This is really just tidying up because job titles have changed. Directors are now executive directors, assistant directors are now directors, so it was making sure that we just reflected those changes. I think one post in those rounds has been deleted, so it's finding an alternative. There's nothing of substance. It purely is titles and who is accountable and responsible. In the last couple of points before I'll let Coral provide a verbal update, the pensions administration IT system is going to be discussed in more detail in the private session, but namely your notes that we are recommending to renew the licenses to Haywoods for eight years. Then finally, we've talked in detail already earlier with regards to the petition, the scheme advisory guidance on fiduciary duty in dealing with lobbying. I don't intend to talk any more on that. You've got the appendix there and we've discussed in detail the implications of what you can and what you can't do. I will pass over to Coral to give a very brief update on member training. I'll just say thank you to the Councillors who have given me the evidence that they have completed the training so far. Just a reminder that you now need to complete a self-assessment form. Sorry, I know it feels never ending, but thank you very much for handing over the evidence. Yes, and your self-assessment, Councillor Dickerton. Thank you. Thank you. We just need to note these updates. We need to delegate authority to Mr Gelosi to vote on the Nuveen UKPF merger if a vote is required before the next meeting of this committee. We need to approve the revised discretion policy updating job titles. Everybody happy with that? Thank you very much indeed. Tragically, we're three minutes late, so we now are going to move into the closed session. I'm going to ask you to agree that under section 100A4 of the Local Government Act 1972, members of the public and press should be excluded from the meeting while items 11 and 12 are being considered, because it is likely that exempt information, as described in paragraph 3 of part 1 of schedule 12A to the Act, would be disclosed to them if they were present. It is considered that in all the circumstances of the case, the public interest in maintaining the exemption outweighs the public interest in disclosing the information. Is that agreed? Thank you very much. If I could therefore ask the officers to make the necessary arrangements and let me know when that's done. [end of transcript] [BLANK_AUDIO]