The Pension Fund Committee of Barnet Council met on Thursday 11 January 2024 to discuss the Pension Fund's investment strategy, audit and accounts, pooling updates, responsible investment, policies, administration performance, and admissions, cessations, and bond status. The meeting also included a review of the Pension Fund's investment performance and the committee's knowledge and understanding.

Investment Strategy

The committee was scheduled to review the investment strategy for the Pension Fund. This included an overview of investment transactions made between October and December 2023, and planned transactions for 2024. The report detailed specific investments made, such as £75 million in the LCIV Long Term Buy and Maintain Credit Fund, and disinvestments from funds like Schroders Corporate Bonds. The strategy aims to comply with the LGPS (Management and Investment of Funds) Regulations 2016 and the Council's Constitution, ensuring prudent management of the Fund's financial affairs to support corporate priorities.

External Audit and Accounts Update

A significant portion of the meeting was dedicated to the external audit and accounts. The committee was to receive an update on the 2020/21 audit, which was still outstanding, and the plan for the 2021/22 and 2022/23 audits. The report highlighted delays in receiving the completed audit report for 2020/21 from BDO, the appointed external auditors. The committee was asked to approve the publication of the 2021/22 Draft Annual Report and to provide views on the appropriateness of publishing the 2022/23 Draft Annual Report. The report detailed the requirements for LGPS Funds to prepare an Annual Report as per Section 57 of the LGPS Regulations 2013, and outlined the current status of publishing these reports for Barnet Pension Fund.

Pooling Update

The committee was to receive an update on pooling, specifically the Government's response to the LGPS Investment Consultation published on 22 November 2023. The report highlighted key policy objectives from the Government, including a commitment to further pooling and delivering efficiencies through economies of scale. A key immediate action for the Fund is to develop a plan to move as much liquid asset to the pool by March 2025 as possible, or to explain why this is not feasible. The report noted that Barnet had taken significant steps to increase its pooled assets over the past year and intended to work collaboratively with the London CIV (Collective Investment Vehicle) to further increase pooled assets.

Responsible Investment Update

This report was scheduled to provide an update on actions taken to progress the Fund's NetZero strategy. Specifically, it aimed to explain what a Paris Aligned Fund means in practice and the options for aligning equity holdings with this goal. The report also detailed explorations into Nature Based Assets in partnership with the London CIV and other Investment Managers. The committee was asked to note the progress made towards NetZero. The report referenced the 'BarNetZero 2030 Model Portfolio' and outlined two workstreams: reducing the carbon footprint in core investments to align with the Paris Agreement and allocating a portion of investments to 'offsetting' assets.

Policies and Procedures Report

The committee was to receive an update on the policies and processes for the Barnet Pension Fund. The report aimed to provide the committee with an overview of current policies and processes, along with their scheduled review dates. Appendix A was to summarise these policies and procedures. The report noted that most policies are required by legislation and that the LBB Pensions Team had reviewed these documents, determining the frequency of their review and the date for the next review. Three policies were updated and approved in 2023, with the Contributions Review Policy undergoing consultation.

Administration Performance Report and other administration and legislative matters

This report was intended to provide the Pension Fund Committee with an update on the current administration performance by West Yorkshire Pension Fund (WYPF), alongside updates on other administration and legislative matters. The committee was asked to note the performance levels and updates. The report detailed WYPF's performance against Key Performance Indicators (KPIs), noting that approximately 91% of cases were completed within KPI targets, consistent with previous months. It also highlighted a low number of complaints and Internal Dispute Resolution Procedure (IDRP) cases. Updates were provided on Annual Benefit Statements (ABSs), the Data Improvement Plan, historical leavers, and the Pensions Dashboard Programme, which has been delayed with a new staging date of 30 September 2025 for public service pension schemes. A finance update detailed contribution payments received between April and November 2023. Finally, a draft updated version of the Fund's Communication and Engagement Policy was presented for approval.

Knowledge and Understanding

This paper was scheduled to summarise the actions to be taken by the LBB Pensions Team to maintain records of training undertaken by the Local Pension Board and Pension Fund Committee members, and to detail expectations regarding training. The report highlighted the complexity and financial significance of Pension Fund issues, emphasizing the importance of committee members having sufficient training to make effective decisions. It distinguished between 'mandatory' and 'recommended' training for Board and Committee members. The report also provided a summary of training undertaken by Committee members via Hymans Robertson's LGPS Online Learning Academy (LOLA) as of 14 December 2023, and noted the availability of a Natural Capital workshop.

Pension Fund Committee Work Programme

The committee was presented with the work programme for May 2023 to May 2024. This outlined the reports scheduled for discussion at future meetings, including quarterly investment reports, reviews of the Pension Fund Risk Register, pooling updates, investment strategy reviews, administration reports, and updates on admissions, cessations, and bond renewals. The work programme also included specific items such as the annual accounts, responsible investment reviews, and the consideration of the Council's request to ease Pension Deficit Contributions.

Admissions, Cessations and Bond Status Update

This report provided the Pension Fund Committee with a status update on outstanding admissions, cessations, and bond agreements/renewals. The LBB Pensions Team has been working with employers, West Yorkshire Pension Fund (WYPF), Hymans Robertson, and HB Public Law to finalise these matters. The report included updates on admission agreements, noting that some were with HB Law for sealing and others were with admitted bodies for signing. A specific recommendation was made for the approval of the admission of Sancroft Community Care into the Barnet Pension Fund on a pass-through basis, as they were unable to provide the required bond. Updates were also provided on cessation valuations, including the payment of an exit credit to OCS and Caterlink, and the expected payment of a deficit from Grasvenor Avenue Infant School. An update on bond renewals detailed the process of recalculating bond values for eight employers and noted seven new admissions awaiting bond or guarantee provision. The report also confirmed a change in the effective date for new admissions to a 'pass-through' basis for schools, moving from 1 January 2024 to 1 April 2024.

Pension Fund Investment Performance Report

This report provided an update on investment valuations, transactions, and performance up to 30 September 2023, with an estimated valuation to 30 November 2023. It also included an update on the performance of the Fiera Real Estate Fund and the LCIV Sustainable Equities Exclusion Fund. The report noted that markets had improved between September and November 2023, leading to an estimated £37.4m increase in the valuation. However, for the quarter ending September 2023, the Fund's return was -0.2%, underperforming its benchmark by 1.1%. The report detailed specific funds that had underperformed, including CBRE Global Alpha, LCIV Renewable Infrastructure, and Barings Global Special Situations Credit. Updates were provided on manager ratings from Hymans Robertson, noting that most managers were rated as 'preferred' or 'positive', with some exceptions. The report also discussed the context around the Fiera Investment, a real estate fund, and provided an update on RBC, the underlying manager of the LCIV Sustainable Equity Exclusion Fund, noting its underperformance and ongoing review. The committee was asked to note the investment activities and performance.

Motion to exclude press and public

This item indicated that a motion may be proposed to exclude the press and public from the meeting for the discussion of specific agenda items, likely due to the sensitive nature of the information contained within exempt appendices.