The Pensions Committee of Bexley Council met on Wednesday 25 September 2024 to discuss the fund's investment performance, administration, and strategy. Key decisions included approving an amended Pensions Administration Strategy for consultation, rebalancing the equity position to reduce risk, and agreeing to fund social and affordable housing initiatives.

Presentation by LCIV and Octopus on the LCIV UK Housing Fund

Representatives from LCIV and Octopus presented on the LCIV UK Housing Fund, highlighting its resilience and the sector's need for private capital. They outlined their manager selection criteria and the fund's focus on providing quality homes for vulnerable groups. The presentation also touched upon the fund's alignment with government requirements for UK investment.

Pension Administration Strategy

The Committee considered a follow-up report on the draft Pensions Administration Strategy, which had been consulted on with employers and administrators. Following feedback, amendments were made, and the Committee approved the revised strategy for publication. This strategy aims to ensure an efficient, high-quality, and cost-effective administration service for scheme employers and members, outlining clear roles and responsibilities and performance targets.

Quarterly Administration Report

An update was provided on the administration of the Bexley Pension Fund, including legislative changes such as the McCloud remedy and the upcoming Pensions Dashboard implementation. LPPA's performance was reviewed, showing an overall operational casework performance of 98.1% against Service Level Agreements (SLAs). Customer contact centre wait times remained below the target, and satisfaction scores for retirements were noted, with efforts to improve response rates ongoing.

Pooling and LGPS Landscape

The Committee received an update on the pooling of Local Government Pension Scheme (LGPS) assets, including the government's stance and the role of London Collective Investment Vehicle (LCIV). Bexley's Pension Fund is a shareholder in LCIV and currently has 54% of its assets pooled, with plans to transition further assets as suitable investment strategies become available. The report highlighted the government's ambition for March 2025 as a deadline for pooling liquid assets and a 10% target for private equity investment.

Annual Report

The draft Pension Fund Annual Report for 2023/24 was considered. It was noted that the fund's market value had increased to £1.029 billion due to strong equity performance. The report also detailed the fund's investment strategy, governance, and membership trends. Bexley's Pension Fund was highlighted as having one of the highest proportions of LCIV pooled assets among London LGPS funds.

Quarterly Financial and Fund Management Update – 30 June 2024

This report provided an update on the Pension Fund's cashflow position, risk register, and the status of LCIV assets. It was projected that there were sufficient liquid assets to meet liabilities. The top five risks to the fund remained consistent, with slight scoring changes. The fund's pooled assets stood at 54% via LCIV, or 71% including passive holdings.

Pension Fund Investment Performance – Quarter Ended 30 June 2024

The Committee reviewed the investment performance of the Bexley Pension Fund for the quarter ending 30 June 2024. The fund had marginally underperformed its benchmark over the quarter and longer periods. Sam Yeandle from Redington provided market updates, noting a return to volatility and a shift in focus from inflation to recession risks. Jill Davys from Redington reported on manager performance, with some funds underperforming their benchmarks, including the LCIV Long Income Fund and the LaSalle property fund.

LaSalle Mandate Review

Redington's review of the residential property mandate with LaSalle was discussed. LaSalle proposed amendments to investment restrictions to increase flexibility, which Redington broadly supported but recommended further discussions on increasing target returns and ensuring the mandate remained balanced. The Committee approved further discussions with LaSalle regarding the mandate's target returns and plans for maintaining a balanced portfolio.

Investment Strategy Update

The Committee received an update on the Fund's Risk Management Framework metrics and considered proposed changes to the investment portfolio. It was recommended to rebalance the overweight equity position by divesting 5.7% of global equities and investing in government bonds. The Committee also agreed to fund social and affordable housing by utilising liquidity from the LaSalle property mandate, with any residual allocation going to listed global equity. Transition specifics were delegated to officers and Redington, with liaison with LaSalle to reduce the mandate over time.

Quarterly Administration Report

An update was provided on the administration of the Bexley Pension Fund, including legislative changes like the McCloud remedy and the upcoming Pensions Dashboard. LPPA's performance was reported as strong, with an overall operational casework performance of 98.1% against SLAs. Customer contact centre wait times remained below target. The report also detailed the progress on the McCloud remedy implementation and the data project for the Pensions Dashboard.

The meeting was attended by Councillors Patrick Adams, Esther Amaning (Substitute), Frazer Brooks, Bola Carew, Christine Catterall (Substitute), Kurtis Christoforides, Andrew Curtois (Vice-Chairman), Larry Ferguson, Howard Jackson (Chairman), and Nicola Taylor. Substitute members Councillor Catterall and Amaning attended for Councillors Lucia-Hennis and Gill respectively. Councillor Brooks was late. Apologies were received from Councillors Lucia-Hennis, Gill, and Smith. Also present were Julia Peacock (Pensioners' Representative), Oliver Wooler (Pensions Board), Ruby Vuong and Matthew Dawson (Tri-Borough Partnership), Jill Davys and Sam Yeandle (Redington), Andrien Meyers and Vanessa Shia (LCIV), and Jack Burnham (Octopus). Councillor Jackson declared an interest related to his work at the Financial Ombudsman, and Councillor Adams declared an interest related to LPPI being a client. There were no items of late business. The press and public were excluded from discussions on exempt information relating to Agenda Items 6, 9, and 11.