The Pensions Committee of Newham Council met on Wednesday 16 October 2024 to discuss the fund's financial performance, investment strategy, and administrative updates. Key decisions included approving the 2024-25 Pensions Administration Budget and noting the fund's investment performance and funding level updates.

Investment Strategy Update

The committee received an update on the Newham Pension Fund's investment strategy and its implementation. The funding level as of 30 June 2024 showed a deficit of £68 million, with a funding level of 96.5%. This decrease from the previous valuation is primarily attributed to higher-than-assumed pension increases due to inflation, although this has been partially offset by a reduction in long-term CPI inflation assumptions.

Investment performance for the second quarter of 2024 showed a slight decrease compared to the actuary's expectations, with the fund's asset valuation reaching a record high of £1.895 billion. The fund's performance against its benchmark over three months was 2.16% compared to the index's 2.99%, and over one year, it was 11.37% against the index's 12.44%.

A significant discussion point was the appointment of a new active equity manager, Wellington Management Company, for the LCIV Global Equity Value Fund. This fund is expected to launch in Q4 2024 and will complement the existing LCIV Global Equity Focus Fund and passive equity holdings. The committee agreed to invest up to 8% of the strategic asset allocation in this new fund, financed by reducing the allocation in the LCIV Global Focus Fund and the LGIM Paris Aligned Global passive equity fund.

Pension Administration Update

The committee received an update on the administration of the Newham Pension Fund. This included information on legislative changes impacting the Local Government Pension Scheme, such as the McCloud judgement¹, the Exit Cap², and the progress of the Pensions Dashboard³. The Pensions Regulator's new Code of Practice⁴ was also discussed, with the fund undertaking a gap analysis to ensure compliance.

The committee approved the 2024-25 Pensions Administration Budget of £0.973 million to be paid to Lancashire County Council. Membership data showed a continued increase in the number of registered members for the online portal, PensionPoint.

Business Plan Update

An update on the Newham Pension Fund's 2024/25 business plan was provided, including developments since the last meeting. This included updates on the London Collective Investment Vehicle (LCIV), with new fund launches and staffing changes. The report also covered general LGPS updates, including the government's Pensions Investment Review, which focuses on scale and consolidation, costs versus value, and increasing investment in UK assets. The fund's response to the MHCLG's Call for Evidence on this review was noted.

The committee noted the fund's budget monitor and cash flow update, with no concerns raised regarding fund liquidity or the funding of future benefits. The draft Pension Fund Annual Report 2023-24 was also presented for agreement.