The Pension Committee will be considering a report on training that has taken place or is scheduled to take place. They will also be asked to approve a draft risk register for the Pension Fund.

The Committee has also been provided with a report on the administration of the fund. The most recent performance statistics indicate that the overall performance is ahead of the target (target 96.7%, WF 99.72% and whole service 99.21%).

Investment Performance

The Committee will receive a report on the investment performance of The London Borough of Waltham Forest Pension Fund ¹.

As of 30 September 2024, the Pension Fund investments were valued at £1,100.5m, which is an increase of £6.1m (30 June £1,094.4m) since the previous quarter.

The strategic performance target of the fund to recover its deficit is the Consumer Price Index + 2.25% (5.35%). However, the report notes that the Fund’s 3-year return was 0.6% pa as at 30 September 2024. It also notes that:

In the quarter to 30 September 2024 a return of 0.6% was achieved, underperforming the benchmark of 1.8% by 1.2%.

The report provides comment on the performance of various investments.

The Darwin Leisure Property Fund has reported a materially significant change in the Net Asset Value (NAV) of -26.1% over the quarter. The report notes that this follows a reported fall of -23.9% in the third quarter of 2023. The Committee has previously agreed to reduce the allocation to the fund, and as at 30 September the annualised 5-year return was -10.8% p.a.

The report states that the LCIV Global Equity Focus Fund returned 1.3% in Q3, compared to a benchmark return of 0.2%. One-year relative performance was negative with a return of 15.8% compared to 20.4% for the benchmark. It has also underperformed marginally over three years by 0.1% per annum, over five years by 1.8% p.a. and since inception (2018) by c. 1.6% p.a.. The report notes that LCIV still have an ‘Enhanced Monitoring’ status in place for this mandate.

The LCIV Emerging Market Equity Fund returned 3.0%, outperforming a benchmark return of 2.5%.

One-year relative performance was negative with a return of 8.1% compared to 14.7% for the benchmark. It has also underperformed over three years by c. 3.3% p.a., over five years by c. 0.9% p.a. and since inception (2018) by c. 1.3% p.a..

The report notes that the Independent Advisor John Raisin, Assistant Director of Pensions & Treasury Management Debbie Drew and Pension Fund Manager Satwinder Chandla met with representatives of LCIV, GIP, Newton and Nordea. The notes from these meetings were circulated to Committee members.

Training

The Committee will consider a report on training undertaken by the Pension Committee, Pension Officers and Pension Board members. The report notes that

It should be noted that the Fund Officer has received Training Needs Assessments from 3 members of the Committee and request that the remaining members Training Needs Assessments are completed.

The report asks the Committee to agree a training plan for 2024/25 and early 25/26.

Risk Management

A draft risk register has been prepared for the London Borough of Waltham Forest Pension Fund, which has been developed in consultation with Mercer, a global financial services firm, and the Pension Shared Service. The scoring method has been revised, and the Committee is being asked to approve both the scoring matrix and the draft risk register.

The draft risk register identifies a number of key risks, and provides a method for scoring their significance. For example, in relation to investment pooling ², the report identifies a risk that:

LCIV fails to deliver on costs or savings or that the Fund is unable to deliver its Investment Strategy or Responsible Investment / ESG requirements.

The report states that:

Representatives of the Fund frequently attend business updates from the pool. Representatives of the Fund frequently meet with the pool to discuss the Fund's strategic requirements.

The report notes that overall, the scoring on the risk register shows that:

• Red – 0
• Amber – 4
• Yellow – 11
• Green – 21

The report highlights that these scores are initial and are under review with the Pension Board.