This meeting of the Pensions Committee included a discussion on the London Borough of Bexley Pension Fund's exposure to investments in Israel and companies that are alleged to be assisting Israel in violating international law in occupied Palestinian territories. It also included an update on the administration of the Bexley Pension Fund, the government's proposed reforms of the Local Government Pension Scheme, and the investment performance of the Bexley Pension Fund.

Bexley Pension Fund's exposure to investments linked to Israel

A report was prepared for the committee on the Bexley Pension Fund's exposure to investments in Israel and the occupied territories, following an enquiry from a local newspaper. The report was prepared after claims made by the Bexley Palestine Action Group that the Bexley Pension Fund has invested in companies domiciled in Israel, as well as other global stocks that are:

aiding and assisting Israel's alleged breaches of international law.

According to the report pack, as of 31 October 2024 the Bexley Pension Fund had direct exposure of £361k to Israeli government bonds, which equates to an overall allocation of 0.03% of the fund's portfolio. This exposure is held indirectly in pooled funds, namely:

• The London Collective Investment Vehicle (LCIV) Multi Asset Credit (MAC) Fund.
• The LCIV Global Bond Fund.
• The BlackRock Composite Passive Fund.

The report pack also indicates that the Bexley Pension Fund is invested in a further three companies alleged to be associated with Israel’s actions in the conflict - Booking.com, Altice, and Expedia.

In addition to detailing these investments, the report pack contains a copy of a legal opinion on the matter provided to the Local Government Pension Scheme (LGPS) Scheme Advisory Board by Nigel Giffin KC on 24 October 2024.

The report pack notes that the Local Authority Pension Fund Forum (LAPFF), of which Bexley is a member, advises that:

The Forum has not taken any position on the merits or otherwise of company presence in the Occupied Palestine Territories (OPTs). The Forum has sought to avoid making any judgements on that question in its discussions with interested parties from both a Palestinian and Israeli perspective. After initial discussions with such groups, it has decided only to focus on company dialogue, HR policies (where they exist), and engagement over the detail of those company policies and practices.

It also notes that under the Fund’s current policies, decision-making regarding the implementation of Environmental, Social and Corporate Governance (ESG) factors is delegated to the Fund’s investment managers.

Quarterly Administration Report

This report provides an update on the administration of the Bexley Pension Fund, including the latest position on upcoming legislative changes impacting Local Government Pension Scheme administration. In particular the report focuses on:

• The application of the McCloud remedy to remove the age discrimination found in the McCloud court case.
• The progress of the scheme's implementation of the pensions dashboards project.
• An update on data quality and a review of the performance of the administrators Local Pensions Partnership Administration.

Fit for the Future – LGPS Pensions Review

This report is a summary of the government's recently released proposals for reforming the Local Government Pension Scheme (LGPS), focusing on asset pooling, UK and local investment, and governance. The report describes the contents of a consultation document that was released following the Chancellor of the Exchequer's Mansion House speech on 14 November 2024.

The consultation follows an earlier Call for Evidence which closed on 25 September 2024, and to which Bexley submitted a response. This response is included in an appendix to the report, and states that:

As at 31 March 2024, the total net asset value of the London Borough of Bexley Pension Fund is £1.03bn. It is a member of the London Collective Investment Vehicle (LCIV) and is invested in a variety of assets including equities, bonds, property, infrastructure, private equity and private credit.

Most recently, the Bexley Fund joined the Tri-borough Treasury and Pensions team. This team consists of Westminster City Council, the London Borough of Hammersmith and Fulham, and the Royal Borough of Kensington and Chelsea. This collaboration of the four London boroughs allows the four London Funds to benefit from cost saving efficiencies, economies of scale, depth of knowledge and robust governance processes and best practices, with AUM totalling £6.2bn.

Quarterly Financial and Fund Management Update

This report provides an update on the management of the Bexley Pension Fund and in particular its:

• Cashflow position at the end of September 2024
• Risk register
• Assets in the LCIV pool.

According to the report pack, the total value of the Bexley Pension Fund's investments as at 30 September 2024 was £1.041bn.

Pension Fund Investment Performance

This report provides a summary of the investment performance of the Bexley Pension Fund and its investment managers in the quarter to 30 September 2024. According to the report pack, the fund marginally underperformed against its benchmark over the quarter.