The Pensions Committee of Bromley Council met on Wednesday 28 May 2025, reviewing the Pension Fund's performance, considering investment strategy, and noting the Local Pension Board's annual report. Key discussions included the performance of various investment managers, the potential benefits and risks of passive global equity management, and the strategic asset allocation of the fund.

Pension Fund Performance and Investment Strategy

The committee received a comprehensive report on the Pension Fund's performance for the fourth quarter of 2024/25. The overall value of the fund was approaching £1.5 billion. A significant discussion point was the ongoing discrepancy between performance figures provided by the custodian and those from investment managers. The committee resolved that the Senior Advisor from Apex Group Ltd should investigate this issue and report back, with the custodian potentially being invited to a future meeting if concerns persist.

The committee also considered recommendations for adjusting the strategic asset allocation. Following a substantial investment in the Fidelity UK Property Fund, a proposal was made to increase the weighting of UK property within the strategic asset allocation from 4% to 10%, while reducing the allocation to multi-asset income funds from 20% to 15%. This adjustment was supported by the committee, with the Chairman noting that the fund's liquidity had enabled the successful investment in the Fidelity UK Real Estate Fund.

A significant debate took place regarding the potential hedging of 50% of the fund's global equity exposure back into sterling. This proposal was driven by concerns over potential US Dollar weakening due to political volatility in the United States. While some members acknowledged the impact of a weakened US Dollar on global equity investments, the committee ultimately expressed a preference not to commit to hedging at this time, preferring to await the outcome of the strategic asset allocation review.

The committee also discussed the London Collective Investment Vehicle's (LCIV) request for £70,312 of additional B class Share Capital. Despite an initial objection from Councillor Simon Fawthrop, seconded by Councillor Michael Tickner, the proposal was ultimately approved, with the Chairman advising that payment was a requirement to avoid breaching Financial Conduct Authority regulations.

The committee noted the key developments expected in the Local Government Pension Scheme (LGPS) over the next five years, as well as the LCIV's strategic development plan and the government's response confirming progress towards the March 2026 asset pooling deadline. Updates on contracts, including the extension of the Pensions Administration System Software (Heywood) contract and the procurement timetable for investment adviser services, were also noted. The triennial actuarial valuation, being carried out by Mercers, is expected to be completed by December 2025.

Presentation from Legal & General Investment Management

Representatives from Legal & General Investment Management delivered a presentation on global equity passive management. They explained that this approach allows for the creation of bespoke investment portfolios by selecting from thousands of indices, with options for capped indices or biases towards specific companies. The low fees associated with passive management, at just over 2 basis points, were highlighted. The presenters offered to conduct a costing exercise for the Bromley Pension Fund to assess the financial implications of such an investment.

Concerns were raised about the concentration of indices towards US technology stocks and the potential impact of political volatility in the US. Legal & General representatives stated that while short to medium-term shifts were not expected, significant investor changes could impact the US market in the longer term. They emphasised that the diversified nature of global equity passive management helps mitigate risks associated with specific regions, sectors, or stocks. The committee noted the presentation.

Local Pension Board Annual Report

The committee received and noted the Local Pension Board Annual Report for 2024/25. This report summarised the Board's activities over the past year, including areas of concern, training undertaken by members, and any conflicts of interest. The report also outlined the Board's work plan for the upcoming year.

Declarations of Interest

Councillor Simon Fawthrop declared that he was a member of the Local Government Pension Scheme and had investments with Legal & General Investment Management. Councillor Keith Onslow declared investments with Legal & General Investment Management, as did Councillor Ryan Thomson.