The Barking and Dagenham Pensions Committee met to discuss the draft pension fund accounts for 2024/25, receive an update from Grant Thornton, review the quarterly monitoring report, and consider a responsible investment policy. The committee approved the Responsible Investment Policy and deferred a decision on which London CIV Infrastructure fund to invest in, pending the outcome of the Strategic Asset Review expected in January 2026, and agreed to delegate to the Strategic Director Resources in consultation with the Chair and Deputy Chair the London CIV preferred way forward on replacing Newton and Pyrford Diversified Growth Funds, and agreed the adoption of Investment Management Agreements between the LCIV and the investment manager for the mandates the Fund currently has with Kempen, UBS, Blackrock, Hermes and Patria.

Draft Pension Fund Accounts 2024/25 and Grant Thornton Update

The committee reviewed the draft pension fund accounts for the year ending 31 March 2025. Nick Vickers, Interim Head of Pensions, Treasury and Capital (IHPTC), presented the accounts, noting they had been passed to Grant Thornton for review.

Terence Bershu from Grant Thornton, the council's external auditors, presented their audit plan, which had been presented to the Audit and Risk Committee on 15 September. The plan outlined how Grant Thornton intended to fulfil their statutory responsibilities, detailing the scope of the audit, key risks, and methodology. He highlighted significant risks including:

• Management override of controls
• Valuation of Level 3 investments¹
• Valuation of pension liability

Terence Bershu confirmed that Grant Thornton's audit work would commence the next day, 1 October, and that he expected to complete the audit and report to the next meeting of the committee on 17 December, with sign-off expected by the 27 February 2026 backstop date.

Councillor Rocky Gill, Deputy Chair of the Pensions Committee, asked how serious the level 3 investment valuations risk was, and how confident Grant Thornton were that they could complete all the audit procedures. Terence Bershu responded that the valuation of level 3 investments was subjective, but that Grant Thornton had already issued requests for interim samples and the responses so far were encouraging, so he was confident that the audit would be completed by the said date.

Councillor Gill also asked about the position regarding the sign-off of the 2023/24 accounts and earlier years by BDO, the previous external auditors. Nick Vickers responded that the BDO audit lead and Richard Harbord, the strategic director of resources, were continuing to exchange views about the outstanding matters, principally the issue of loans between the Pension Fund and the General Fund. He said that the council's position remained that the loans, whilst unwise and should not have occurred, were not illegal. He was hopeful that the council and BDO were relatively close to clarifying the facts, from which the BDO audit lead would then need to make a judgement and come to a decision about the outstanding years' accounts. He confirmed that BDO were due to update members at the next meeting of the Audit and Risk Committee on 26 November.

Pension Fund Quarterly Monitoring 2025/26

Nick Vickers presented the Quarterly Monitoring Report for the period 1 April to 30 June 2025 (Q1). The fund's value was reported as £1,600.8m, an increase of £73.3m from the previous quarter and the highest it had ever been. Cash held by the council was £23.9m as of 30 June.

The fund returned +4.84% during Q1, outperforming its benchmark return by 0.52%. Over one year, the fund outperformed its benchmark by +0.24%, returning 8.99%, but underperformed the benchmark by -1.00% over three years, returning 8.85%. Over longer periods, the fund slightly underperformed its benchmark, over five years by -0.93% and over 10 years by -0.92%.

The report also included a private appendix setting out the London CIV Quarterly Investment report as of 31 March 2025.

Councillor Gill asked about the asset allocation set out in paragraph 6.2 of the report. Nick Vickers responded that the London CIV had offered to do an update on the fund's strategic allocation, and that he had had some initial discussions with colleagues in the London CIV. He said that he, Richard Harbord, and Shabana Couser were meeting with Barnett Waddingham the next day to talk about the actuary valuation results, which he expected to be very positive.

Councillor Mukhtar Yusuf asked whether some of the internal metrics used were too ambitious and possibly should be revised. Nick Vickers said that in respect to the equity managers' targets they had to be linked to the main market indices. He acknowledged that some of the targets in the report were a little arbitrary, with some quite generous and others more challenging.

Councillor Gill asked about the cash holdings, and whether there were plans to invest elsewhere. Nick Vickers clarified that these were transactional cash holdings, and confirmed cash should not be held for any other purposes.

Responsible Investment Policy

Nick Vickers reported that the fund did not have an up-to-date Responsible Investment Policy (RIP). He explained that the Local Government Pension Scheme (LGPS) Investment Regulations (2016) required the Fund to set out its policy on how Environmental, Social and Governance (ESG) considerations were taken into account in the investment approach, and to explain how it exercised rights (including voting rights).

He explained that responsible investing was a highly complex subject and covered a diverse range of issues. The aim of presenting this report was to establish a base position from which the committee could develop its approach over time. He noted that there were a number of current events and issues in the LGPS that were bringing into sharp focus responsible investment and particularly disinvesting in certain markets. He noted that LBBD were very fortunate to be part of the London CIV who were extremely active around ESG issues and which formed part of their Responsible Investment Policy which was adopted in 2024.

The committee resolved to approve the LBBD Responsible Investment Policy set out in Appendix 2 of the report. Councillor Manzoor Hussain, Chair of the Pensions Committee, requested officers to prepare a report for the next meeting about disinvestment to include the latest legal advice obtained by the Scheme Advisory Board regarding responsible investment.

Investment Strategy Update

This item was discussed in private, with the public and press excluded from the meeting.