Agenda and minutes
PDF 353 KBVenue: Council Chamber, Woodhatch Place, 11 Cockshot Hill, Reigate, Surrey, RH2 8EF
Contact: Angela Guest Email: angela.guest@surreycc.gov.uk
Media
| No. | Item |
|---|---|
|
APOLOGIES FOR ABSENCE AND SUBSTITUTIONS
Additional documents: Minutes: Apologies were received from Robert King for absence and Robert Hughes for lateness. Robert Hughes joined the meeting at 11.32am in time for item 10 – Company Engagement and Voting.
|
|
|
MINUTES OF THE PREVIOUS MEETING - 10 March 2023
To agree the minutes as a true record of the meeting. Additional documents: Minutes: The Minutes were approved as an accurate record of the previous meeting. |
|
|
DECLARATIONS OF INTEREST
All Members present are required to declare, at this point in the meeting or as soon as possible thereafter (i) Any disclosable pecuniary interests and / or (ii) Other interests arising under the Code of Conduct in respect of any item(s) of business being considered at this meeting NOTES: · Members are reminded that they must not participate in any item where they have a disclosable pecuniary interest · As well as an interest of the Member, this includes any interest, of which the Member is aware, that relates to the Member’s spouse or civil partner (or any person with whom the Member is living as a spouse or civil partner) · Members with a significant personal interest may participate in the discussion and vote on that matter unless that interest could be reasonably regarded as prejudicial. Additional documents: Minutes: There were none. |
|
|
QUESTIONS AND PETITIONS
To receive any questions or petitions.
Notes: 1. The deadline for Member’s questions is 12.00pm four working days before the meeting (12 June 2023). 2. The deadline for public questions is seven days before the meeting (9 June 2023)). 3. The deadline for petitions was 14 days before the meeting, and no petitions have been received.
Additional documents: Minutes: There were four supplementary questions:-
1. Jennifer Condit asked Kevin Clarke’s supplementary question:She asked if the Committee would consider asking managers to make them aware if they are investing in UK operated water companies whether directly or indirectly. The Chairman explained that this was a complex area to establish but would ask officers to consult with Border to Coast. 2. Lindsey Coeur-Belle stated that she was pleased to hear the Fund’s commitment to the interdependency between SDGs and climate change action and would the Fund take account of this issue in 2024. The Chairman responded positively in that SDGs were pertinent to investments. 3. Jenifer Condit asked what the Committee thought of what Shell had to say at its AGM on Wednesday and whether it was inspiring the Committee to take any further steps on the escalation process and if so, what that might be. The LGPS Senior Officer stated that the Fund would consider this matter consistent with its RI policy. 4. Lindsey Coeur-Belle asked Lucianna Cole’s supplementary question.She asked Whether the Fund knew if it had met its 2030 target as it had divested considerably over the last few years. The Head of Investment & Stewardship reported that when the next TCFD report would give a clearer picture but Border to Coast had seen reductions already below the 2030 target.
|
|
|
THE SURREY PENSION TEAM 3 YEAR STRATEGIC PLAN
This report summarises the next phase of our Transformation via a 3 year Strategic plan. Additional documents: Minutes: Speakers: Neil Mason, LGPS Senior Officer Nicole Russell, Head of Change Management
Key points raised during the discussion:
Actions/ further information to be provided: That the LGPS Senior Officer review how members are informed of communications sent to employers and others. That the LGPS Senior Officer review how the scheduling of the backlog remediation programme can be advanced in the 3-year Plan.
Resolved: That the Pension Fund Committee endorsed the 3-year Strategic Plan.
|
|
|
ACTION TRACKING AND WORKPLAN
An action tracker is attached, detailing actions from previous meetings. The Board is asked to review progress on the item listed. Additional documents: Minutes: Speakers: Chairman Neil Mason, LGPS Senior Officer
Key points raised during the discussion:
Actions/ further information to be provided: None.
Resolved: The Committee noted the Action Tracker and Forward Plan. |
|
|
SUMMARY OF THE LOCAL PENSION BOARD REPORT
This report provides a summary of administration and governance issues reviewed by the Local Pension Board (the Board) at its last meeting (19 May 2023) for noting or actioning by the Pension Fund Committee (the Committee). Additional documents: Minutes: Speakers: Chairman of Surrey Pension Board Tim Evans (online) Neil Mason, LGPS Senior Officer Tom Lewis, Head of Service Delivery
Key points raised during the discussion:
· the Pension Board had been focussed on understanding the impact of changing to Unit 4 from SAP. · The Board had noted the progress on the backlog. · The Board had welcomed the new Head of Change Management and was pleased with the dynamic approach to change. · The Chair also expressed support for the increased emphasis on training.
Actions/ further information to be provided: None.
Resolved: That the Committee noted the support of the Pension Board.
|
|
|
INVESTMENT MANAGER PERFORMANCE AND ASSET/LIABILITIES UPDATE
This report is a summary of manager issues for the attention of the Pension Fund Committee (Committee), as well as an update on investment performance and the values of assets and liabilities. Additional documents: Minutes: Speakers: Neil Mason, LGPS Senior Officer Lloyd Whitworth, Head of Investment & Stewardship Steven Scott – Hymans Robertson
Key points raised during the discussion:
Actions/ further information to be provided: None.
Resolved: That the main findings of the report in relation to the Fund’s valuation and funding level, performance returns and asset allocation be noted.
|
|
This report provides an update on the progress of the 2022 triennial valuation being undertaken by the Fund actuary, Hymans Robertson. Additional documents: Minutes: Speakers: Steven Scott – Hymans Robertson
Key points raised during the discussion:
· Data received for the valuation was provided on time and to a very high standard · In terms of the assumption setting process advice was provided to the fund very early · Training was provided to the Committee which enabled members to agree the assumptions proposed with a good level of challenge.
Actions/ further information to be provided: None.
Resolved: 1. That the completion of the actuarial work for the 2022 triennial valuation including the report from the actuary be noted. 2. That the up-to-date Rates and Adjustments schedule be approved.
Robert Hughes arrived at this point of the meeting.
|
|
|
COMPANY ENGAGEMENT & VOTING
This report is a summary of various Environmental, Social & Governance (ESG) engagement and voting issues that the Surrey Pension Fund (the Fund), Local Authority Pension Fund Forum (LAPFF), Robeco, and Border to Coast Pensions Partnership (BCPP) have been involved in, for the attention of the Pension Fund Committee (Committee). Additional documents: Minutes: Speakers: Lloyd Whitworth, Head of Investment & Stewardship Milo Kerr, Border to Coast
Key points raised during the discussion:
· There had been a high number of engagements from LAPFF on climate change · No management resolutions failed, as a result of Surrey voting. · He thought engagement was having an impact · There had been an escalation of voting this time · Increasing negative votes were being taken more seriously · Escalation was included in the Responsible Investment Policy and in Border to Coast’s policy · There was an expectation that managers would use the escalation policy.
Actions/ further information to be provided: None.
Resolved: 1. That the Fund’s belief, that the United Nations Sustainable Development Goals (UN SDGs) represent an appropriate foundation in terms of the Fund’s overall Responsible Investment (RI) approach, be reaffirmed. 2. That ESG Factors are fundamental to the Fund’s approach, consistent with the Mission Statement, be reaffirmed through: a) Continuing to enhance its own RI approach, its company engagement policy, and SDG alignment. b) Acknowledging the outcomes achieved for quarter ended 31 March 2023 by Robeco and LGIM in their Active Ownership approach and the LAPFF in its engagement with multinational companies. c) Noting the voting by the Fund in the quarter ended 31 March 2023.
|
|
|
ASSET CLASS FOCUS - EQUITY
As part of good governance, the Committee periodically reviews the performance of the Fund’s investments. There is a further focused review of different asset classes. This paper concentrates on Equities. Additional documents: Minutes: Speakers: Neil Mason, LGPS Senior Officer Lloyd Whitworth, Head of Investment & Stewardship Steve Tyson, Independent Advisor, MJ Hudson Joe McDonnell, Border to Coast
Key points raised during the discussion:
That Newton had seen performance improvement That BCPP had two funds reviewed – · there was an area of concern raised on the UK Alpha Fund regarding risk and was therefore a challenge made to Border to Coast · Border to Coast Global Alpha had performed well. 2. The LGPS Senior Officer reported that work continued to be undertaken with Border to Coast and other partner funds to address any issues. 3. Border to Coast gave further explanation of the issue around tracking errors and the possible actions that could have been taken. However, due to lower volatility they were of the opinion that it would work itself out within the next 12 months. 4. A Member explained that a year ago the decision was made to invest in LGIM’s Future World Fund, and they offered a number of other funds and asked if it would be possible to find out how those funds had performed over the same period relative to the Future World Fund. 5. A Member stated that reports are not necessarily Surrey specific and asked if Border to Coast were looking to change that in the future. Border to Coast responded that reporting to partner funds was evolving and would take the comments into consideration going forward. However, the presentation was specific to Surrey.
Actions/ further information to be provided: That comparison figures from other LGIM funds be circulated against LGIMs Future World Fund over the same period of time.
Resolved: The Committee note the Fund’s Equity holdings, respective funds’ investment performance and review from the Fund’s independent investment adviser.
|
|
|
RESPONSIBLE INVESTMENT UPDATE
The agreed priorities of the Pension Fund Committee (Committee) in relation to the Responsible Investment (RI) policy are to set a net zero date, update the voting policy, submit an application to become a signatory of the UK Stewardship Code and align manager reporting. Additional documents: Minutes: Speakers: Lloyd Whitworth, Head of Investment & Stewardship Steve Turner, Mercer David Crum and Thomas Bolger – Minerva (online)
Key points raised during the discussion:
1. There was some debate about the information contained in Part 2 of the agenda and whether that could be made public. The Chairman and Mercer stated that they would look again at the Part 2 information and determine whether any more could be made public. 2. Mercer gave a precis of the three parts to the report as being Net Zero, Responsible Investment Policy and Voting Policy. Each part would be discussed in turn.
Net Zero 3. Mercer highlighted that bringing the net zero date forward would mean a loss of diversification and increased risk – he gave detailed information regarding the research and analysis undertaken on this issue.
4. A Member raised several points which included: 1. A Member thanked officers and advisers for taking climate change seriously which was highlighted in debates, engagement reports and the massive reduction in carbon intensity of the portfolio. However, given the progress he thought that the Mercer report was unambitious: · It was thought that we had moved away from the idea that fiduciary duty and responsible investment were at opposite end of a spectrum with a simple trade-off between the two. · The Responsible Investment Policy was consulted on with stakeholders but they were not consulted on the net zero date. · Throughout Surrey and Surrey itself had declared a climate emergency and set a 2030 net zero date and wanted to see a net zero date consistent with that. · Once a date has been set there would be an urgent need to decide how often that is reviewed because even in a few years’ time he thought the thinking would be that we could not wait for 2045/2050. · That a recorded vote be taken was requested. 2. Another Member seconded the request for a recorded vote and stated that he wanted to see a net zero date of 2040 as a minimum.
Rewording ... view the full minutes text for item 36/23 |
|
|
LGPS UPDATE (BACKGROUND PAPER)
This report considers recent developments in the LGPS. Additional documents: Minutes: Speakers: Neil Mason, LGPS Senior Officer Sandy Armstrong, Technical Manager
Key points raised during the discussion:
1. The Chairman highlighted the change in the deadline date for the dashboard.
Actions/ further information to be provided: None.
Resolved: That the report be noted.
|
|
|
EXCLUSION OF THE PUBLIC
Recommendation: That under Section 100(A) of the Local Government Act 1972, the public be excluded from the meeting for the following items of business on the grounds that they involve the likely disclosure of exempt information under the relevant paragraphs of Part 1 of Schedule 12A of the Act. Additional documents: Minutes: Resolved: That under Section 100(A) of the Local Government Act 1972, the public be excluded from the meeting for the following items of business on the grounds that they involve the likely disclosure of exempt information under the relevant paragraphs of Part 1 of Schedule 12A of the Act.
The Committee took an 11 minute break and reconvened again at 13.29pm
David Harmer left the meeting at 13.18pm
PART TWO – IN PRIVATE |
|
|
INVESTMENT MANAGER PERFORMANCE AND ASSET/LIABILITIES UPDATE
Part 2 annexes for item 12 attached. Minutes: Key points raised during the discussion:
Actions/ further information to be provided: None.
Resolved: That the Part 2 annex to item 8 be noted (see minute 32/23)
|
|
|
RESPONSIBLE INVESTMENT UPDATE
Part 2 annexes for item 11 attached. Minutes: Key points raised during the discussion:
Actions/ further information to be provided: None.
Resolved: That the Part 2 annex to item 12 be noted (see minute 36/23)
|
|
|
INVESTMENT STRATEGY REVIEW - EMPLOYER STRATEGIES, FIXED INCOME WEIGHTS & INVESTMENT STRATEGY STATEMENT
The Pension Fund is reviewing its Investment Strategy in accordance with the 2022 valuation, taking into account its investment core beliefs and in line with the asset offerings of Border to Coast Pensions Partnership (BCPP). This paper presents analysis on the employer strategies, fixed income weights and Investment Strategy Statement. Minutes: Speakers: Lloyd Whitworth, Head of Investment & Stewardship Steve Turner, Mercer Sandy Dickson, Mercer
Key points raised during the discussion:
1. The Committee considered a Part 2 report that explained the Pension Fund was reviewing its Investment Strategy in accordance with the 2022 valuation, taking into account its investment core beliefs and in line with the asset offerings of Border to Coast Pensions Partnership (BCPP). This paper presented an analysis on alternative employer strategies, fixed income weights and Investment Strategy Statement.
Actions/ further information to be provided: None.
Resolved: 1. That the review by the Investment Consultant of the employer strategies, fixed income positioning and Investment Strategy Statement be noted. 2. That the asset allocation targets for each of the employer strategies be accepted. 3. That officers, consultants and investment managers be approved to execute resultant asset allocation shifts by the most efficient means possible. 4. That the new Investment Strategy Statement be approved.
|
|
|
REAL ESTATE UPDATE
Border to Coast Pension Partnership (BCPP) is developing a range of Real Estate funds for Partner Funds to invest in. Government guidance expects the LGPS to use pooling when products are available. Minutes: Speakers: Neil Mason, LGPS Senior Officer Steve Turner, Mercer
Key points raised during the discussion:
1. The Committee considered a Part 2 report that detailed how Border to Coast Pension Partnership (BCPP) was developing a range of Real Estate funds for Partner Funds to invest in. Government guidance required LGPS to use pooling when products were available. 2. The LGPS Senior Officer informed the Committee that the matter was being considered again because the current Border to Coast offering had a different risk/return parameter (lower return with a lower level of risk) to the funds considered previously and it was therefore appropriate to bring it back. He also explained the reasons for the additional recommendation submitted in an amended report that was circulated prior to the meeting.
Actions/ further information to be provided: None.
Resolved: The Committee accepted the revised recommendations that had been distributed and published as a Part 2 supplement to the agenda prior to the meeting.
1. That the review by the investment consultant of the BCPP Global Real Estate funds be noted. 2. That the target asset allocation weight for real estate be maintained. 3. That a geographic split within the real estate exposure of 75% UK and 25% Global be approved. 4. That a switch from CBRE to BCPP Core for global real estate be agreed, on the basis that the Committee accepts the change in risk and return dynamics, and subject to meeting necessary conditions prior to launch. 5. That delegation of authority be given to the Director of Corporate Finance and Commercial, in consultation with the Assistant Director – LGPS Senior Officer and Chair of the Pension Fund Committee, to transition the global real estate portion of the Surrey Pension Fund portfolio to the BCPP national pool when its design has been established to the satisfaction of officers and Fund advisors and assuming that the “necessary conditions” of governance have been satisfied.
|
|
|
BORDER TO COAST PENSIONS PARTNERSHIP UPDATE
This paper provides the Pension Fund Committee (Committee) with an update of current activity being undertaken by the Border to Coast Pensions Partnership (BCPP). Minutes: Speakers: Neil Mason, LGPS Senior Officer Milo Kerr, Border to Coast Joe McDonnell, Border to Coast
Key points raised during the discussion:
1. The Committee considered a Part 2 report which gave an update of current activity being undertaken by the Border to Coast Pensions Partnership (BCPP).
Actions/ further information to be provided: None.
Resolved: 1. That compliance with the “necessary conditions” of governance for the BCPP Emerging Market equity investment proposition, and that a commitment consistent with the Surrey Pension Fund target asset allocation to Emerging Market Equity can commence, be noted.
2. That the background and progress of BCPP activity be noted, including details of the following: a) BCPP Joint Committee (JC) meeting of 21 March 2023. b) The schedule of activity of BCPP since the last Committee meeting of 10 March 2023 until the end of the calendar year.
|
|
|
PUBLICITY OF PART 2 ITEMS
To consider whether the item considered under Part 2 of the agenda should be made available to the Press and public. Minutes: Resolved: That the LGPS Senior Officer be requested to consult with Mercer to ensure that all that can be made public, from their reports, is made publicly available.
|
|
|
DATE OF NEXT MEETING
The next meeting of the Surrey Pension Fund Committee will be on 8 September 2023. Additional documents: Minutes: The next meeting of the Surrey Pension Fund Committee will be on 8 September 2023.
|