Minutes:
Witnesses:
Neil Mason, Senior Advisor (Pension Fund)
Alex Moylan, Senior Accountant
Jason Bailey, Pension Services Manager
Key points raised during the discussion:
1. Officers updated the Board on the Surrey Pension Fund Committee meetings that had taken place since 12 October 2015. The Board was advised that the key areas of focus had been the government consultation regarding the pooling of investments, and the models of actuarial valuation for the forth-coming tri-annual valuation of the Pension Fund.
2. In reference to investment fund pooling, the Board was informed that the Surrey Pension Fund had opted to join with 13 partners to form Border to Coast Pension Partnership. This was a pooled fund totalling in the region of £36 billion in assets, with Surrey representing approximately £3 billion. The Board was informed that the proposed partnership had been well received by central government, who had responded to the expertise already present within the partnership. It was commented that the government’s stated intention was that investment decisions would be taken by an executive body, with oversight from each of the partners through a supervisory body.
3. The Board raised several questions pertaining to the governance of the Border to Coast Pension Partnership, and the role of the different bodies in decision-making and scrutiny. Officers clarified that the governance arrangements were yet to be set out in detail, but that an initial £50,000 investment had been required of each partner for legal and merger consultancy costs. The Board was informed that the set-up costs would fall equally to each partner, but the management charge for assets under management through the partnership would be pro-rata. It was also highlighted that decisions around asset allocation and funding would remain under each partner’s local decision-making structures.
4. The Board discussed recent coverage in the media concerning local government pension investments, both in reference to infrastructure and “sin stocks” (tobacco, alcohol and firearms). The Board noted that the Pension Fund Committee’s response to the government’s consultation on investment regulations had highlighted the Fund’s fiduciary duty to its members, and had expressed concern regarding the proposals set out in the consultation to enable central government to direct pension fund investments.
5. The Board also discussed the level of interest in ethical investments by members. It was highlighted that a public question had been submitted to the Pension Fund Committee on 13 November 2015. The Board was informed that the Local Government Association had sought counsel opinion on the matter 18 months prior, this had highlighted the primacy of a pension fund’s fiduciary duty to its members over any decision to disinvest. This had been reinforced by central government in the proposed changes to investment regulations. Officers also commented that there had been a number of individuals writing in or submitting Freedom Of Information (FOI) requests in reference to investments. The Board requested that the detail of the Fund’s responses was circulated for their information.
6. Officers highlighted that a decision had been taken on 12 February 2016 by the Pension Fund Committee to extend the fund’s property portfolio to include global investment, with a £30 million additional investment in property. There were discussions ongoing with CBRE on how to proceed with implementing this decision.
Actions/further information to be provided:
The proposed governance arrangements contained in the Pension Fund Committee report on pooled investments to be circulated to the Board.
The Fund’s response to FOI requests concerning investments to be shared with the Board.