Agenda and minutes

Councillor John Muldoon declared a personal interest as a Substitute Member

on the Advisory Board of the Local Government Pension Scheme.

The Chair confirmed that the Hyman’s report on Harbour Vest had been

dispatched by e-mail subsequent to the last meeting.

Councillor Bonavia observed that the training schedule presented at the last

meeting was not convenient for him but that for other areas he had  found

videos and online webinars to be most useful in meeting his training

requirements. The Principal Accounant promised to investigate the availability

of such resources covering the Pensions field.

The Chair commented that it was important for members to undertake

relevant training especially now that the Pensions Board would be monitoring

their performance. In order to be able to demonstrate they had fulfilled the

requirement to be adequately trained, he asked that the Member

Development Officer be asked to provide a register of training to date

undertaken by Pensions Committee members.

RESOLVED that the minutes of the meeting held on June 11 2015 be

confirmed and signed as a correct record.

 A presentation was made to the Committee by Graeme Rutter, the Head of

Real Estate Capital Partners, Neil Turner, the Head of Indirect Real Estate

Investment and Lyndon Bolton. They briefed the Committee on recent staffing

changes at Schroders and answered questions from the Committee.

The Chair received an explanation of the tertiary property designation and

was advised that it was expected the existing significant cash reserves would

be drawn upon within four to six months.

In conclusion the Chair thanked the Fund Managers for their presentation.

RESOLVED that the presentation be noted.

A presentation was made to the Committee by Stephen Lee, the Lewisham

Portfolio Manager in the UK Client Group and Tom Nelson the Head of the

Commodities and Resources team. They explained that 2014 had been a very

difficult year for Commodities and acknowleged that the asset class had been

underperforming.

After member questioning the Chair thanked the Fund Managers for their

presentation.

RESOLVED that the presentation be noted.

A presentation was made to the Committee by Lynn Coventry who made a

presentation on the performance of Lewisham’s Pension Fund relative only to

other Local Authority Funds for the year ending 31 March 2015.

The Chair thanked her for the presentation which he believed to be very

positive as it had placed Lewisham in the top quartile of all local authorities.

RESOLVED that the presentation be noted.

The Chair referred to the updated version of the report in the Supplementary

Agenda and suggested that all three recommendations should be addressed

separately.

In respect of the first recommendation the Principal Accountant explained that

£50,000 had been paid in service charges so far and that it was proposed

there would now be an annual service charge of £25,000pa to support the

operational costs of the London CIV which was partly owned by the Council.

The Committee agreed the charge was reasonable.

On the second recommendation on regulatory capital, Councillor Best said

that at a level of £150,000 the CIV appeared to be over capitalized and the

expenditure might be hard to defend given the Council’s dire financial

circumstances. The Principal Accountant explained the Pension Fund was

separate from the Council and its funds could never be used to bolster

deficiencies in the General Fund. She stated the payment of this sum as

regulatory capital could be regarded as an investment with a return. She

further explained the CIV had to demonstrate financial robustness to the FCA

with the ability to resist unforeseen exposure and therefore required the over

capitalisation. Given this explanation, the Committee agreed to approve the

suggested payment.

The Chair outlined previous discussions he had held regarding the third

recommendation and said that his conclusion, given the enormous sums

involved, was that he preferred the decision to be taken at a future meeting of

the Committee on the basis of a considered report rather than having such a

significant decision being delegated on the basis suggested in the report. The

Committee concurred with the Chair’s view stating that they welcomed the

greater transparency a decision made in open session would offer.

RESOLVED that

(1) the payment of an annual service charge of £25,000 to support the

operational costs of the London CIV while the Council remains an owner of

the company be approved;

(2) the payment of £150,000 to the London CIV for use as regulatory capital to

meet the requirements for Financial Conduct Authority authorisation be

authorised;

(3) any decision to authorise the transition of pension fund assets into the

London CIV should be considered at a future meeting of the Committee and

be subject to the necessary financial due diligence being performed by

officers and relevant professional (financial and legal) advice being received. 

The report was presented by the Principal Accountant who confirmed the

Pensions Board had met in July but that it still did not have its non voting

Chair. The Committee agreed with a suggestion from Councillor Best that the

Council advertises widely including the use of Lewisham Life and its website

to attract appointable candidates.

RESOLVED that the report be noted.

RESOLVED that under Section 100(A)(4) of the Local Government Act 1972,

the press and public be excluded from the meeting for the following items of

business on the grounds that they involve the likely disclosure of exempt

information as defined in paragraphs 3, 4 and 5 of Part 1 of Schedule 12(A) of

the Act, as amended by the Local Authorities (Executive Arrangements)

(Access to Information) (Amendments) (England) Regulations 2006 and the

public interest in maintaining the exemption outweighs the public interest in

disclosing the information:-

(1)       Performance of quarter 2.

(2)       Alternative Growth Asset Mandate.

The report was presented by Albert Chen from the Council’s Investment

Consultants, Hymans Robertson.

Based upon a commercially confidential assessment of performance, the

Committee agreed the following in respect of the various mandates:

Blackrock                   Passive Multi-asset            no change

Harbourvest              Venture Capital                    no change

Investec                     Commodities                                    sell

M&G                           UK Financing Fund                        no change

Schroders                  Property                                 retain but downgrade owing to

                                                                                    staffing changes

UBS                            Passive Multi-asset             no change

RESOLVED that the proposals made by Hymans Robertson be approved.

The report was presented by Albert Chen from the Council’s Investment

Consultants, Hymans Robertson. He outlined three alternatives for the

replacement of the current investment in the Commodities Mandate. These

were Multi-Asset, Senior Secured Loans and Infrastructure. The preferred

option was Multi Asset which allowed an active manager to access a broad

range of assets in a single vehicle.

Members questioned the active nature of the preferred choice and noted

Commodities was already an active fund. The Chair stressed that any

decision to pursue an active option would mean that the choice of fund

manager would be critical to success.

As the meeting had exceeded the two and a half hour limit from the start time

advertised in the Summons, the Committee passed a resolution to suspend

standing orders to allow full consideration of this item.

RESOLVED that:

(1) the Investec mandate be replaced with a multi-asset mandate under a

pooled fund arrangement as set out in the recommendation by our advisors;

(2) a manager selection process be commenced for the multi-asset mandate;

(3) the Non-OJEU procurement single-stage process be approved as the  

preferred procurement approach to be undertaken;

(4) the proposed timetable for the Manager selection process set out in the

Hymans report be approved

(5) authority be delegated to the Executive Director for Resources and

Regenerationton to arrange the timings of the Manager selection process and

meetings; and

(6) the fee stipulated to Hymans for undertaking the carrying out of a pooled

fund search under the timetable and process set out in the Hymans

report be approved on the assumption eight managers receive and return

Requests for Proposals (RfP) with the cost to increase by £2,000 for each

additional RfP returned and reviewed.

The meeting closed at 9.46pm