Agenda item

This report provides an update on the performance of the Croydon Council Local Government Pension Scheme Fund to the end of quarter 2 (to the end of September 2020).

(To Follow)

This item was introduced by the Head of Pensions and Treasury and the following was noted:

·        The Fund was performing quite well despite the current circumstances and there was a distinction between what the markets thought and what was occurring in the real economic world that needed to be considered;

·        There was, however, the reality that the world would move into recession due to the effects of the pandemic;

·        The value of Assets had increased.

Councillor Hay Justice questioned what mitigations were in place as the markets did not reflect the reality of what was occurring around the world in terms of the economic climate, the Covid pandemic, and the presidential elections in America. Officers said that a strategy was in place that spread investments over a number of areas and therefore mitigated risk by diversification.

They continued to follow best advice, and constant monitoring was taking place as was the ability to react as necessary. The Investment adviser added that in terms of risks, as stipulated by Investment 101, that some had to be taken in order to generate a return and not taking any was a risk itself.

It was important that risks were taken in a managed way in areas that would result in payments on a long-term basis and ensuring that risk sources and return driver sources were spread across various different areas.

COVID had created dislocation in the markets. This dislocation would continue to be monitored for signs that the dislocations would become imbedded. The portfolio had a spread of return drivers across it, which was helpful in ensuring the Fund was well placed. Our advisers would continue to be alive to changes going forward and how we might need to adapt the portfolio.

Members asked whether the Council issuing a Section 114 notice would affect the value of the Fund and whether members of the Committee had been interviewed by the Pensions Regulator regarding the Property transfer. The Chair stated that the Section 114 notice did not affect the Fund.

Mike Ellsmore; the Chair of the Pensions Board confirmed that he had been interviewed by the Pensions Regulator in September 2018 about the Property transfer as he had written a letter to the Section 151 Officer in 2018 raising a few areas where he thought further work was required. He confirmed he had not received any feedback from the Regulator. Councillor Hopley confirmed she had been interviewed by other outside bodies about the ratification of the decision about the Property transfer and concerns on governance. Officers confirmed that they had written to the Pensions Regulator about the Section 114 notice confirming that the arrangements of the Pension Fund were separate from the Council.

Members asked whether valuations of properties associated with the property transfer had been carried out. Officers responded that they had not got the information on this. It was commented that details of this had been requested on several occasions and there had been no details brought forward to date, there were also concerns about registration as well as completion of the legal papers.

It was agreed that a formal request for information be sent on behalf of the Committee to Officers to provide a written briefing on the Fund’s position. Members highlighted further concerns about the reduced payment that was being taken from the Council as a result of the current agreement. Officers confirmed that currently the contributions paid by the Council had not been reduced and were in line with those agreed in the triennial valuation.

All Members expressed concerns about the continuing delays in resolving the Property transfer arrangement and that they wanted the situation resolved very quickly.

The Committee requested to be provided with a briefing note on the position in relation to Property Transfer which should include:

a)     The valuations of the properties included in the transfer

b)     The position regarding the legal agreement between the Council and the Fund

c)     The completion of the agreement

RESOLVED: to note the performance of the fund for the quarter.