Agenda item

This report presents to the Board a draft Business Plan for the Fund for financial years 2024/25 to 2026/27 attached as Appendix A. It invites their comments and requests their agreement to the Plan.

The Pension Fund Investment Manager introduced the report and explained that the report was relevant to the Board and Committee and covers information about the investment duties of the Fund. He stated that the report was yet to be presented to the Committee.

The Pension Fund Investment Manager explained that the government had issued a statement which outlined the desire for pension funds to move their investments into their local pools by the 31 March 2025, which would be a difficult deadline for the Fund to meet.

The Pension Fund Investment Manager stated that the Fund was committed to having and implementing a good training policy. The Pension Fund Investment Manager explained that the Fund had around 15 fund managers which was considered a lot for a fund of this size, and the Fund had various investments in the key areas specified in the governments statement, namely 5% in levelling up in the UK and 10% in private equity; the Fund was close to achieving these figures and had been committed to this strategy for a long time.

The Pension Fund Investment Manager informed the Board that there would be a governance review conducted by AON in the year 2024/25.

The Pension Fund Investment Manager stated that the Fund was approaching £2 billion and was over 100% funded.

The Pension Fund Investment Manager explained that officers believed the Fund would remain in surplus for several years and would not become a mature Fund due to the fund’s investment policies, which would allow the Fund to have a net income over the period of 2024-27. The Pension Fund Investment Manager informed the Board that the Scheme Advisory Board (SAB) good governance review and the new pension regulators code of good practice would provide officers with direction on how to manage the Fund.

In response to a question from a member, officers informed the Board that:

• It had been recognised if a fund possessed relatively illiquid investments such as private equity and socially responsible funds, then it would be more difficult to take money out of those types of assets and transfer them to another fund. It had also been recognised that this action would not be in the Fund’s best interest and officers believed they would be given the opportunity to explain these difficulties to the government.
• The Fund intended to move all their listed assets into pool as they were significantly easier to transfer than the illiquid assets, however, officers would need to be careful with the cost of transition. The London CIV pool did not have the capability of accepting the Fund’s private equity assets as there were no private equity investments in the pool. Officers believe that this was the reason that they would not be able to fully transfer the Fund’s assets to the pool by the 31 March 2025. 
• Officers may be able to transfer the Fund’s property investments into the London CIV without selling those investments.
• The TPR Code would be covered as part of the governance review, and once officers had established the Fund’s compliance with the TPR code then they would present a report to the Board detailing their findings.
• Matthew Hallett was the Acting Head of Pensions and Treasury; the Pensions Accountant post had been covered by a contractor on a temporary basis; the Pension Investment Manager role had been covered by Ian talbot. Once a permanent Head of Pensions and Treasury had been appointed, there would be a slight restructure. There was an appropriate number of posts and there was enough of a budget to appoint to all the required positions, however, officers needed to ensure that the job descriptions for each post were correct.
• The structure would be addressed once the Head of Pension and Treasury was appointed. Appointments of members to the committee was raised at the last committee meeting and will be ready for the committee meeting in June 2024.

The Board asked officers to review the June 2024 deadline that they had set for the EDI policy statement to be drafted.

RESOLVED:

• To agree to the recommended Medium Term Business Plan 2024/27.