Agenda and minutes

The minutes of the meeting held on 1^st December 2023 were taken as read, confirmed and signed subject to an amendment being made to record that prior to consideration of the Climate Risk Management Report 2023 (minute 84 refers) the meeting had been adjourned for a short period.

The Chief Executive reported that no questions had been received under Standing Order 34.

The Chief Executive reported that no questions had been received under Standing Order 7(3) and 7(5).

There were no urgent items for consideration.

The Chairman invited members who wished to do so to declare any interest in respect of items on the agenda for the meeting.

There were no declarations made.

The Committee considered a report of the Director of Corporate Resources, the purpose of which was to inform the Committee of the outcome of the annual review of the Leicestershire Pension Fund’s (the Fund) strategic investment allocation and structure.  The report also provided advice regarding the Fund’s current investment strategy relating to fossil fuel exposure and provided advice, as requested by the Committee at its last meeting in December 2023, on the proposal put forward to ‘require LGPS Central to establish a fossil fuel free fund.’   A copy of the report marked ‘Agenda Item 6’ is filed with these minutes.

The Chairman welcomed to the meeting Mr. Philip Pearson and Mr. Russel Oades from Hymans Robertson, who supplemented the report with a presentation.  A copy of the presentation slides is filed with these minutes.

At the request of the Chairman and in response to questions raised, the Head of Law advised the Committee that the report properly addressed the proposal put forward by Cllr Cartwright in the context of the motion unanimously agreed at its last meeting and referred Members to the relevant paragraphs (paragraphs 2, 9, 20 to 46 and the recommendation at paragraph 48(d)).

The Chairman reminded members of the legal advice the Committee had received about its duties and responsibilities, emphasising that the Committee’s power of investment must be exercised with care, skill, prudence and diligence and that its predominant focus should be what was best for the financial position of the fund (balancing risk and return). The primary objective of the Committee was to ensure sufficient funding in the long term so that retirement benefits that employers promised to members under scheme rules could be paid when they fell due. Provided the risk of significant financial detriment to the fund remained low, the Committee’s choice of investment might be influenced by wider social, ethical or environmental considerations where views on investment are likely to be widely shared by scheme employers and members.

Arising from the discussion and questions, the following points were made:

Annual Review of Investment Strategy

(i)               Based on current figures the expected median return for the 2024 strategic asset allocation (SAA) of 8.7%pa, was considered achievable. The figures were based on yields on government bonds which were relatively high.  It was noted, however, that as this was just a median estimate there was a 50 percent chance the returns could be higher or lower.  Therefore, when establishing the funding position for the Fund a more prudent and conservative view would be taken.

(ii)             A member questioned how the investment strategy took account of the recent announcement by the Department for Levelling Up, Housing and Communities (DLUHC) which suggested that funds might be required to invest up to 5% in assets to support levelling up in the UK.  Mr Pearson advised that investing in projects that would contribute to levelling up would not be new for the Fund.  The Funds investment in infrastructure assets were a good example of this, which included a significant allocation to the UK.  Members noted that investment managers were in the process of assessing where the Fund’s existing investments were already contributing to levelling up objectives, following which they would consider whether anything else needed to be done. However, the Fund already likely met the 5% target.

(iii)            A Member raised concerns that some large-scale government projects aimed at levelling up had been cancelled, such as HS2 phase 2b, and questioned, given that government policy could change, if this increased the level of risk for the Fund.  Mr Pearson reassured members that investment managers would not invest predominantly or  ...  view the full minutes text for item 117.

The Committee considered a report of the Director of Corporate Resources, the purpose of which was to seek the Committee’s approval of the Leicestershire Pension Fund’s Responsible Investment Plan 2024 to enable the Fund to further improve the management of responsible investment risks.  A copy of the report marked ‘Agenda Item 7’ is filed with these minutes.

RESOLVED:

That Responsible Investment Plan 2024 attached to the report as Appendix A, be approved.

The Committee considered a report of the Director of Corporate Resources, the purpose of which was to provide an update on the Training Needs Self Assessments undertaken, to identify training Members of the Committee were expected to complete to demonstrate a suitable level of knowledge and understanding and to set out options for the Committee to consider as part of the planned review of the current Training Policy.  A copy of the report marked ‘Agenda Item 8’ is filed with these minutes.

Arising from discussion, the following points were made:

(i)               The Chairman commented that, whilst training was not currently mandatory, this did appear to be the Government’s intended direction of travel to make sure members of local pension committees had a good level of knowledge and understanding relevant to their role.

(ii)             A Member commented that the Hymans Robertson on-line Aspire training modules provided a good, ‘nuts and bolts’ overview and members were encouraged to complete this.  The modules were not time consuming and very manageable.

(iii)         Members welcomed the suggestion of providing for different training requirements (such as starter, interim and advanced courses), taking account of the different levels of experience of Committee Members.  It was suggested that this would provide a more flexible and targeted approach.

(iv)         It was suggested that training events held in person were more beneficial as much was learnt from the questions raised by other members and from the informal discussions held with officers. 

(v)             A Member commented that a new Code of Practice from the Pensions Regulator had been introduced and which would come into force in March 2024.  Members queried what the implications of this would for the Committee.  The Director undertook to provide an update as part of a future regulatory update to the Committee.

RESOLVED:

a)     That the report on the Pension Fund Training Needs Self-Assessment be noted;

b)     That all members be encouraged to complete the training needs assessment, if not yet done, and to return this to officers by 14 February 2024;

c)     That Members be encouraged to commit to progressing with completion of the Hymans Aspire training modules, noting that a record would be taken as at 31 March 2024 for the Fund’s Annual report;

d)     That Members feedback any further views on the current approach to the Fund’s Training Policy as part of the review;

e)     That the Director be requested to provide an update on the Code of Practice from the Pensions Regulator as part of a future regulatory update.

The next meeting is scheduled for 8 March 2024, at 9.30am.

RESOLVED:

That it be noted that the date of the next meeting would be 8 March 2024, at 9.30am.