Agenda item

Report of the City Treasurer.

7.1       Peter Carpenter presented the report that sought approval of the Investment Strategy Statement (ISS) and the Funding Strategy Statement (FSS). Members noted that the ISS set out the remit of the Committee, as well as the City Council, as the Fund’s administering authority, its approach to pooling in respect of the London Collective Investment Vehicle (CIV). Peter Carpenter advised that around 53% of the Fund’s assets would be transferred to the CIV by the end of June, and as the Committee had agreed to the CIV negotiated rate for LGIM, this would take the overall percentage of assets under the CIV to 76%. As the proportion of assets under the CIV grew, governance issues including voting rights increasingly needed to be addressed.

7.2       Peter Carpenter advised that there had been two minor changes to the FSS since it had been presented to the Committee at the 15 November 2016 meeting. The first involved changes to section 7.2 of the report relating to the monitoring arrangements for assessing the financial health of employers, and the second was a correction to Section 12 of the report referring to the new ISS and not the earlier Statement of Investment Principles.

7.3       During discussions by the Committee, a Member referred to paragraph 1.4 in the ISS and suggested that the advice of the Investment Consultant was not always sound. It was agreed that the wording for paragraph 1.4 be reviewed for the next meeting. The Chairman commented that the ISS does not consult with interested parties and it was more accurate to state that the ISS informs interested parties and it was agreed that paragraph 6.9 of the ISS be amended accordingly to reflect this. Members also sought clarification as to whether funds could invest in more than one CIV and it was commented that this would be desirable if it was permissible as it would help reduce costs further.

7.4       In reply to questions raised by Members, Peter Carpenter advised that it had been confirmed at the first London CIV annual conference on 1 March that investing in more than one CIV was not permissible at the moment, however the Minister for Local Government will consider this matter further. Peter Carpenter informed Members that the City Council was now receiving some reports from the London CIV in respect of the transfer of Majedie assets, however greater clarity and transparency was needed. However, he felt that the London CIV currently lacked the capacity to attend, for example, all of the Pension Fund Committee meetings held by the participating London boroughs, however there were staff undertaking monitoring duties. Members noted that Nikki Parsons (Pension Fund Officer) was a member of a working group looking at London CIV governance issues.

7.5       The Chairman requested that Peter Carpenter write to the Minister for Local Government on behalf of Councillor Patricia McAllister and himself to ask for confirmation on whether administering authorities would be able to choose to invest in more than one CIV at some point in the future and when was a final decision likely to be made on this matter. The Committee agreed the ISS and the FSS, subject to the comments made above.

7.6       RESOLVED:

1.    That the new Investment Strategy Statement required by changes of legislation to be implemented as of 1 April 2017 be approved, subject to the comments made above.

2.    That the Funding Strategy Statement required by changes of legislation to be implemented as of 1 April 2017 and which was approved in draft form by the Committee on 15 November 2016, be approved.