The Pensions Committee of Newham Council met on Wednesday 20 March 2024 to discuss the administration and investment strategy of the Newham Pension Fund. Key decisions included the approval of a revised Investment Strategy Statement, which will be subject to stakeholder consultation, and noting the fund's performance and business plan updates.

Pensions Administration Update

The committee received an update on the administration of the Newham Pension Fund. This included information on the ongoing implementation of the McCloud judgement, which rectifies age discrimination in public service pension schemes. Final regulations for the McCloud solution came into effect on 1 October 2023, and the focus is now on updating administration software to identify and correct affected members' benefits. The report also noted that membership numbers in the fund continue to increase, contrary to concerns about members exiting due to the cost of living crisis. The Local Pension Board had met twice since the last committee meeting, discussing administration reports, legislative changes, and the fund's risk register.

Business Plan Update

An update on the Newham Pension Fund's 2023/24 business plan was presented. The committee was informed about developments with the London Collective Investment Vehicle (LCIV), including its Shareholder General Meeting and ongoing monthly business update meetings. Several new sub-fund launches are planned for mid-2024 and 2024, including the LCIV Nature Based Solutions Fund, LCIV Private Debt II Fund, LCIV Global Equity Value Fund, LCIV Indirect Property Pooling, and LCIV UK Housing Fund. The report highlighted that the LCIV has achieved significant annual savings for investors, and these savings are being passed on. The committee also discussed the Economic Activities of Public Bodies (Overseas Matters) Bill, with a request for further information on its potential retrospective impact on fund investments. Updates were also provided on the Pension Regulator's new General Code of Practice and the procurement process for a new Macro-economic Adviser contract. The committee noted that there were no concerns regarding fund liquidity or the funding of future pensions.

Investment Strategy Update

The committee reviewed the fund's investment strategy and its implementation. The funding level report for Q4 indicated a deficit of £56 million, with a funding level of 96.9%, a decrease from a surplus of £4 million at 31 March 2022. This was attributed to changes in inflation and higher pension increase allowances. The fund's asset valuation at the end of Q4 was £1.767 billion. The report detailed the fund's investment performance against its benchmark, noting that the largest sources of outperformance were the LGIM ESG Paris Aligned global passive equities and the LCIV Global Bond Fund, while the equity protection portfolio was the largest detractor.

The committee agreed to approve the draft revised Investment Strategy Statement (ISS) and instructed officers to consult with stakeholders. The ISS outlines how the fund meets six objectives aimed at improving investment and governance, including diversification of investments, risk management, pooling of investments, and the consideration of social, environmental, and corporate governance (ESG) factors. The revised ISS includes further information on the fund's pooling partner, the London Collective Investment Vehicle (LCIV). Discussions are ongoing regarding the reintroduction of a second active equity manager from within LCIV. A climate action plan update, including emissions data from the London CIV, will be presented at the next meeting.

Decisions Made:

• The minutes of the previous meeting held on 14 December 2023 were approved as an accurate record.
• The report on the Pensions Administration Update was noted.
• The report on the Business Plan Update was noted.
• The report on the Funding Update Q4 and the Fund's investment performance report Q4 were noted.
• The draft revised Investment Strategy Statement (ISS) was approved, with officers instructed to consult stakeholders. The Chair and the s151 Officer were delegated authority to approve the final version of the ISS following consultation.
• The press and public were excluded from the meeting for specific items of business involving exempt information.