The Pension Committee of Croydon Council met on Tuesday 12 March 2019, where members received updates on the London CIV and M&G's Residential Property Fund, and made decisions regarding currency hedging for the Pension Fund's equity investments. The committee also noted the audit plan for the Local Government Pension Fund and a progress report for the third quarter.

London CIV Update

The committee received a presentation on recent developments at the London CIV¹ from Kevin Cullen, London CIV Client Relations Director. The update covered governance arrangements, the appointment of a new Chief Operating Officer and Chief Investment Officer, and the launch of new product lines. Committee members raised questions about the CIV's in-house expertise development for different asset classes, the performance of the Global Bond fund, potential cost savings for the Croydon Pension Fund from participation, and the timeliness of recent money transfers to the London CIV. The committee noted the update and thanked Mr. Cullen for his presentation and for answering their questions.

M&G Residential Property Fund Update

Lucy Williams, Director of Institutional Business UK and Europe at M&G, provided an overview of M&G's Residential Property Fund and its investment strategy. Committee members sought clarification on the longevity of properties, the liquidity of the fund, and the risks associated with planning requirements and political factors, with M&G undertaking to provide written material on political risk modelling. Questions were also raised about the disposal of properties, the structure of the organisation, the location of future developments, and the environmental ratings of properties being developed. The committee noted the presentation and resolved to accept an invitation to visit an M&G property asset.

Currency Hedging for Equity Investments

Peter Gent, FIA, from Mercer Ltd, presented an overview of the considerations for implementing currency hedging for the equity investment portion of the Pension Fund portfolio, excluding emerging markets. Members engaged in a question-and-answer session to understand the options, risks, costs, value, and appropriate levels and timing of hedging exposure. The committee resolved to note the report on currency hedging commissioned from Mercer and to delegate the decision on whether and when to implement a currency hedge to the Chief Financial Officer, in consultation with the Committee's Chair and the Cabinet Member for Finance and Resources.

Audit Plan for the Local Government Pension Fund

The committee resolved to note the audit plan provided by Grant Thornton for the Local Government Pension Fund.

Progress Report (Q3)

The committee agreed with the recommendations in the progress report for the third quarter. These included noting the performance of the fund during the quarter and delegating fund investment decisions to the Chief Finance Officer, in consultation with the Chair of the Pension Committee and the Cabinet Member for Finance and Resources.

Risk Register Review

The committee resolved to note the report on the risk register review.

Deferred Items

Several items were deferred due to insufficient time for discussion: the Key Performance Indicators for the Local Government Pension Scheme, the Forward Plan, and the Review of training support for the Pensions Committee. The consultation on draft statutory guidance on pooling assets was also not considered; given the consultation deadline preceded the next committee meeting, members were to be kept informed via email regarding the consultation response.