The Pension Fund Committee of Somerset Council met on Friday, 14 June 2024, to discuss various matters related to the management and performance of the pension fund. Key topics included climate change risks, investment performance, administrative performance, and updates to the business plan and cash management strategy.

Climate Change and ESG Factors

Sigurd Reimers raised concerns about the impact of some pension fund investments on climate change. He highlighted that certain investments contribute to climate change through their operations. The committee reaffirmed its commitment to achieving net-zero operations for all investments by 2040.

Investment Performance

The Independent Investment Advisor provided an update on Brunel’s performance across various equities. The Funds & Investments Manager reported a strong quarter for investment returns, although overall performance was slightly below the 5% benchmark due to underperformance in private equity and the Global High Alpha Fund. The committee noted the report and will keep a close eye on private equity investments, particularly those with Neuberger Berman.

Administrative Performance

The Head of Peninsula Pensions presented the administrative performance report for Q3 2023. The report showed a 1% improvement from the previous quarter and a 2% improvement from Q1. There were 26 compliments and 8 complaints from scheme members. The team is still working on the McCloud project, which remains complex. The committee noted the report and the ongoing efforts to ensure compliance and best practice.

Business Plan Update

The Funds & Investments Manager updated the committee on the business plan and developments in the Local Government Pension Scheme (LGPS). Key points included the completion of the 22/23 audit, the start of interim work on the 23/24 audit, and the need for an informal meeting to discuss a new investment strategy statement. The committee noted the progress.

Cash Management Strategy

The committee discussed the cash management strategy and counterparty policy. Councillor Simon Coles proposed, and the committee agreed, to reappoint the Investments team of Somerset Council to manage the Fund’s cash. The strategy and policy were adopted unanimously.

Administration Strategy Statement

The Head of Peninsula Pensions proposed amendments to the administration strategy, including fines for non-engaging employers and a detailed communication policy. Councillor Simon Coles proposed delegating the decision to adopt the new strategy to the Chair after further review by the Pension Board. The committee agreed to this proposal.

Resource Review and Financial Forecast

The Funds & Investments Manager presented the financial forecast, noting a decrease in projected contributions for the 23/24 financial year and an increase in pensions in payment. The committee resolved to adopt the financial plan and accept an absolute return target of 4.6% for the investment return of the fund.

Review of Pension Fund Risk Register

The Funds & Investments Manager reported no changes to the risk register since the last meeting. The committee noted the report.