The Pensions Committee of Newham Council met on Wednesday 16 October 2024 to discuss the fund's investment strategy and administration. Key decisions included the approval of the 2024-25 Pensions Administration Budget and the appointment of a new Global Equity Value manager.

Investment Strategy Update

The committee received an update on the Newham Pension Fund's investment strategy and its implementation. The funding level at 30 June 2024 showed a deficit of £68 million, with a funding level of 96.5%. This decrease from the previous valuation was attributed to higher-than-assumed pension increases due to inflation, although this was partially offset by a reduction in long-term inflation assumptions. Investment performance in the second quarter was slightly lower than anticipated by the actuary, with the fund's asset valuation reaching a record high of £1.895 billion.

A significant decision was made regarding the appointment of a new active equity manager, Wellington Management Company, for the LCIV Global Equity Value Fund. This fund is expected to launch in Q4 2024 and will complement the existing LCIV Global Equity Focus Fund and passive equity holdings. The committee agreed to invest up to 8% of the strategic asset allocation (approximately £150 million) into this new fund. This will be financed by reducing the allocation in the LCIV Global Focus Fund by £30 million and drawing £120 million from the LGIM Paris Aligned Global passive equity fund. The committee noted that the impact on investment management fees and transition costs were detailed in an exempt report.

Pensions Administration Update

The committee received an update on the administration of the Newham Pension Fund. Key legislative changes impacting the Local Government Pension Scheme (LGPS) were discussed, including the McCloud judgement, the Exit Cap, and the Pensions Dashboard. The Pensions Regulator's new Code of Practice was also noted, with the fund undertaking a gap analysis to ensure compliance.

The report highlighted that LPPA's performance remained above its 95% Service Level Agreement (SLA) target for casework, achieving 98.1% for the quarter. Pension estimates were slightly below the SLA at 93.2%, but retirements from active members were above target at 97.8%. The number of registered members for the online portal, PensionPoint, had increased to 4,979.

The committee approved the 2024-25 Pensions Administration Budget of £0.973 million to be paid to Lancashire County Council.

Business Plan Update

An update was provided on the Newham Pension Fund's 2024/25 business plan. Developments included updates on the London Collective Investment Vehicle (LCIV), with the Global Equity Focus Fund remaining on enhanced monitoring. New sub-fund launches were noted, including the Global Equity Value Fund, expected to launch in Q4 2024, and the Natural Based Solutions fund. The LCIV also announced a new Indirect Real Estate Pooling (IREP) initiative. Staffing changes at LCIV were also reported, including the departure of the Chief Financial Officer and maternity leave for the Head of Sustainability.

Updates on the LGPS General included the launch of a Pensions Investment Review by the government, focusing on defined contribution schemes and the LGPS, with a particular emphasis on scale, consolidation, and investment in UK assets. The committee noted the Fund's response to the MHCLG's Call for Evidence on this review. The Pension Fund monitor indicated no concerns regarding liquidity or the funding of future benefits. The draft Pension Fund Annual Report 2023-24 was presented for agreement.

The committee also noted the programme of recent and forthcoming events, including various committee meetings, conferences, and training sessions.