The Teesside Pension Fund Committee is scheduled to convene to discuss various aspects of the fund's performance, governance, and future strategy. This includes presentations from Border to Coast Pensions Partnership on real estate and investment performance, reviews of investment activity and advisor reports, and updates on recent developments in the Local Government Pension Scheme (LGPS). Members will also consider the draft annual pension fund report and accounts for 2024/25.

UK Real Estate Market and Portfolio Update

The committee is scheduled to receive a presentation from Border to Coast regarding the UK real estate market and the fund's real estate portfolio. The presentation, detailed in the Report - Border to Coast Presentation Real Estate, will cover:

• A market update
• A portfolio update
• Performance
• Pipeline

The presentation includes a market overview noting that:

While the UK is not as directly aƯected by higher US tariƯ rates, the wider global disruption they bring will likely influence the UK's economic performance in the future.

The presentation will also provide an overview of the UK Real Estate Main Fund's key characteristics as at 30 June 2025, including the number of properties, capital value, passing rent, estimated rental value, and key risk metrics. Some of the properties mentioned in the report include BMW Battersea, Lion Retail Park in Woking and 27-35 Mortimer Street in London.

The presentation will also include a performance forecast versus the forecast performance target, and an overview of the UK Main Fund pipeline for September 2025, including potential acquisitions in cities such as Cambridge and Leeds.

Investment Activity and Performance

The committee will be presented with the Report - Investment Activity Report, which provides an overview of the fund's investment activities, treasury management, and valuation.

Key discussion points are scheduled to include:

• Implementation of Investment Advice: The fund's preference for growth assets over protection assets, with no investments in bonds at this time.
• Cash Levels: The fund's cash level at the end of June 2025 was 7.77% of the total fund value, against an agreed maximum of 20%.
• Investment in Alternatives: £27.3m was invested in the quarter in alternative investments such as infrastructure and private equity.
• Transaction Report: A detailed transaction report for the period April - June 2025, with net purchases of £23.8m. A detailed breakdown of transactions is provided in the Transaction Report.
• Treasury Management: Management of cash balances with approved counterparties, with £435.2m invested as at 30 June 2025.
• Fund Valuation: The total value of all investments, including cash, is £5,706 million as at 30 June 2025. A summary analysis of the valuation, including asset class weightings compared with the fund's customised benchmark, is included in the Valuation Custodian and Valuation Internal documents.

• Forward Investment Programme: Commentary on activity in the current quarter and outlook for the next three to five years. The agreed Strategic Asset Allocation (SAA) at the September 2024 Pension Fund Committee is:

  • Growth Assets: 70% (UK Equities 10%, Overseas Equities 45%, Private Equity 15%)
  • Protection Assets: 30% (Bonds / Other debt / Cash 10%, Property 10%, Infrastructure 10%)

• Local Investment: Update on the fund's investments in the Ethical Housing Company, Waste Knot, and the Teesside Flexible Investment Fund managed by FW Capital.

Investment Advisors' Reports

The committee will consider reports from the fund's independent investment advisors, Peter Moon and William Bourne, detailed in the Report - Investment Advisors Reports. These reports will provide an update on current capital market conditions to inform decision-making on short-term and longer-term asset allocation.

Peter Moon's report, detailed in the Appendix A PM document, notes that:

Globally there has been a significant decline in press and media freedom. Civil liberties have been restricted and there has been a general undermining of democratic rights. The shooting of Charlie Kirk in the United States is a reflection of the decline in the democratic checks and balances in democracies that have existed up until now.

William Bourne's report, detailed in the Appendix B WB document, notes that:

The exception to the big picture is China, which remains mired in deflation.

Actuarial Valuation Communications

The committee will discuss plans to communicate the 2025 Actuarial Valuation for the Teesside Pension Fund, as outlined in the Report - Valuation Communications. This includes consulting with employers on revisions to the Funding Strategy Statement (FSS). The report notes that:

The intention is to present the FSS to the next Committee on 10th December 2025 with a view to consulting all employers and the Department of Education from 11th December until mid-January 2026.

The report also covers communication of individual employer valuation results, and the rates and adjustments certificate.

Recent Developments in the LGPS

The committee will receive an update on recent developments in the LGPS, as detailed in the Report - Recent Developments in the LGPS. This includes:

• The Pension Schemes Bill, enabling reforms to investment management in the LGPS following the 'Fit for the Future' consultation.
• His Majesty's Treasury's response to the consultation on Inheritance Tax.
• A letter from the Palestine Solidarity Campaign calling for divestment from Involved Companies operating in the Occupied Palestinian Territory.
• Reform UK's potential policy in relation to the LGPS.

The report notes that Councillor John Kabuye, Chair of the committee, received a letter from the Palestine Solidarity Campaign (PSC) which threatens legal action if the Fund does not divest from Involved Companies who operate in the Occupied Palestinian Territory. The report also notes that:

The LGPS Scheme Advisory Board has posted the following:

The Board is aware that many funds will have received a letter this week from the Palestine Solidarity Campaign, alleging that LGPS administering authorities are in breach of their legal obligations in relation to the ongoing humanitarian disaster in Gaza.

Pool Governance

The committee will discuss the Border to Coast Pension Partnership governance arrangements and potential changes in response to the Government's Fit for the Future consultation, as detailed in the Report - Pool Governance.

The report notes that:

As members are aware, the Government is taking forward a series of changes to the way investment pooling in the LGPS works through its Fit for the Future consultation. Changes include Administration Authorities delegating implementation of investment strategy to the pool and taking their principal investment advice from them. Management of all assets is also to be transferred to the pool.

The report also includes a diagram illustrating the decision-making, advisory support and regulatory oversight processes for Border to Coast Pensions Partnership.

Draft Annual Pension Fund Report and Accounts 2024/25

The committee will be presented with the draft annual report and accounts for the year ended 31 March 2025, as detailed in the Report - Pension Fund Draft Annual Report and Accounts. The Pension Fund Annual Report 31.03.2025 - Final document includes:

• An overall fund management review
• A governance and training review
• A financial performance review
• The fund account, net assets statement and notes
• Information on investments and funding
• Information on administration

The report notes that Andrew Humble, Director of Finance and Transformation, confirms that the draft statement of accounts gives a true and fair view of the financial position of the fund at 31 March 2025 and of its income and expenditure for that year.

The report also notes that XPS, who were the pensions administrator for the period covered by the Annual Report, have not provided any performance information for inclusion in the Annual Report.