Agenda and minutes

There were no declarations of interest.

The minutes of the meeting held on 4 May 2022 were confirmed as a correct record and signed by the Chairman.

Mr Anthony Fletcher, the external adviser from MJHudson Allenbridge Investment Advisers Limited, attended the meeting and presented his report to the Committee. The report incorporated Mr Fletcher’s view on the global economic position, factual information for global market returns, the performance of the Derbyshire Pension Fund, and his latest recommendations on investment strategy and asset allocation. Mr Fletcher also provided an update and a general overview of the current market situation.

          The Fund’s latest asset allocation as at 30 April 2022 and the recommendations of the Interim Director of Finance & ICT and Mr Fletcher, in relation to the Fund’s new final strategic asset allocation benchmark, which came into effect on 1 January 2022, were set out in the report. The value of the Fund’s investment assets had reduced by £75m between 31 January 2022 and 30 April to £6.030bn. Over the twelve months to 30 April 2022, the value of the Fund’s investment assets had increased by £461m. The Fund’s valuation could fluctuate significantly in the short term, reflecting market conditions and supported the Fund’s strategy of focusing on the long term. A copy of the Fund’s valuation as at 30 April 2022 was attached at Appendix 3 to the report.

Mr Fletcher informed the Committee that, with regard to performance, it had been the first time in 6 years that a 12 month negative return had been reported at the end of June for UK Gilts and Global Corporate Bonds.

The Russian invasion of the Ukraine had been ongoing for 100 days and this situation had directly contributed to a further increase in inflation. The behaviour of Russia should be a wake-up call for Europe and Germany in particular. It was likely that the transition to a lower carbon economy would be accelerated.

It was highlighted that the Fund had purchased two direct properties and had sold one during the period. Members asked if an additional short report on property could be produced for information. Officers informed that Colliers Global were responsible for this portfolio with buying, renting and selling property for the Fund and they would be attending a future meeting to explain their ESG responsibilities to the Committee and report on the activities they had undertaken.

RESOLVED:

That the Committee:

a)    Notes the report of the independent external advisor, Mr Fletcher;

b)    Notes the asset allocations, total assets and long-term performance analysis set out in the report of the Interim Director of Finance & ICT;

c)    Notes the change to the Fund’s Private Equity benchmark from FTSE All Share +1% to Global Sustainable Equities +1%;

d)    Notes the commitment of £56.25m to CVC Credit Partners European Direct Lending Fund III; and

e)    Approves the IIMT recommendations as outlined in the report of the Interim Director of Finance and ICT.

The Committee was provided with an overview of the stewardship activity that had been carried out by Derbyshire Pension Fund’s external investment managers. The following three reports were presented to ensure that the Committee was aware of the voting and engagement activity that had been carried out by Legal & General Investment Management (LGIM) and by LGPS Central Limited, the Fund’s pooling company:

?        Q1 2022 LGIM ESG Impact Report (Appendix 2)

?        Q4 2021-22 LGPSC Quarterly Stewardship Report (Appendix 3)

?        2021 LGPSC Annual Stewardship Report (Appendix 4)

It was enquired whether LGPS Central had considered the implications of the nature economy and Bio investment and should the Fund draw this to the attention of the pooling company? The Investment Manager would provide feedback to the next meeting of the Responsible Investment Working Group however, this was not the opinion of the full Committee.

RESOLVED:

That the Committee notes the stewardship activity of LGIM and LGPSC.

The last review of the Pension Administration Strategy (PAS) had been undertaken and approved by the Committee in March 2021 and a copy of this document was included for comparison purposes attached at Appendix 3 to the report.

The Fund had started the i-Connect project in November 2019 with the target of commencing its implementation for the submission of individual scheme member data for all participating employers by the end of 2021. However, due to the impact of the Covid-19 pandemic, the deadline for employers to have commenced engagement with the Fund in respect of implementing i-Connect had been extended to 31 March 2023 to allow employers more time to introduce the new method of data submission.

The revised PAS now established i-Connect as the standard method for the Fund’s employers to submit member data and would introduce charges for employers who had failed to engage with the Fund on implementing i-Connect.

Derbyshire Pension Board had reviewed the proposed changes to the PAS and the updated version had incorporated the Board’s suggestions. Subject to the Committee’s approval, a consultation would be undertaken with the Fund’s participating employers on the revised Pension Administration Strategy. The results of the consultation will be reported to the Committee at the next meeting.

RESOLVED:

That the Committee:

a)    Approves the draft Derbyshire Pension Fund Pension Administration Strategy 2022 attached at Appendix 2 to the report, for consultation with the Fund’s participating employers; and

b)    Delegates the consideration of the results of the consultation, and the determination of whether any revisions to the proposed Pension Administration Strategy are necessary following the consultation, to the Interim Director of Finance & ICT in conjunction with the Chairman of the Committee.

To move “That under Regulation 21 (1)(b) of the Local Authorities (Executive Arrangements) (Access to Information) (England)  Regulations 2000, the public be excluded from the meeting for the following items of business on the grounds that they involve the likely disclosure of exempt information as defined in Paragraph(s) 3 of Part 1 of Schedule 12A to the Local Government Act 1972”

To move that under Section 100(a)(4) of the Local Government Act 1972 the public be excluded from the meeting for the following items of business on the grounds that in view of the nature of the business, that if members of the public were present exempt information as defined in Paragraph 3 of Part 1 of Schedule 12A of the Local Government Act 1972 would be disclosed to them and the public interest in maintaining the exemption outweighs the public interest in disclosing the information.

There were no declarations of interest.

The Committee was updated on confidential matters in respect of Local Government Pension Scheme (LGPS) investment pooling.

RESOLVED:

To note the contents in the not for publication report.

Approval was sought for a commitment to Macquarie European Infrastructure Fund 7, together with a commitment to the accompanying co-investment sidecar.

RESOLVED:

To approve the recommendations in the not for publication report.