Venue: County Hall, Matlock, DE4 3AG
Contact: Danny Sunderland 38357
Note: Please note - there will be a training session on Diversified Multi-Asset Credit for Committee members and Pension Board members immediately following this meeting.
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To receive declarations of interest (if any) Minutes: There were no declarations of interest. |
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To confirm the non-exempt minutes of the meeting of the Pensions and Investments Committee held on 6 December 2023. Minutes: The minutes of the meeting held on 6 December 2023 were confirmed as a correct record. |
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Climate Risk Management Report Additional documents: Minutes: The LGPSC Climate Risk Management Report was structured around the Department for Levelling Up, Housing and Communities (DLUHC) potential recommendations on climate-related risk management as set out in the DLUHC consultation document, ‘Local Government Pension Scheme (England and Wales): Governance and reporting of climate change risk’. This was the fourth Climate Risk Management Report prepared by LGPSC that had been presented to the Committee.
Recognising that there was considerable uncertainty in the future development of climate risks, LGPSC and the Fund’s In-House Investment Management Team (IIMT) believed that using a variety of different carbon risk metrics and climate scenario analysis tools would currently provide the most appropriate method of analysing and managing climate risk within an investment portfolio.
LGPSC’s contractual arrangements with MSCI, the third-party provider of the carbon risk metrics data, prevented the publication of the full Climate Risk Management Report as the report contained some proprietary information in respect of individual investment manager and stock holding carbon metrics, which was subject to a non-disclosure clause. The full report would be presented in the restricted part of this Committee meeting. This public version of the report provided largely the same degree of overall portfolio and asset class information but omitted the proprietary information noted above and was attached at Appendix 2 to the report.
LGPSC had noted that based on the Fund’s current processes and disclosures, the Fund was well positioned to meet DLUHC’s potential requirements on climate change governance and disclosures.
The Investment Manager provided further details of the key highlights of the carbon risk metrics analysis on the Fund’s listed equities and listed investment grade bonds and informed the Committee of the progress made to date in respect of the Fund’s two targets included in the Climate Strategy. The Fund’s climate related targets were expected to show a sizeable increase once the updated Climate Strategy had been finalised.
The Report included a number of considerations and recommendations, several of which were addressed in the Fund’s updated Climate Strategy. The remaining recommendations, largely relating to governance and reporting were currently being considered by the Fund.
RESOLVED that the Committee notes the Climate Risk Management Report attached as Appendix 2 to the report. |
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Local Government Pension Scheme Investment Pooling Minutes: The Committee received an update on matters in respect of Local Government Pension Scheme (LGPS) investment pooling.
LGPS Investment Pooling Consultation The Government’s response to the pooling consultation had unexpectedly been published at the same time of the Autumn Statement in November 2023. Details of the response were highlighted. Officers would be discussing the government’s response with the other Partner Funds in the LGPS Central Pool and with LGPS Central Limited, the pooling company, in the Moving Pooling Forwards in Collaboration forum and more widely with other LGPS funds.
One of the Government’s requirements was for Funds to set a plan to invest up to 5% of assets in levelling up the UK. Members of the Committee expressed their concern over a number of the new requirements and in particular this issue and felt it was a directive from the Government as to where the Fund should be investing.
Members and officers felt that it would be helpful to see what the other Funds’ interpretation of the guidelines was prior to preparation for working towards the legislation.
LGPS Central Limited Strategic Business Plan & Budget 2024-25 Partner Funds were currently considering the LGPSC Strategic Business Plan & Budget 2024-25 (Strategic Plan), which was expected to be presented to shareholders for approval at the Company’s General Meeting on 27 February 2024. Mark Kenyon, the Director of Finance & ICT, would represent the County Council at the meeting and would vote on the Company’s resolutions.
Partner Funds had discussed their ongoing/future requirements with LGPSC in September 2023. LGPSC had circulated the Strategic Plan to Partner Funds at the start of December 2023 and had attended a meeting of the Shareholders’ Forum shortly afterwards to present its high-level strategic outlook for the Company, taking into consideration the recently published government response to the pooling consultation.
Partner Fund officers were considering requesting additional information on the Strategic Plan that had been provided by LGPSC and Members requested if copies could be made available for their consideration.
Recruitment of the Chief Executive Officer The recruitment of a new Chief Executive Officer for LGPSC was reaching its final stages and the Fund would receive on the appointment.
LGPS Central Pool Joint Committee The next meeting of the LGPS Central Joint Committee was due to be held on 2 February 2024 at the offices of Leicestershire County Council. The Chairman, Councillor Wilson would be representing the Fund.
Investments in Collaborative Arrangements The investments the Fund had in LGPSC vehicles at the end of December 2023 was presented.
LGPS Central Pool Cost Sharing Arrangements A review of the cost sharing arrangements was being undertaken six years on from the agreement of the original arrangements.
RESOLVED that the Committee notes the contents of the report. |
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Governance Policy and Compliance Statement Additional documents: Minutes: Approval was sought for the draft updated Governance Policy and Compliance Statement for Derbyshire Pension Fund which was attached at Appendix 2 to the report.
Minor updates had been included in the Statement to reflect the appointment of the two members representing Derby City Council following the City Council’s Annual General Meeting on 24 May 2023 and to provide additional information on the governance of the LGPS Central Pool.
As there were no material changes to the Statement, it was not proposed to consult with stakeholders, and subject to the Committee’s approval, the Statement would be published on the Fund’s website.
RESOLVED that the Committee approves the draft updated Derbyshire Pension Fund Governance Policy and Compliance Statement attached as Appendix 2 to the report. |
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Derbyshire Pension Fund Risk Register Additional documents:
Minutes: Changes from the Committee’s last consideration of the Risk Register had been highlighted in the Summary and Main Risk Registers, which were attached to the report as Appendix 2 and Appendix 3 respectively.
Details of how the risk scores and target scores had been applied were presented. A further column had been added to the Risk Register to indicate whether the target score was expected to be achieved in either the short, medium or long term.
The Risk Register currently had the following five high risk items and details of each risk were provided:
- Systems failure/lack of disaster recovery plan/cybercrime attack (Risk No.13) - Fund assets insufficient to meet liabilities (Risk No.20) - LGPS Central Limited related underperformance of investment returns (Risk No.31) - Insufficient cyber-liability insurance relating to the pensions administration system (Risk No.41) - Impact of McLoud judgement on administration (Risk No.45)
Members of the Committee requested an update on the administration impact of the McCloud remedy. The Head of Pension Fund informed the Committee that the Fund had the tools in place due to the preparatory work undertaken and the gathering of information prior to the remedy being announced. This meant that the Fund was currently in a much better position to cope with the increased workload, than many other Funds.
RESOLVED that the Committee notes the risk items identified in the Risk Register. |
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Exclusion of the Public 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 3 of Part 1 of Schedule 12A to the Local Government Act 1972” Minutes: RESOLVED that under Section 100(a)(4) of the Local Government Act 1972 the public be excluded from the meeting for the following item 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.
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Climate Risk Management Exempt Report Minutes: The Committee was presented with Derbyshire Pension Fund’s full Climate Risk Report dated January 2024 which had been prepared by LGPS Central Limited.
This report was the same as the report considered in the non-exempt section of the meeting, but in addition it included an Appendix, together with a fund dashboard which contained some proprietary information provided by MSCI ESG Research LLC which was subject to a non-disclosure clause.
RESOLVED to approve the recommendation as detailed in the not for publication report. |