Agenda and draft minutes

There were no declarations of interest. 

To confirm the non-exempt minutes of the meeting of the Pensions and Investments Committee held on 4 December 2024.

The minutes of the meeting held on 4 December 2024 were confirmed as a correct record. 

The Committee was provided with a report and presentation, reviewing the Fund’s asset allocation, investment activity since the last meeting, and long-term performance analysis that sought approval for the investment strategy in the light of recommendations from the Director of Finance and the Fund’s independent external adviser, Anthony Fletcher.

A copy of Mr Fletcher’s report, incorporating his view on the global economic position, and the possible implications following the US Presidential elections, factual information for global market returns, the performance of the Fund and his recommendation on investment strategy and asset allocation was attached as an appendix to the report.

RESOLVED that the Committee:

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

b)    Notes the asset allocations, total assets and long-term performance analysis set out in the report; and

c)     Approves the IIMT recommendations outlined in the Director of Finance’s report.

A report was presented which provided the Committee with an overview of the stewardship activity that had carried out by one of Derbyshire Pension Fund’s external investment managers, in the quarter ended 31 December 2024.

The report attached at appendix 2 to the report ensured that the Committee was aware of the engagement activity that had been carried out by Legal & General Investment Management (LGIM) in Q4. The report provided an overview of the investments managers’ current key stewardship themes and voting and engagement activity.

It was noted that on this occasion the LGPSC quarterly report would be covered in the LGPSC’s Annual Stewardship Report and would be reported to the Committee in due course. It was also noted that from 2 January 2025, LGPSC had taken over the oversight of the Fund’s LGIM arrangements on an advisory basis, together with the engagement and stewardship of the assets managed through LGIM pooled products.

The Committee was informed that the Fund’s application to remain a signatory to the UK Stewardship Code had been submitted to the Financial Reporting Council (FRC) in October 2024 and confirmation was received from the FRC in February 2025 that the application had been successful; consequently, the Fund remained on the list of Stewardship Code 2020 signatories published on their website.

RESOLVED that the Committee:

a)    Notes the stewardship activities of LGIM;

b)    Notes that from 2 January 2025, LGPSC had taken over the oversight of the Fund’s LGIM arrangements on an advisory basis, together with the engagement and stewardship of the assets managed through LGIM pooled products; and

c)     Notes that the Fund’s application to remain a signatory to the UK Stewardship Code 202 had been successful.

Committee approval was sought for Derbyshire Pension Fund’s Service Plan for 2025-26, including the annual budget for the year of £38.671m.

For 2025-26, a budget of £38.671m was sought to deliver the services of the Pension Fund, made up of operational costs of £7.984m and total investment management expenses (IMEs) of £30.687m. This represented a 1.4% increase against the 2024-25 adjusted budget and a 9.4% increase on the 2024-25 forecast outturn. Further details on 2024-25 budget outturns by category of expenditure and on the requested budgets by category for 2025-26, were set out in the Service Plan which was attached at Appendix 2 to the report.

RESOLVED that the Committee approves the 2025-26 Service Plan for Derbyshire Pension Fund attached at Appendix 2 to the report, including the annual budget of £38.671m.

Approval was sought for Derbyshire Pension Fund’s draft Treasury Management Strategy for Derbyshire Pension Fund for 2025-26, which was attached at Appendix 2 to the report. The proposed Treasury Management Strategy for 2025-26 included the following requirements and comments:

?        The Fund’s objective when investing money was to strike a balance between risk and return, minimising the risk of incurring losses from defaults and the risk of receiving unsuitably low investment income.

?        The Fund prioritises liquidity for cash investments over investment return.

?        The maximum amount and duration of cash investments by counterparty should be according to the limits set out in Table 1 on page 4 of the Treasury Management Strategy.

?        The counterparty limit for Money Market Fund’s had been increased from £30m to £60m to provide sufficiency capacity for the Fund to hold liquid cash following a significant reduction in lending to Local Authorities.

?        The overnight limit for the Fund’s Main Operation Bank Account (currently with Lloyds) had been increased from £60m to £125m, reflecting the significant increase in the value of the Fund’s investments over the last few years and to allow sufficient liquidity for the Fund to trade.

?        The counterparties limit for Banks and Building Societies had been reduced from £15m to £10m to bring it into line with the comparable Local Authorities & Other Government Bodies limit of £10m.

The Fund’s actual cash allocation on 31 January 2025 was 4.1%, equating to £280m. Future commitments on 31 January 2025 had totalled around £484m, and a significant proportion of these were likely to be drawn-down over the next 12 to 18 months.

RESOLVED that the Committee approves the Treasury Management Strategy for Derbyshire Pension Fund for 2025-26 attached as Appendix 2 to the report.

The Committee was presented with Derbyshire Pension Fund’s fifth Climate Related Disclosures Report, which was attached at Appendix 2 to the report.

The report described the way in which climate-related risks were managed by the Fund. It included the results of climate scenario analysis and carbon risk metrics analysis undertaken on the Fund’s assets as part of LGPSC’s preparation of an annual Climate Risk Management Report for the Pension Fund.

Given the significant level of progress the Fund had made against its two targets: (reduce the carbon footprint of the Fund’s listed equity portfolio by at least 30% relative to the weighted benchmark in 2020; and invest at least 30% of the Fund portfolio in low carbon & sustainable investments by the end of 2025), the Committee had approved an updated Climate Strategy in March 2024. The updated Climate Strategy had included a significant increase in the Fund’s climate strategy targets relative to the November 2020 Climate Strategy, together with an increase in the assets covered by the targets. The updates targets were highlighted.

RESOLVED that the Committee notes the Climate-Related Disclosures Report attached as Appendix 2 to the report. 

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”

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.

To confirm the exempt minutes of the meeting of the Pensions and Investments Committee held on 4 December 2024.

The exempt minutes of the meeting held on 4 December 2024 were confirmed as a correct record.