Agenda and minutes

To elect Chair for 2024/25

RESOLVED to elect Sioned Parry as Chair of the Board for 2024/25.

Eifion Jones was thanked for his work and support as Chair of the Board over the past two years. Cllr R. Medwyn Hughes was welcomed to the meeting and he was congratulated on his appointment as Chair of the Pensions Committee. 

To elect Vice Chair for 2024/25

RESOLVED to elect Osian Richards as Vice-chair of the Board for 2024/25.

To receive any apologies for absence

None to note

To receive any declaration of personal interest

None to note

To note any items which are urgent business in the opinion of the Chairman so that they may be considered

Following the overwhelming success of the Labour Party in the General Election held on 4 July 2024, attention was drawn to the opening statement of Rachel Reeves (Chancellor of the Exchequer). She had emphasised the need for 'growth' in the economy, expressing her vow to address the pensions system in order to trigger investments in local businesses and giving more profit to pension funds.

A need to add the statement to the risk register since the Wales Pension Partnership and Gwynedd Fund had the right to make a decision on the Fund's use.

The Chairman shall propose that the minutes of the meeting of this committee held on 23rd April 2024 be signed as a true record.

The Chair signed the minutes of the previous meeting of this committee held on 23 April 2024 as a true record.

To submit, for information, minutes of the Pensions Committee meeting held on the 17^th June 2024

Consider any matters arising from Pensions Committee 17^th June 2024

To note the information and decisions made

Submitted for information, the minutes of the Pensions Committee held on 17 June 2024. Anthony Deakin had attended the meeting on behalf of the Board.

To receive and note the Draft Statement of Accounts

Submitted, for information, a report from the Investment Manager providing details of the financial activity of the Pension Fund during the year ending 31 March 2024.

It was reported that the accounts followed the statutory CIPFA format, with the guidance interpreting what was to be submitted in the accounts. It was noted that the year had been busy for the fund as it actioned the strategic assets allocation and invested more broadly with the Wales Pension Partnership (WPP).

Attention was drawn to the Fund Account, noting that there were some variations as the contributions and benefits increased after employees received salary increases and also as the pension increased with the CPI. It was reiterated that there had been an increase in the management costs as the value of the Fund's assets increased and the introduction of different types of investments to the portfolio, e.g. private credit.

It was highlighted that the fund's investment income had increased substantially and that the equity investments had performed strongly and had therefore generated a substantial income.  It was noted, as a part of the new strategic asset allocation, that more investment had been made in the fixed income funds, and in one new fixed income fund, i.e. the Global Credit Fund. It was reported that these investments had generated a substantial interest income and that these collective investments were being used to reduce the fund's risks, compared with the equity investments.  It was explained that the income, more or less, followed the patterns of interest rates, therefore it was reasonable that the income level had increased substantially.

In addition, it was noted that there had been an increase of approximately £300 million in the market value of the Fund following the recovery of equity markets after the impacts of the Ukraine War and high inflation. Reference was also made to the statutory notes in the report which provided details behind the figures, as well as further details regarding the activities of the Fund and WPP.

The members thanked the officer for the report.

In response to a question regarding the number of employers and which employer had left by 31/3/24 (numbers on 31/3/24 were one fewer than on 31/3/23), it was noted that Cynnal, a company under joint-ownership between Gwynedd and Anglesey, had been wound up with the service now being included in the technical services of the individual Counties.  After the company had been wound up, credit had been seen in the pension, but in line with policy, there was no need to pay out - it was not considered that this posed a risk since the pensions of the staff, who were employed by Cyngor Gwynedd and Cyngor Môn, would remain within the fund.

In response to a question regarding closed funds (a total of £12,854,000 had been paid out), and  ...  view the full minutes text for item 8.

To consider the report and note the information

A report was submitted by the Investment Manager, explaining the performance of the Pension Fund's investments for the 2023/24 financial year. It was reported that the investment managers were being monitored every quarter by the Investment Panel with the advisers giving a presentation on the performance to the Members and invitations were sent to investment managers to attend in turn to explain the performance further.

It was highlighted that the value of the fund on 31 March (over the last 10 years) had increased to £3.1 billion, which followed a pattern of a gradual increase over time. It was noted that the fund's performance had been strong, with returns of 11.2% over the year, and although this was lower than the benchmark, it was higher than the average for the British Local Government Pension Fund average, at 9.2%.  It was reiterated that the benchmark set was challenging, as well as market conditions, particularly within active equities.

When discussing the performance of Equity Investment Managers, reference was made to two BlackRock funds which had performed well over the quarter and the year and in line with the benchmark. It was noted that the active managers, who were trying to exceed the benchmark, had underperformed since there were underweights for the US and exposure to value-type equities disrupted the general returns of the Fund.  It was reiterated that the funds' performance could be cyclical, and therefore it was reasonable and expected for under-performance to occur; however, the Global Growth Fund, which included the Baillie Gifford, Pzena and Veritas investment managers, had now been under-performing for some time and WPP were looking at the structure of this fund to see what could change.

When discussing the performance of Fixed Income Managers, it was explained that these funds had experienced challenging periods with market instability due to the Russia and Ukraine War, and a time when there was high inflation and interest rates. Nevertheless, it was reported that this market had now stabilised and the funds had been performing close to the benchmark over the year.

When discussing Property Managers, it was highlighted that the performance of the sector was generally poor and behind that benchmark due to challenges in the property markets where it was seen that these funds had invested, e.g. in offices and in the high street. It was explained that there would be considerable changes to the property portfolio over the next years, with the Lothbury Property Fund ending and the money to be returned. It was noted that this would mean that the WPP property funds would have potential options to invest Lothbury money in three different funds - UK property, International property and Impact property. It was reiterated that discussions were being held on the best method of reinvesting this money  ...  view the full minutes text for item 9.