To consider the report
The Investment Manager submitted a report updating Members on the developments of the Wales Pension Partnership. It was reported that partnership performance had been at a very high standard and collaboration was going from strength to strength. Members were reminded that £606.2m of the Gwynedd Fund’s equity investments had been transferred to the Wales Pension Partnership Fund in February 2019, with the amount divided equally into two funds. It was reiterated that the performance of both funds were higher than the benchmark and that this was very encouraging news. The next step would involve transferring current investments with Fidelity (£161.6m - Global Equity) and Insight (£292.0m - Bonds) to two Fixed Income funds. It was noted that Russell Investment was monitoring performance and conducting frequent discussions and meetings with the Fund so that the transfer could be completed in April 2020.
Following the Fixed Income transfers, it was reported that the aim was to determine the ideal investment management structure for the Emerging Markets fund. It was highlighted that there was approximately £52m to be transferred to this fund from the Fidelity company and that discussions were being held with Russell Investment to consider suitable funds. It was added that Russell Investments considered environmental, social and governmental requirements when investing responsibly and they looked carefully for ways to meet these needs, along with low carbon investments, when developing the form and management of the Wales Pension Partnership Fund but without losing returns.
Reference was made to the arrangements of the Partnership's Joint Governance Committee and it was noted that there was an intention to discuss whether or not the arrangements were still appropriate at their next meeting on 12 March. It was added that there was a suggestion to include representation from Pension Boards (within the constituent authorities) on the Joint Committee.
The officer was thanked for the information.
During the ensuing discussion, the following observations were noted:
· That the Gwynedd Fund had agreed and adopted responsible investment principles and these needed to be adhered to when considering future investments. This was a strong stance and no influence should seek to change the viewpoint.
· Need to avoid a rushed way of thinking and be influenced by others.
· The Board had a responsibility to challenge decisions and ensure that guidelines were followed.
· There was a need to ensure the right balance so that expectations were being met.
· That the 17 sustainable aims were being addressed - a suggestion to hold a training session on these aims with Pension Committee Members.
· Wales Pension Partnership Governance Arrangements - a suggestion that Pension Board Chairs could attend the joint committee meetings as observers - able to provide an input but no vote.
· Possible to recommend two observers (one from South Wales and one from North Wales).
· A members' representative should not be an independent chair.
· The exercise must add value.
· CIPFA recommended the exercise and other Funds were implementing it - Wales Partnership needed to do the same.
· The Pensions Regulator pressed on the Boards to examine how funds operated - this was a good reason to include representatives from the Pension Boards on the Joint Committee.
· A suggestion for the Pensions Committee to reach a decision on the matter and refer the decision to the Joint Committee.
The information was ACCEPTED.