Agenda item

The Board is asked to note the information

The Investment Manager submitted a report, providing a formal update to members on the work of the Wales Pension Partnership (WPP). She noted that the report was now a regular report for the Board and was a very important element of the Gwynedd Pension Fund where 85% of the fund had now been pooled.

She reported that the Head of Finance Department and the Investment Manager represented the Fund in all the pool's meetings, and that the joint-working continued to work well on matters such as responding to freedom of information requests, voting and engagement and generally sharing good practice across the funds.

She drew attention to the funds, highlighting that the funds' performance overall had lagged behind the benchmark since the beginning, specifically because the benchmark that had been set was challenging e.g. for the Sustainable Equity Fund, the benchmark used was the MSCI All Country World Index, which included all the companies, but the Fund was restricted in terms of which companies it could invest in them. It was explained that the Global Growth Fund had been in existence for over five years and had been underperforming the benchmark. Subsequently, it was reported that it would be timely to review this fund. It was noted that Russell Investments were looking at the structure of this fund and were changing the managers within the portfolio – Gwynedd officers, the Fund's advisers, Hymans Robertson and WPP officers would closely monitor the funds in future. 

In the context of developments in the property field, it was noted that the procurement process for appointing property investment managers had been completed. Attention was drawn to the requirements of establishing a property investment portfolio which included the requirement to develop an investment programme that used funds' investments and direct investments in strategies that made a difference in the UK, with a minimum of 50% of assets located in Wales. She added that the Gwynedd Pension Fund would consider its property portfolio in due course, and would take full advantage of these options.

Reference was made to a very recent development, which was the 'Call for Evidence' pensions review with the Chancellor launching a landmark pensions review to boost investment, increase savings pots and tackle waste in the pensions system. The first stages of the review would ask funds to consider whether the number of active pools should be reduced, and the Gwynedd Pension Fund's response had been included as an appendix to the report, which expressed that the partnership between Gwynedd and the Wales Pension Partnership worked well, and that there were advantages of working together within Wales e.g. the Welsh Language, the Future Generation Act, and also the fact that the partnership had established a number of sub-funds that met the needs of the funds, and that they were keen to make local investments – interfering with this would divert this money to the UK instead of Wales.

⁠Feedback was received from Sioned Parry and Osian Richards who had attended a recent engagement meeting with the other pension boards from Wales, which had been arranged by the WPP Host Authority (Carmarthenshire County Council). Osian Richards noted that he had suggested that a policy officer should be appointed to develop policies and work with the officer of the operational group, rather than appointing an external consultant. It was considered that this would be a good opportunity for Wales to show good governance, would reinforce the reasoning for the Wales pool to remain in Wales, and show that the WPP had prepared in advance to prove the value of keeping the pool in Wales.  

The members thanked the officer for the report

Observations arising from the ensuing discussion:

·        It was good to see that investments in the Fund were continuing to increase

·        Agreed with the comments of the Council and the Partnership regarding the 'Call for Evidence' review, particularly the comment about the Welsh language

·        Pensions were just deferred salaries and not government money – although there was incentive to invest, it must be ensured that the money was safe

·        Wales Pension should stay in Wales and be invested in Wales

·        The funds within the partnership were still working together – there was concern that political discussions were emerging from this rather than financial discussions.

In response to a question as to whether the Chancellor had consulted with the Welsh Government, the Head of Finance Department stated that the Welsh Government had been part of the discussions, but he was not aware of the Welsh Government's response to the consultation. He added that the consultation was open for anyone to make representations – there was no restriction on it.

RESOLVED to note the information.