That the Committee notes in accordance with the regulations, the Funds position as at 31 March 2021 and the performance of the investments.
The Head of Pensions presented an overview of market valuations and an update on the performance of the Fund, as at 31 March 2021.
Members noted that by the end of the quarter the market value had increased by £55.378m, to £2.898bn. It was reported that performance for the fund over three years to March 2021 was 7.6%, and was slightly behind the benchmark by 0.2%. Members were advised that the last twelve months provided a return of 3.5% ahead of the benchmark of 26.6%.
In response to a question, members were advised that Officers were monitoring Brunel’s performance over a longer period, as a three year period gave a true reflection of performance. It was noted that Brunel was still relatively early in its performance history but Officers would continue to closely monitor the situation.
During the discussion, it was noted that the picture quality of the voting record was difficult to read. Members requested a future training session on benchmarks and performance.
The Chairman referred to the £16m quarterly under performance by Brunel Pension Partnership (Brunel) and requested the Head of Pensions advise Brunel that it would be closely monitored by the Committee.
In response to a question, it was explained that the Fund partake in a performance benchmarking exercise against other Local Authorities funds. The Head of Pension advised Members once the data was available it would be presented to Committee. It was noted that although useful as a comparison, this benchmarking needs to be reviewed in the context of what the Gloucestershire Pension Fund is looking to deliver based upon its Funds demographics, membership profile, liability, etc, which will be different to the other Funds being benchmarked.
The Independent Advisor informed Members that Pensions & Investments Research Consultants (PIRC) provide this benchmarking analysis for the Fund . The draft report received recognised the Gloucestershire’s fund was performing at 7.7% (37th) and over a ten year period its return was 8.5% (36th), which meant Gloucestershire’s performance was in the top third of the Funds that partake in the benchmarking. Members requested in the future this information be reported to Committee on an annual basis.
In response to a question, it was explained that the majority of investments, approximately 98%, were now managed by Brunel with the exception of the legacy private debt and private equity investments. The Head of Pensions explained specific investment issues would be discussed in more detail at agenda item 13 during the exempt session.
The Committee noted the administration performance of the fund had decreased due to Covid. The Head of Pensions told the Committee there were a number of issues staff had faced during the pandemic but overall the administration team were doing a sterling job in challenging times. It was recognised that the payment of members benefits, such as retirements and death grants had been given priority and there were currently remain challenges to recruiting and the training of staff.
Some members felt the Brunel outcomes report was exceptionally long and should be more succinct and tailored to Gloucestershire’s situation. Members were advised that the Fund had committed itself to the Brunel responsible investment policy.
The Committee discussed carbon emissions and disclosure rates in detail and referred to the chart on page 40 and page 43 of the report. Members felt that Brunel should be more specific and address the issues of engagement. The Independent Advisor explained that there was a dilemma involving engagement as if one disinvested, then someone else take the opportunity to invest. The Committee requested further feedback from Brunel.
The Committee were advised that the Fund was in a positive funded position at the quarter end.
Julie West, Hymans Actuary gave a detailed explanation of the funding position calculation. Members were informed that the funding position had improved since the formal valuation, liabilities had grown as the Actuary would expect with the accrual of new benefits. The Actuary reminded the Committee that it was worth noting that this was very much a snapshot in time and in effect a backward looking position. Members felt the fund was in an encouraging position.
That the Committee noted the market value and quarterly performance of the Gloucestershire Pension Fund as at 31 March 2021.