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Joint Pensions Committee
Wednesday, 16th September 2026 at 7:15pm

 
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1 Minutes - 8 June 2026

Good evening and welcome to everybody. My name is Councillor Melanie Hampton and I am
the Chairman of the Joint Pensions Committee. Members of the Committee, I will now call
your names in alphabetical order please switch on your microphone to confirm
your attendance Councillor cardi good evening sir
Councillor Craig good evening Councillor Davies good evening
Councillor Dicker down evening Councillor gasser good evening
Councillor Ireland.
Good evening.
Councillor Durian.
Good evening.
Deputy Chair, Councillor Serra.
Good evening.
We also have a number of officers who are present and also some professionals from various organisations.
They will introduce themselves when they come to address the committee.
I would like to ask members if there are any objections to confirming the previous minutes of the 8th of June, 2026 as a correct record.
Councillor Gasser.
Just for accuracy, I don't receive an LG pension at the moment.
I have a very tiny one from when I was a councillor before, and I think we're probably all members of it now currently.
Councillor Dickelhame.
I'm a member of the Palestine Solidarity Campaign.
I also just started a new job at Amnesty International, which cares about human rights, which is relevant
to the ethical investment paper.
But I don't work on campaigns linked to divestment, so I'm not conflicted.
Thank you for that transparency.
One of the things that I was going to do is to now at this meeting, anybody who's part of the pension fund,
to declare it and then thereafter, as long as we're the same people, we will just keep it going if we're all happy about that.
So perhaps, yep, so am I. Who isn't? Oh, the young ones.
So if you could report that, we will have it minuted and as I said, then we will not need to ask that question again if you are all in agreement with that.
Thank you very much. So apart from that we're happy to note that those are an
accurate record on the previous meeting. Yeah agreed. Thank you very much. We've

2 Disclosable Pecuniary Interests

done our pecuniary interest. Thank you very much for all of that. So then we

3 Draft Minutes of Local Pension Board - 2 July 2026

come to item three, the draught minutes of the local pension board which was held
on the 2nd of July. Our recommendation is, as you say, is as there to note the draught
minutes. Does anybody have any points or questions that they would like to raise? Right.
Councillor Dickard, first. Can I reference these later on in the discussions
around the responsible investment? Because within the notes of the pension boards, particularly
at the end of paragraph three on page 15, members of the pension board express support
that we should make sure that the survey highlights that people's ethical and political stances
might change if they're shown in the survey that their pension might be under threat,
which isn't actually how the pension works.
Excuse me, sorry, before we continue, ladies and gentlemen in the gallery, I just want
to make it absolutely clear that this is a very serious committee, talking about £3 .5
billion. So if you can please ensure that the committee can carry on without interruption.
Thank you very much. Councillor Dickard, at which point of that, which page?
On page 15, it's at the bottom of the third paragraph where members talked about their
own views on the responsible investment discussion.
And the final part of that is that they agreed there needed to be a balance between ethical
investment and responsible financial management, which kind of is missing the point that this
is a defined benefit scheme.
And I also want to highlight that, you know, we as a committee were only allowed to have
a working group in which we got to feed into the survey, of which I was not allowed to
be a member of. But it does seem like that the pension board was allowed to discuss how
the survey looked, what was in the survey, in a way that, looking at the survey, seems
to have had significant influence. So I just want to flag that as context in the leading
up to the discussion, because I'm still unsure about the balance and the weight of influence
of unelected pension board members and elected members on this committee to be able to shape
the way that we do ethical investment.
So it's some context on this paper
that I think is relevant to the paper that's coming up.
Okay, so that's not factual.
I was...
It is factual, because I'm talking about
literal minutes that are in front of us in the document.
What I'm saying is...
But you went in that meeting, so are you querying
the accuracy? No, no, I'm not querying.
No, no, not at all.
I'm just saying that I think it's really important context
to know that, you know, as an elected member,
I was not really allowed to shape the outcome of the survey.
that members on this committee were allowed to and express very clearly positions that
I think are contradictory to the way the defined benefits scheme should be reflected in the
survey.
So I think that's really relevant to the discussion.
We will note the point that you're making.
Councillor Dickard, if I can just pick you up.
You said that on the working group you weren't allowed to be part of it.
We collectively agreed that we would have one person from the Labour side, which was
Councillor Gasser, which we all agreed, Councillor Sarah and myself, we had a very productive
meeting.
So I don't think you were prevented.
I asked, but...
You appointed Councillor Gasser?
No, I'm pretty sure we asked and then there was a...
Councillor Sarah.
Yeah, but no worries.
I'm, well, we'll discuss it in the upcoming...
No, I'm afraid that's factually...
Can I just add something? I accept what we're talking about here, but I just wanted to add
that even after that previous meeting, everybody was allowed to give their input. Even though
you may not have been in the working group, there was nothing stopping you from giving
your feedback to the survey as it progressed to get to the stage that it's at now. So I
to make that point. It wasn't as if you were not allowed.
Well, I sent in a lot of emails, that's true.
There are a couple of things that I could mention on that, but as I said, we've noted
your points. I think that's important. Oh, yes, Councillor Gasser, sorry, and then I
will come on to my point.
Sorry, just looking at bottom of page 11, so I think Mr. Giulotti was informing that
group of people what had happened in these meetings here, and it says there was a variety
of strong opinions, both in favour and opposition to investment discussions.
I don't remember that many opposition discussions.
I think we've been discussing this for about two years now, and the committee has been
very much in favour.
Well, I mean, obviously, as long as we keep to the financial rules.
But I don't think there's been members of this committee over the years that have said,
no, we mustn't do it.
Most people have agreed.
We've just got to find the right way.
So I'm not sure that it was accurately reported.
And in fact, my point is on page 15 in the second paragraph, and one goes over.
It says, whilst there were loud voices from some groups, this did not always equate to
the absolute majority of opinion.
So this, I was not at that meeting, so I think we've got a slight difference of views, but
these are the minutes of the meeting.
So we can't change that.
It is what it is.
Does anybody else have any queries on this one?
So our recommendation is that we have. So the recommendation is that we have seen
it and we receive it. We're happy with that? Right, then we are going to

4 Pension Fund External Audit Report 2025/26 (Paper No 26/195)

move on to item number four. Mr. Giulotti is going to give us a brief introduction
And then the two people from EY are going to give a very brief overview.
I'm very much of the opinion that the Committee likes to debate things rather than being talked
at.
So I think we're all in agreement with that.
So Mr. Giugliotti, if you could start us off.
Thank you, Chair.
Okay, so on that note, I'll be very brief.
So the report before you is there to show you the published draught accounts for the pension
Fund which you are required to assess and approve subject to any comments or feedback
you hear from EY.
EY have got their report attached to this which is any issues that they have found through
the auditing of the accounts but hopefully you will note that the comments that they
raise are relatively minor which shows you obviously the good work that was done by officers
in preparing the set of accounts, but I will throw it open to EY for them to present their
report.
Thank you very much.
Please present it.
So, good evening, members.
I'm Kevin Souters, requested to introduce myself by the Chairman at the start of the
paper.
So I'm the partner for EY, responsible for the pension fund audit, and I will be giving
a very brief overview as requested.
So presenting the paper today, it's the provisional audit results report for the audit the pension fund accounts for the year ending 31st of March 26 starting on page 21 of your agenda pack.
So it follows on from the plan that we presented at your June meeting and we can confirm there are no changes to the risks or the areas of focus since we presented that plan.
Our headline message is that subject to the satisfactory completion of the outstanding
items contained in the report, we do anticipate we will be in a position to give an unqualified
opinion on the pension fund accounts for the year.
Our programme of work has identified a few issues to report to you as contained within the report,
but in the context as the Chairman pointed out, 3 .5 billion pounds of pension fund assets,
We haven't got anything that is material.
We do need to flag there were a couple of minor issues on investment value valuations
left to be completed as part of our work.
Just to give you an indication of the sorts of issues we're talking about, we have a 1 .7
million pound difference on one investment we would like just to bottom out and resolve
if we can.
So again, in the context of 3 .5 billion, we are talking minor issues and minor numbers
now. We also do need to get an updated IES 26 report from the actuary, so that's the
actuarial report on promised pension benefits, because we identified as part of our work
that there was a version control issue in the data that was sent to the actuary. So
they need to do a quick update to give you the amended number for your accounts that
can be included in the final version, but we fully expect management will make that
update as and when that report is received from the actuary.
So we're slightly behind where we wanted to be at this stage because we did want to present
to you a final version with everything resolved, but we do have no anticipated problems hitting
the deadline this year. And again, the key headline is we do anticipate giving an unqualified
opinion on your accounts. So members that's all I wanted to highlight I'm
happy to take any questions you might have.
Thank you very much for your brevity. You can see the recommendations we've got. Have colleagues got
questions that they would like to ask?
Councillor Gasser.
I just can't quite remember the process but if you find
anything untoward when these last bits of information come through it would come
back to us but if not not we approve it tonight is that correct?
I mean if you do I mean are you anticipating finding any key issues that
to come back? Well we don't anticipate it but we never know until we finished.
I'm sorry, I generally can't ask the question because it's your governance process, not
mine.
My gut feeling would be we probably should come back or we should communicate it at least
through the chair.
But in terms of whether it comes back to this committee, I would have to defer to the officers
to give that answer.
In which case, on that aspect, we would obviously assess what anything you identify.
If it was key and material, clearly we would.
But if it was a point for noting, we would probably just wrap that up in a General Matters
paper at the next committee. Yeah I think it's important that Councillor Gasser's
point is made so we rely on you and we'll be very disappointed if it doesn't
come when it should. Colleagues any other questions? We have our
recommendations A to note, B to approve, C to authorise. Are we happy to agree all
of those? Agreed. Thank you. So then we come on to item five which is the update of to
responsible investment. Mr. Giuliati as the director of finance is going to introduce

5 Update to Responsible Investment (Paper No 26/196)

this one which he will take slightly longer for. And then we have the representative from
Mercer who's going to respond last meeting.
He did not have the time to do so.
So this will happen before we then open it up to debate, just so that I explain to everybody
what's happening.
So Mr. Giuliati, if you'd like to start.
Thank you.
Thank you.
So to start with, I'll just give a brief overview and set the scene for how we've come to where
we are.
If you recall, we originally are looking to set out a broader approach to our current
response to investment policy that sits within our investment strategy statement.
Our investment strategy statement at the moment has been relatively silent on anything explicit
and specific to any key major areas outside that of setting a net zero target.
We do have ethical style of investing but we place reliance upon our fund managers in order to set the tone and set the arrangement that we are looking to do.
The regulations do allow for this committee to set an approach that takes non fiduciary matters into consideration
and that's what's been debated over a longer period of time around how we get to that approach.
We got KC advice that set out what you must do if you wish to take that pathway in setting,
which includes getting advice from appropriate advisors, which we have managed to achieve
through MRSA.
And it also then says that that advice needs to show that any risks associated with the
returns is not significant.
and Tony will go through the basis of the report that was produced at last
time because it wasn't discussed around what the risks associated with it were, but we
can obviously look at how that that's dealt with and managed. We also need to
demonstrate an evidence that our scheme members and then stakeholders would
broadly support the approach. That is also why it must and should go
to the local pensions board for their view as well because the local pensions
board are scheme representatives from both employers and from scheme members.
And that's why we've always taken that approach and when we set our net zero
pathway that went to the local pension board as well before it came to here
with their views and their comments put into place. What we had at the last
committee was there was key individuals and the members thought that we needed
to have some revisions to the phrasing and the wording of that survey.
They were taken into consideration and the working group sat around and agreed an approach
and changes to the words.
Subsequent to that working group, we put it through to the relevant team which actually
deals with consultations for the Council so they can make sure that the word, the language
and the tone was appropriate to go out to scheme members.
and that's what's taken place and that is now what you have in front of you.
In addition, you will see that we also received some objections to the approach we're taking
from the UK lawyers for Israel and the approach that Mercer had done.
So what you have here is a report also from Tony to say how we're addressing those points.
So I think that's where we are to date.
So I think I'll let Tony go over the original report that he produced and also answers to
the questions raised by UK lawyers for Israel.
Thank you Paul.
So yes, good evening everyone.
Tony English, investment consultant from Mercer.
We've recently rebranded to Marsh, but I will probably continue to – I've worked at
Mercer for 27 years, so it's taken me a while to get used to that.
So I don't intend on going through the full analysis, but if we start off on page 14 of
the slides, which in your pack is page so 121 is where the analysis starts.
And if you turn onto page 122, that does a summary.
that's where we summarise our initial analysis.
Are the page numbers cut off there, is it?
So if you, yes, that's it, great.
So we looked at risk through a number
of different lenses, effectively.
This lens here is, we used an external software package
called Style Analytics, and so that looked at
kind of portfolio metrics as to how the risk and return of the portfolio might be impacted by excluding the current
list of
Stocks under pillar three. Well, we actually done the pillar one two and three as currently defined clearly. That's something that isn't
You know that that's something that could change over time, but we just used it on the latest
list that we had and
So you'll see if you so that there's been lots of jargon here lots of an acronym
So I'll try to please pull me up where needed.
But we start with the parent index,
which is called the MSCI All Countries World Index,
or the MSCI ACWI is the jargon.
And you see that the ACWI has around about 2 ,500 stocks,
to be precise at the date of the analysis,
2 ,514 stocks in the ACWI.
So that we've just defined as the investable universe.
And then you'll see that Pillar 1 excludes 33 stocks,
Pillar 2, 71 stocks, and Pillar 3, 107 stocks.
And then we run that through this analytics software
to see how that might impact the predicted,
and it is only predicted, the predicted risk,
or the ex ante is the jargon,
that's ex ante, in other words, forward looking,
the predicted risk of these exclusions.
And you'll see that for Pillar 1,
the tracking error is 0 .4%,
pillar two, 0 .5, and pillar three, 0 .6.
What does that mean?
So tracking error is a technical term.
For the mathematically minded,
you can think of it as a standard deviation.
And so the simple way that I'd explain this
is if you assumed a normal distribution,
then if we focus on pillar three,
a tracking error of 0 .6%, what does that mean?
It means that two years out of three,
you would expect the return of the restricted portfolio
to be within plus or minus 0 .6 % of the parent index.
In other words, the MSCI ACWI.
That means for one year out of three,
you'll be outside of that range.
In other words, you might outperform by more than 0 .6%,
you might underperform by more than 0 .6%.
How much more, how much less?
It depends on the market environment.
So sometimes you'll hear people talk about
a two standard deviation event.
So a two standard deviation event would mean that pillar three
outperforms by 1 .2 % over the year or under performance by 1 .2 % a year.
If you look at things like financial crises,
then you're talking multiple standard deviation events.
So it's important to note that there are tails to any risk distribution.
But high level though, the first conclusion,
the independent view I'd give on this is that, you know, if you think of active management,
then active managers generally have risk budget tracking errors of anywhere 2, 4 percent or even
more. So now a passive manager would have a tracking error of probably less than 10 basis
points, sorry, less than 0 .1 percent. So these exclusions in my kind of objective opinion,
and they do introduce some risk,
but it's not a huge amount of risk.
It's not significant based on this analysis.
We then took another lens,
and I'm sorry, and actually just on page 123,
we then looked at what's actually driving
that risk of 0 .6%, so it's not, I should point out,
it's not insignificant either,
so it's not a significant risk,
But you're clearly you could
steal from these exclusions.
If you looked at this and saw that you've
done performed one year by 3%, that that is possible.
So they can have a modest impact on your return.
But in terms of the threshold of significance,
that's where we feel that actually that it's
a relatively modest impact
on your risk return characteristics.
And page 123, where we look at the risk attribution,
what's driving that tracking error is
really the sector risks.
So, so these exclusions are basically introducing some sector biases, which is possible.
You might be able to manage that by, we've just done a simple analysis of excluding the
stocks and then running the portfolio.
You could possibly try and neutralise those sector impacts.
That's not something we've looked at as part of this work.
The next piece of work we did was we looked at strategic modelling.
So if you go onto page 124, we actually ran these, some example portfolios through our
assets liability modelling software, Lambda, that's a proprietary Mercer Marsh ALM tool.
And given that we'd just identified using the portfolio analytics that a tracking error
of 0 .6 % was possible, we thought,
well, let's be a bit conservative here.
And let's say the actual tracking error is 1%.
How might that impact?
Because also remember the key thing
that this committee needs to do is pay the pensions.
So actually the key thing is,
what's your impact on the funding level?
What's your impact on risk?
And what's your impact on the probability
crucially of hitting the actuary's discount rate?
So that's what we do here.
And you'll see, it's unsurprisingly,
Secondly, if you reduce the size of a universe, you are all else being equal,
going to reduce the diversification, and you would expect an increase of risk.
And we saw that on the previous analysis, and we see this on this analysis as well.
So if you look at the value at risk at the bottom, so the value at risk of your current strategy,
without any exclusions, is 924 million pounds over a three year basis.
What does that mean?
So what that means is that over a three year period, in a one in 20 events,
in a one in 20 downside events, the funds could lose more than 924 million pounds.
So that's how much risk is basically you're taking in the fund at the moment.
And you'll see as we introduce the tracking error from 1%, then we go up to 2,
up to 3, up to 5, you'll see that VAR number does increase.
So it increases only modestly at 1 % to 925,
and then it goes all the way for 5 % tracking error
up to 945.
So again, our conclusion here is that
if we take the 1 % tracking error as perhaps indicative,
broadly indicative of the level of exclusion
that you're currently anticipating under pillar three,
that would only have a modest impact,
a very modest impact on VAR.
You'll see that the probability of achieving
your discount rate does decrease slightly
from 84 .2 to 84 .1, but again, it's very small.
And therefore, again, our conclusion is therefore that the exclusions,
as they're currently defined, only have a small to modest impact,
are only likely to have a small and modest impact.
And therefore, in terms of that key test of fiduciary duty,
we think that the exclusions do not breach that rule of fiduciary duty.
Just to quote from the regulation, because it's so important, clearly this is a legal issue.
I'm just giving advice from an investment perspective.
It's clearly very important you also take separate legal advice, which I can't give.
But just to remind you what the regulations say, and they say, administrative authorities may also take non -financial considerations into account.
Provided that doing so would not involve risk of significant financial detriment to the fund, and
that they have good reason to think that the scheme members would support their decision.
So my analysis certainly supports the fact supports that it does not involve the risk
of significant financial detriment, but it does show that there's a risk of some financial
detriment, small to modest, and therefore certainly some of the questions asked in the
survey, I think, which do ask about that.
Would you, to what extent would you accept a modest impact on return to reflect your
responsible investment beliefs?
I think that would be an appropriate question in that context.
So that's all pretty much done.
I'll just go on to the summary and conclusions now.
So that's on page 125.
So as I've said, overall in our opinion, we do not think these exclusions as currently
defined, and I'm sorry if I keep on repeating that, but that is clearly very important,
is not expected to result in significant financial detriment to the fund over the long term.
However, the exclusions will result in modest performance deviations over the short to medium
term which could either be positive or negative.
Given however that of course the list of exclusions is likely to or could change over time, even
though our analysis is supportive at the moment, you would clearly need to, even if you were
to adopt these exclusions on this basis and you had and you felt that there was sufficient
member support as well and you had all the legal support that you could do that, you
would need to still monitor, have some way of monitoring the extent to which those exclusions,
to the extent they change, might impact those conclusions of this analysis.
But that's clearly out of the scope here, but that would be something for you to consider,
subject to you making the decision to go down this route.
Sorry, and then, yes, there was a letter that was received by the committee which made some
references to Mercer's analysis.
And we've set those, that letter is the letter
that Mercer responded to those points.
And just to summarise, in summary,
what we did, whilst we think some of the points
in the letter are well made, we think a number
of these points were already covered in our analysis,
and therefore that letter does not change our conclusions.
For example, one of the points was made
that clearly recently the defence sector has performed very well.
So absolutely accepts that, you know, that that is exactly one of the scenarios whereby, you know,
under our analysis that, you know, you would therefore perhaps see a modest negative impact,
but the defence sector is a very small weighting of the overall index. So even if,
as we've set out in the letter, even a large negative impact from that, sorry,
even a large positive performance of the defence sector would not actually
have a particularly large detrimental effect to the fund by virtue of the defence sector being relatively modest.
So I set out in the letter, we remain confident with our analysis.
Thank you, thank you very much. And just for clarity, you're talking about the letter from the UK lawyers for Israel.
Yes.
Okay, which is one of the points here.
Would anybody like to raise anything to do with that one?
Councillor Dickard.
Did you reply to that letter?
Personally or? No.
No. Okay.
So there's no correspondence between the council and them that hasn't been shown to the committee?
No. We're making sure that there was a Freedom of Information request that had come in
and when we took advice we were saying,
because we're going to publish it here in its form,
and everything would be open and transparent,
that's the approach we've taken doing it here.
Yeah, and if I can tell you, I mean it was literally
almost hours before our first committee meeting,
so I did not respond in any other way,
I just handed it to the director,
so I can absolutely assure you
that I did not make any correspondence.
I was wondering if somebody could tell me how much of our funds are currently invested
in northern Cyprus or western Sahara.
And I'd probably add, I'd be interested if we got any funds invested in Somalia, Sudan,
Afghanistan, Iran, or North Korea.
I'm assuming there isn't much, and I'm assuming we don't invest in any of those countries,
but I would be interested to know.
Was that in relation to the letter?
The letter specifically mentions two of those, but also people raised the principle of do
we boycott particular places.
So one question I'd like to ask officers on their storeys.
I can't tell you specifically, we can come back to you on that.
We do have, remember, broad passive funds and quite a substantial amount of money invested
in global passive funds.
So without screening things out, there is a potential that we could have in, but the
likelihood is that it would be very, very minor because of the weighted element of the
global portfolio.
But I don't have the specific information, we need to get back to you.
I would appreciate a response at some point on that and I appreciate it's not information you have
necessary to hand. I've got another question to follow up but if you want to. Yes okay fine.
Sorry it's a response to that. I'll pass on to Councillor Dickardam.
I'll come back. Well you collect yourself don't worry. Councillor Dickardam.
Yeah, well, I just want to – the point of these letters is to scare the committee into
trying to not do this.
It's a tactic that's used across various different local authorities.
It's been used in health care with the removal of artwork in hospitals and horrible kind
of litigious threats like that.
I do think it's really important that Mercer have returned and articulated and held their
case, and I think we need to be bold and stand up for the Pillar 3, which is the highest
level of exclusions, regardless of letters or litigious threats that we get.
And I think we are in a strong position to do so.
I'd like to come back later in the talk around, because I do think some of the things
raised in the letter have had an influence on the survey, and we can discuss that.
But I do think it's good to see that we're not allowing the arguments in that letter
to overrule the clear financial evidence that there will be a limited risk if we go for
Pillar 3, which is the highest exclusion rate.
and I think we should feel confident as a committee
to push forward with that.
I think I would comment that a letter arrived.
A letter was sent to me as the chairman for the committee.
As we discussed, I handed it to officers.
They appropriately sent it to Mercer's
for their professional, independent view.
We have published both, so it's fully transparent.
And what we're being asked to do is just to note all of that.
Councillor Cottier.
Thank you, Chair.
Sorry, the follow -up I had was, can we
have some feedback from officers as to what proportion
of companies do respond to these sorts of sanctions?
I'm thinking back to the apartheid
in the South African thing, but more recently with Russia.
What proportion of companies respond
to sanctions such as big in Russia, such as BDS
and so on, by divesting from that, and therefore
the risk actually, the number of companies you don't have to invest in, can't invest in, tends to fall as sanctions, corporate or civic or statewide come into effect on that.
Has there been any research done on that, either for the apartheid rule?
So if it's sanctions, it's state driven, it's law. So that takes it out of the question.
We don't do anything like that.
The questions you asked, we would never hold.
We don't necessarily go back to, I could ask London SIV
whether or not they've got anything,
but to the best of my knowledge, it
isn't something that is actively maintained, that sort of thing.
But there is a potential that as boycotts come into effect,
so companies will respond to that boycott
by pulling out and becoming investable again.
That's why currently the policy approach is engagement.
And that is why if you ask professional advisors,
they will say engagement is better than disinvestment because engagement in the main is a productive
way of doing things when it's effective.
And that's why if you ask advisors and looking at the approach, which is why the current
policy is set for engagement, it is for that reason.
I'm sorry, I've got to turn my thing off.
So I think now we come to the substantive discussions.
You can see what our recommendations are.
If you could bear with me, Committee, there is one thing that I feel very strongly about,
so perhaps you would indulge me to allow to mention it first.
One of the things that I am genuinely concerned about is pensioners of a certain age who will not be on the Internet.
My father is 93 years old. He couldn't even begin to know anything about the Internet.
I don't know if we know how many people that would be.
It might be impertinent to say that somebody who's 80 doesn't use the Internet. They may do.
But what I am very keen is that we make sure that they are part of this consultation, that
they will not be able to use the internet, and it's something that I feel very strongly
about.
So, Mr. Giulotti, how do we manage that?
It's difficult.
I'm not going to shy away from that.
Because of the timeliness of this, and in order to be able to get results back in, we
need to use technology to assist us in doing that.
And so we are mainly going to be using email addresses,
because that's the quickest, the most easiest way in order
to get responses coming back out.
We have got the ability to do telephone surveys
and potentially write to people.
But that takes time, and it negates the ability.
We've got a hard -wire window.
Bear in mind, this is just a survey.
We haven't even talked about setting the response
and investment policy or the investment strategy statement,
which must legally be approved by the 31st of March.
So, we don't have any timelines and waiver now.
That's why it came to the last committee and we've deferred it one.
That's why we're under the window in order to get things through.
If you want to set an ambitious response and investment policy, we need to get this moving
going forward.
We have to acknowledge that the responses that we're likely to get will be relatively
low in comparison.
You know, right away from the early papers, we know that surveys don't foster 20, 30,
40 percent responses.
You don't simply get that.
But it's trying to give us a flavour for, as much as possible, you know, the scheme
members.
We will endeavour to utilise all methods to maximise a broad range of responses from all
service groups, including pensioners, deferreds and actives.
We made sure that on the pensioner payroll details they were made aware that this survey
was coming.
So we've done whatever we pragmatically can do to maximise it.
but I'm not going to sit here and give assurances that we're going to get a hard, long response
from pensioners because I can't provide that assurance.
It matters to me to note that I would like consideration to be given to people who are
not on the Internet.
Councillor Gasser.
Yeah, I would agree with you.
Obviously, we've got people's ages, so could we say anybody over 90 or 80, whatever it
is, would give them a letter or give them a call?
I think the way it works is they know who's got internet because they've obviously got
the email address.
So there must be a percentage of people who don't have that.
And that's why we're working with an external body to maximise return.
But if we don't have telephone numbers for them either, it's going to be a limited
opportunity for us to be able to do things.
So we have catered for different ways of communication, but I can't – and I'm not going to sit
here and guarantee you that we're going to get an equal weight in between all three
different service groups and it might be a challenge to do that and that will be
something for yourselves when it comes back to consider when determining do you
have that assurance that you feel as though members will probably support it
but I don't think that you know that we need to have a 30 40 50 percent level of
response the legal advice that we got didn't set a de minimus level but you as
your group of nine committee members need to be comfortable that with whatever
response we do get is reasonable and proportionate. We'll endeavour to maximise
that but there is a risk that it will be a distorted response that you get back.
You may well find you've got a lot more active members who respond to
those who are deferred and pensioners. So Councillor Gasser I think I'm going to
keep an eye on it if you're happy that I take that forward. Is everybody else
Happy that I keep an eye on our friends who don't have internet
I'm sure we've got some more questions
If we're talking about the Mercer report, can I move on to that? Okay, so
Just for the kind of avoidance of doubt then if I can just just I want to make two or three points
Where you very eloquently, Tony, where you eloquently
described all of this, if I can just paraphrase that
and just double cheque this for the purposes of
what everyone is listening to.
If we are stating that the MSCI ACWI is the benchmark
that we're setting this against, on pillars,
let's say pillar three, we're talking about
a tracking error of .6%.
What we mean by that is that the benchmark, those group of two and a half thousand shares across the world,
if in a year they produce 8%, the tracking error of 0 .6 could mean our fund could produce 8 minus 0 .6, which is 7 .4%.
I did A -level maths, by the way.
If it produces 10%, any minus 0 .6, we could be either side by 0 .6%.
That's what that, in effect, that's what that means.
For every two years out of three.
Yeah, yeah, that's right.
Okay.
So onto the next point then.
If we have an investment universe of around 2 ,500 that we're comparing this with.
If we're reducing this by 107 shares,
there is likely to be some impact.
We can't say there'll be no impact.
So I know you were saying, so the debatable point is
whether that impact is gonna be significant or not,
but they will be.
If you have a choice of, if I have a choice of
two and a half thousand shares to choose from,
and I'm reducing that by 100, it will have some impact.
Am I right?
Yes, it could have a small to modest impact,
which could be positive or negative for the fund,
depending on how things evolve.
Agreed.
And the third point there is where you were talking
about tracking error.
So you referred to passive strategies versus active
and so on.
Am I right?
And you can clarify if I got this wrong.
Our funds are something like 70 % actively managed
rather than having a large proportion in passive.
So, the fund managers do have the ability to be able to make up for any deficiencies
in having reduced the investment universe.
That's a slightly more difficult question to answer.
But, I mean, certainly because you have active managers, that means you have a lot of active
risk, which, again, you know, relatively speaking, put this in context that, you know, this is
a, you know, your, some of the managers we've seen have had huge track and errors, you know,
like over 10 percent over a year.
So, seriously, you know, again, it just supports the fact that, you know, it's a small to modest
impact.
It's not insignificant, but it is small to modest.
Just about the largest weighting that we have in equity is to a passive manager.
So the biggest individual singular investment we've got is in a global passive mandate.
We do have actives, but it's broadly in line.
I can't remember the exact moment.
We've got about roughly about 50 percent in equity.
It's roughly half and half.
And that's the legal and general – the Elgin fund.
That is the Elgin fund, yes.
And for simplicity, I didn't talk about – because obviously you don't just invest
in equities, there's also some analysis in bonds and we just assumed the same track and
error as a simplistic analysis. We just applied the same track and error to the bond allocations
as well.
Dr Ireland.
I'm just trying to understand what this means. So in terms of the funding level, what sort
of impact would this have? Because I notice it's gone up from 116 % to 121 % in the past
year.
The funding level is separate from this.
Ultimately that's the outcome of investment returns.
So the individual annual performance is what Tony's looking at.
So your tracking error is based on year on year.
The funding level is your total amount of assets over your terminal liabilities.
So it could, but again it's either way.
I think what the report is highlighting is that there is a modest tracking error,
which could be better or worse than if you just went 100 % passive and had no exclusions.
It's, so the gist of really what we're getting at is, like I said,
there's a three -point test that you need to make.
We need to get advice.
The advice needs to demonstrate that the impact is not significant
and that your scheme members will support what you're doing.
We've got the advice.
the device is coming back and saying,
there is an element of risk,
but that risk is within the tolerance levels
that will facilitate you doing this.
And in terms of the funding level specifically,
so let's say you expected the funding level to be 105%.
Because of these restrictions, you might find it's 105 .5,
or you might find it's 104 .5.
So it has a small, it could have a small impact,
But I'd be surprised if it was more than 1 % at the funding level.
Yeah, if I talk a little bit about the survey, which is, so the point I made at last committee,
and sadly I sent these to Judy, but they didn't make it into the survey itself,
is that I still think this survey is really weighted in a way that
how the pension fund works in regards to the defined benefit scheme.
Because tucked away right at the end is the bit that we said we'd quite like at the top and
that I asked for to be put in bold, which is around explaining that no one will lose money based on the decisions that are paid out.
And I think I understand why that is being put in is because we're talking to employers and employees.
But that merger is a decision by us because we don't have a statutory duty to go out to
the employers.
We just have to go out to the scheme members.
We do have a statutory duty to go to employers.
In the same survey.
Not in identical surveys.
It can be separate.
That's my point.
So I can address that particular point.
Can I just finish that?
That's my point.
I know we have to go out to the employers.
But if we do it all together, then it does lean into issues that aren't relevant to the actual people who will be receiving their pension being confused with the implication on employers.
And I think that's why at the top it's just really important that we are clear that it's a divine benefits scheme and whatever decisions we make are not going to impact whether Mr.
Smith gets their pension, because I think that's the bit that will scare them.
So that's my first point.
The second point is, and the whole process that has led to this is the historical moment
of horrific acts of genocide taking place that civil society has organised around across
the world.
And within our own documents, we have been told that we can't mention the Israeli occupied
territories or mention certain words because of, I mean, the argument was made about equality
I think is why we don't specifically talk about targeting countries.
And I think, again, as someone who is on the committee, you take that as written.
But during the summer, I got access to Islington's survey.
And Islington's survey literally talks about, issue two that they specifically spell out
to their members, talks about specific activities related to Israeli settlements in the illegally
occupied Palestinian territories.
It's issue two, highlights and targets Palantir Technologies as a specific company that they
want to exclude.
So I realise we're on a specific path, but the motion that we passed, which we were told
was kind of too risky, does not seem to match with what other councils are doing.
And I know we have to move on this, but I'm saying if we have to get this survey out and
there's going to be a small response to it, when we're actually setting the responsible
investment strategy, we have the grounds to follow in the footsteps of our local authorities
that have been bold, have been explicit, and have, you know, answered the call of civil
society and all the people who have been regularly turning up to a pension committee.
No one wants to turn up to a pension committee.
When has that ever happened?
It's because people really care about this deeply serious moral issue.
So I just – I really wanted that to be on the record, because I think the journey we've
been on has been one in which we have stepped away a little bit from actually being as bold
as we can be.
If I can ask Mr. Gigliotti to talk about the legals.
I can address both points that you raised.
So I can't comment, I wasn't privy to what advice another borough has sought and received.
We went out and got Casey advice that was presented, a summary of such, to this committee
which highlighted what we needed to do.
Paul Newman, who is the KC involved,
is a highly respected individual in this field
who knows the stuff in the LGPS area,
which is why we used him to give the advice.
That is to protect you as a committee
in making the decisions that is compliant
with the regulations.
I'm not gonna comment on what another council has done
and whether or not they've followed appropriate advice.
What we went out and sought to do
was get something that sits before us that facilitates a broader responsible investment
policy.
Because remember, pillars two and three go beyond what we currently have in our investment
strategy statement.
You know, some of the areas that they consider and look at is taking out sectors and also
take out much broader approach to carbon climate change approaches than what we currently set.
So that is why we've got a broader range of what we're looking at doing.
In regards to whether or not how we've spelt out, I made it very clear to members, clearly
as Tony has advised you now on the advice as to how we approach a survey and what questions
we ask, we do need to put questions in around investment returns and highlight those issues.
But talking specifically about the point around individual members, I refer to what actually
says when we first talk about trade -offs which is what that point is straightaway
under the section 7 trade -offs the words explicitly being used are ones of
pension fund is part the local government pension scheme as such
individual benefits ie your pension are determined by their salary and length of
service rather than the performance of the fund we are explicit in saying that
and we then highlight that it's the employers that are impacted.
I think that's really important.
My point is that that is the last bit right in section 7
and I just wish it could be right at the top
so that when people are filling it out, they know.
And I don't think that would be a crazy amendment for us to bring to this meeting
because the wording's already there.
It's just about dragging it to the top.
And I would love to have a vote on that,
whether we could just drag that wording to the top of the...
to set the scene for the person who's filling it in.
Can we take another question, please? You've had a big say.
Thank you. I just wanted to ask you about, go back to Moses's report.
Given the changes, the government statement last week or before,
and the imminent sanctions on a number of countries,
number of companies operating in the illegal settlements,
How will that – many of those companies no doubt are in pillar three.
Isn't it financially prudent to start divesting as soon as possible, given those sanctions
you're in?
Yes, so I mean – so all I'd say on that is that – so I am not a lawyer.
I haven't looked at the detail of how the government's going to implement that statement.
But obviously, a number of countries did make the same statement or similar statements.
So clearly, we talked about this earlier with Russia.
If national governments sanction a country, there's effectively the work's done for you.
You don't have to divest from companies because they have operations in Russia, for example,
because all the countries you own have to do that.
They have to divest their operations on your behalf, effectively, so the job's done for
you.
So clearly, the UK's decision, as I understand it,
if any UK, any British companies that were trading in goods
relates to the occupied territories, that that would cease,
and therefore you wouldn't have to do anything again.
But clearly, I don't think, I haven't done an analysis,
I don't know whether, I mean, there's a range of companies,
there's UK, Canada, France, Ireland, Spain.
My guess is, though, a lot of the companies on the list
are not covered by those sanctions that have come in.
And therefore, now,
certainly you can make financial arguments,
because we've talked about making non -financial arguments
for exclusions, you can make non -financial arguments,
but generally, it's quite hard for you to do that
as a committee when you hold so many different companies.
And, you know, again, perhaps going back to the comments made earlier, you also, I think,
need to be very careful, and I'm not a lawyer, but you've had legal advice, and I can see
where that legal advice is coming from.
You need to be very careful that you're not seen to be discriminating and have a, you
know, your response to investment policy should be a top -down, principles -based policy which
endures and can be applied to different situations around the world.
So if the committee's concern is human rights in conflict zones, then there's a world trodden
path where there's an acronym for it, CARAs, so conflict affected in high -risk areas.
You can have a policy for that, which you then give to your investors, say, please implement
this policy, please engage with companies wherever they are in the world.
And that's obviously the letter from UK lawyers from Israel refers to the fact that there
There absolutely are other conflict zones around the world where your concerns could
equally be relevant.
Please, quiet.
So I don't think that quite answered your question.
Please, we have a serious meeting here.
I will not have shouting for the gallery.
the committee members are the only ones who can speak.
The point I was trying to make was that if we're financially prudent, that's a key part
of this committee, and we're seeing the potential sanctions coming down the road on potentially
more companies, can we take that into account when we're making our investment decision
or funds are making those interesting decisions?
I mean, so clearly if you had a strong case that there was a material financial risk for
a company that had significant operations in an area that you thought could be subject
to sanctions, then that potentially could be a cause.
But generally, the way the structure you have that you've delegated that decision to the
pool who in turn have delegated that to the fund managers.
So you are kind of you are entering the world of fund management as opposed to
policy. To add to that the regulations are very clear. You as a committee can't make
that call. You need to be able to get a proper advice to support that decision
because you know that's quite a technical analysis of what you're talking
about here. Now there may be people in this room that can deliver that and do
that but they'll need to present the evidence -based approach to whether or
that is true and genuine. What we're looking at doing here and remember with
this is not setting the strategy at all this is a way not even anyone close to
setting a strategy this is purely about getting the survey that will help help
us shape what that strategy will be and when we're looking at that we are
confined by the parameters of how we can invest and again that was in the advice
that was received and presented back to this committee and that is where we're
We're relying upon working with our 33 partners in the London SIV.
London SIV can't have 33 different strategies, which is why compromise needed to be found and agreed.
Which is why you're looking at the three pillar approach.
And what the committee will need to be conscious of is we do not need to set a policy that fully aligns to those three.
You don't.
But we can have something slightly different to help engage with our partners to get the shape and direction and change to the SIV.
but broadly we need to have a policy that can be delivered. We can't set stuff
that we can't invest in.
Two other points. Firstly, when it comes to genocide, can we set a policy that if a
particular international organisation has ruled that a genocide
is taking place, then our investment should reflect that and avoid that area.
And to address Councillor Dickerton's point about the survey, if we've got two audiences
for the survey, employers who do have a financial potential risk on the amount of money they
had to put in but would potentially go up, and pensioners who don't have that risk,
could we have two slightly different wordings of the survey, one with a question going to
the employers that specifies that risk and one to the pensioners that doesn't?
Not this time around.
We really have not got time.
If – we said this at the last committee, that we've got to set an investment strategy
statement by the end of March. That's a legal requirement that's absolutely
imperative that we deliver on that. There is insufficient time to go out and have
a wholesale change to the approach that we are that we're taking. The survey is
very clear if you look at the beginning of it it separates out the views of
scheme members and employers. You're asked to say are you an active
preferred or pensioner or an employer. You'll see the results and how they
differ. So you'll see the differential response will come back to here in a
report and if you see in that there's a big differential between the employer
views anything as the survey as it stands accommodates that.
Councillor Serra and then Councillor Dickard and Gusser and we are going to have to be
quicker because we have many more things to discuss tonight.
Thank you chair I was gonna make a slightly different point but just coming back to
rewording the survey or adding adding things in there I mean I was just
I was thinking that if then an employer turned around and said, the employer would want a statement at the start of the survey to say,
well, doing this, that, and the other might end up in us as an employer having to make additional contributions.
I wouldn't want that, I wouldn't want the survey rewritten to include that, because where would we draw the line?
We've drafted the survey, it's ready now, and people have had a chance to make their input.
So that's what I'd like to say on that.
The point I'd like to make, which I think we were all sort of getting at earlier on,
is we're referring to the statement by Ed Miliband and we all know what was said there.
Am I right that the remit of this particular committee is not to judge what he said or didn't say?
It is now down to the government to impose sanctions if that's what they want to do.
And then our work is done for us automatically.
Am I right?
On one particular geographical region, yes.
But this is not about one political geographical region.
This is a much broader approach.
If a sanction comes in, it takes it off the table.
But this is trying to address not just one area, but a lasting ability to set how do
want the ethical responsible approach to be taken across a broad range of areas.
And that was my point, that our remit isn't to exclude any specific companies.
We set a broader strategy which says, well, if it's genocide, it's genocide everywhere.
If it's excluding for tobacco companies, it's tobacco companies everywhere, and so on and
so on, rather than singling out a particular company or a particular country.
That minimises the risk of any legal challenge that comes against the regulations because
you're not setting it and targeting it around any particular geographical area or individual.
It's a broad approach at a high level saying that this is the ethical responsible standards
we expect our companies to be invested in.
The risks that have been associated that are looking at doing that are in line with the
pillars and if we set a stance that is slightly different to that we can try and campaign
in order to do that but as I said this is only about survey not our strategy
it will help guide us and shape how that strategy is devised and that
might not fully aligned with the three pillars and then you know we need to get
something broadly aligned with that but then we can work on that but that's not
for today this is about enabling us to get the views of people so we can
actually set an RI policy.
Councillor Dickardam and then Councillor, please be quiet.
Yeah, I think in response to the last point, I want to in some ways mount a defence of
targeted campaigns because there's just an amazing history in Britain of local authorities
heeding the call in the 1980s to make a very specific targeted campaign and divestment
strategy against apartheid in Africa and we all celebrate that history now. So I think
For us to pretend that that doesn't exist and to exclude the idea that we have a duty
when specific crimes or historical moments are taking place, as has happened over the
last years in Palestine, I would just push back on that because I think we can.
We have agency as politicians.
It's why we do what we do is to try and make the right call on issues of great importance.
My point is really about post -survey.
You're right that the CIV can't have 33 individual strategies, and that's why I think it is really
important that post -survey we are connecting up with other local authorities and councils
and thinking through how we make Pillar 3 fit the actual will and reason why we are
doing all of this in the first place, which is to have asset managers in those specific
pillars take on the moral frameworks and the political frameworks that we think are relevant
to the reason we are taking that ethical decision.
There's a kind of pretending that making
an ethical investment strategy is somehow not linked
to our morality and what we think is right and wrong
and what's happening in the world.
And it seems very strange in this committee
that we sometimes shy away from that.
And I understand because there are all kinds of rules
put in place to stop it from leaning into something
that could damage the pensions of the workers.
I care about, the unions care about.
The unions have been central to this
and they do not want our pensioners to lose out on it.
But I do think we do ourselves a disservice if we don't take
seriously the reason why we are going down this route, which is
because we want to make sure that we don't have money
in companies that are committing war crimes.
And I just want to ground us in that again.
My final point, and I hope some people jump in with me,
but I do think I don't want to amend the survey.
I don't want to change the wording of the survey.
I would like existing wording within the survey to just be brought to the top to help frame
the survey.
And I don't think it would damage the survey.
And I think we could take a vote on it here.
It wouldn't be controversial.
Just addressing obviously that votes are not for me to comment on.
But what I say in the other point about the legacy and the ongoing, so I 100 percent agree,
you know, the same of everything.
You can't just devise a policy and forget about it and then pick it up again in three
years' time when we're asked to refresh and renew it.
that isn't best practise and should never happen.
There are working groups that will continue to operate
and not just in looking at response and investment.
There's another discussion on a later paper
about local investment.
There'll be new things.
So the London SIV and the 33 partner funds
are not gonna park this on the 31st of March
and forget about it until 2029
and when they go and refresh it.
You're totally right.
Times change, political environment changes
and we need to be dynamic and adaptable to that.
So I support what you're saying that this is not a one -time only and that's what we need to reflect upon
When we're looking at this is even if it isn't perfect and it isn't exactly what people want to see
This isn't the only time we're ever going to do this and but it does set a precedent
It does set the aim and direction of travel that we're looking to go in
But it is not a singular moment in time and things will evolve and change
Councillor gasser is going to finish us off on this one
Well, I'm just going to repeat the call for section 7 to go up to the top, and it could
just be copied and pasted up to the top because it's a lot less scary than that first explanation.
And it's there already at the bottom, but why not have it at the top as well, because
then it explains the situation better.
And could we have a vote on that if it's controversial?
So what I will say is that in the spirit of collaboration last time, we very equitably
agreed three people from three different parties to come together to discuss, which we all
three of us did in an open and honest manner, and things and changes were made.
That is fair.
That is actually what happened.
We've heard the reality of what will happen if we keep on debating and changing the survey.
It will not hit the spot.
Will you be quiet? This is a very serious meeting and I'm sure every single member
of this committee would agree that we are agreeing this in a civilised manner.
Shouting over us when we are debating something that is very serious is unacceptable.
I have asked you on a number of occasions not to disrupt this meeting. This will be my last warning.
I am going to read this.
So,
Chancellor Serra.
Thank you, just for the
so that we're all literally on the same page.
Can we just understand what it is that we're being asked to amend?
Councillor Diggadim can just clarify what the sentence is and where he wants to put
so that we all know what's being talked about.
And I'm doing this in the spirit of collaboration.
I understand, I really appreciate it.
All I want is for, just to, not to take away, but just to copy exactly the same wording
that's in section 7 where it says, ones with pension fund as part of the local government
pension scheme.
So it's under Section 7 trade -offs, and it says the Wandsworth Pension Fund is part of
the local government pension scheme.
As such, individual benefits, i .e., your pension, are determined by their salary and length
of service rather than the performance of the fund.
And I would just like that to be put alongside the point about employer contributions.
I think on page 103, the best place to put it would be – I'm just scrolling up.
Basically right at the start where it says...
I think it's very important and I put those words in myself.
Thank you for taking part in the Richmond.
Your views will help us shape the investment.
So I'm afraid I think that is more important.
Oh definitely.
I think it should go just in front of probably at the end of that second paragraph.
So it says pension fund investment money on behalf of its members and employees can provide
pensions now and in the future.
When making investment decisions, the fund must comply with government regulations and
its primary responsibility is to protect the long -term financial interests of members and
employers and then say that.
If we are all in agreement, in the spirit of collaboration again, we will agree to that.
I think it might be better slightly after that, because it then goes on to say –
There's a whole paragraph.
– what the purpose of this is, that's – but it then goes on to say – sorry,
this is just working live.
It then goes on to say, alongside financial consideration, the fund must also take account
of nonfinancial blah, blah, blah.
Which works.
Which I think works because I think you have to set that out, right, because that is the
purpose of doing this.
I don't want to get rid of anything.
I just want to –
Yeah, you know, I know, I know, but it's just like the – you've got to put it in
the right place, although it sounds odd, otherwise you shouldn't.
So then because the fund has recently reviewed its financial position, they're now sinking.
So I wonder if you put it after the one that says the fund, right?
So you've said the recent review of financial position is now seeking your views.
And then if you then say, you maybe say something like, you know, confirmation or something,
ones with pension fund is part of the LGPS as individual members.
Do you see what I mean?
Before you then go into your role?
I still think it works.
I think it works well just in that second paragraph, because then it says, alongside
financial consideration, the funds may also take into account certain non -financial, which
is exactly right.
The fund recently reviewed its financial position and is now seeking members' views.
Before you go on to, we may approach it.
That's what I'm wondering if you put it before you may approach.
Where does it say we may approach it?
It goes, the fund has recently reviewed its financial position and is now seeking members'
views on nonfinancial.
So, I mean, that introduces why we're asking you for your specific views.
And then it goes first.
And then it says, as such, individual benefits, i .e. your pension, are determined by blah blah blah.
It just feels like, because you're, do you see what I mean? You've said the fund has recently reviewed,
you're seeking members' view, you clarify how the benefits are, you know, what it says here.
It's going first.
That's it, it's still going first.
I think the first three paragraphs were all agreed, correct, I think?
Well, I'd like it to go into the bottom of the second paragraph.
I don't think, because you have to introduce, sorry, just give us a minute. I think you
have to introduce the fact that this is a non -financial, we're asking people about
the non -financial to inform the responsible investment strategy. So I think you have to
say that before you – because what you're trying to get at is you're trying to make
sure people aren't scared, right? They are aware that their pension is not in line with
the market like private pensions are. So I just think you need to get –
So where exactly – so you wanted to go after the fund has recently reviewed its financial
I'm not saying I want it, but I'm suggesting, would it flow after the fund has recently
reviewed its financial position and is now seeking members' views on which non -financial
issues should be considered as part of the investment decision?
So before you then go on to, you may approach these questions from different perspectives.
It feels to me to make sense to then have a statement before that that says –
No, no, so the reason why, because I think that those two paragraphs, I think, are really
good, and they don't need alteration because they're not confusing.
I think where it's useful to have clarification that this is a defined pension scheme is in
that second paragraph, and then it goes alongside financial considerations if I may also take
it out of non, which is exactly what has been reiterated, and then it goes on to even further.
So that's why I think I'm agreeing with you that it should be above the approaches, and
And that's why it should be at the bottom part of the second paragraph.
I'm going to defer to Councillor Sarah.
But I'm not the top of the world either way.
Right. Councillor Sarah.
Okay, can I just say one thing?
Look, we are a committee and as part of teamwork where I think it makes sense to accept everyone's views.
What I wanted to just ask before we start sort of rewording all of this and rearranging this.
I just wanted to ask, Bojilati, does this cause you a problem in having to redraft it
and so on in any way?
Is there still time for you to change it?
If we agreed tonight and it's only just repeating some words that are in Section 7 up above,
I can do that easily.
So long as something is agreed now, that's the final version.
Okay.
No more changes.
Okay.
I would ask just because the reason why we want to put this in is because if you just
leave paragraph two, when making investment decisions, the fund must comply with government
regulations as its primary response is to protect the long -term financial interests
of the members and employers, which is true.
We want to make people realise that this is a defined pension scheme.
So, we explain that, and then we say, alongside the financial consideration, the fund may
also take certain non -financial factors on the basis that it does not have significant
labour caps on it.
These considerations set out in the fund's responsible investment strategy.
And if you want it to go at the end of paragraph 3, before it says the fund has recently reviewed
its financial position, that also works.
But I think it has to go before it says the fund has recently reviewed its financial position.
So it can either go at the end of paragraph one or paragraph three, which I think is closer
to what you wanted.
I don't want to say anything.
I'm just trying to get some ideas to help us as a group.
From my perspective, it can move it.
But I think if I'm being brutally honest with you, if you put the whole paragraph up, highlighting
again to say how it works, that the performance is impacted by the employer, not the individual,
it puts everything above board transparent.
So if you repeat all of that paragraph, move it up to where you're asking for Cancer Dickerdom.
It is, I'm sorry to gallery, but this is not for just the individuals, this is for employers
as well, and the committee have to take into consideration employers' views for this to
be a legally compliant approach.
So that's what we need to do, so it's putting it up, being honest, open, transparent, and
I can understand why people want it up the beginning before you ask any questions, so
You can see it all in its entirety
before you ask a single question.
The specifics can be raised again in section seven
where it's more pertinent,
but raising it to the top doesn't cause me
any challenge or any problem.
We need to make sure it's ready and appropriate
for all stakeholders,
and that is an effective way of doing it.
So I just want to, so I'm gonna read out
the bit we're taking from the bottom again, yes?
So we're gonna take.
Can I just ask that you read it in its flow
so we can understand how it goes from the top.
Let me do that on my screen right now.
So the bit we're going to, I just want to clarify,
the bit that we're copying from Part 7 is,
Wandsworth Pension Fund is part of the local government pension scheme.
As such, individual benefits, i .e. your pension,
are determined by their salary and length of service
rather than the performance of the fund.
And the way that I would like that to be placed is,
Thank you for taking part in Richmond and Wandsworth Council's pension fund survey.
Your views will help us shape the investment of monies that pays for your pension.
Second paragraph.
The pension fund invests on behalf of its members and employers to help provide pensions
now and in the future.
When making investment decisions, the fund must comply with government regulations, and
its primary responsibility is to protect the long -term financial interests of members'
employees.
Wandsworth Pensions Funds is part of the local government pension scheme, and as such, individual
benefits, i .e. your pensions, are determined by their salary and length of service rather
than by the performance of the fund.
Alongside financial considerations, the fund may take into account certain non -financial
factors such as environment, social governance, blah, blah, blah, blah, blah.
So that's how it would flow.
So I think just from the point Mr. Gialotti was making, we should actually have that entire
paragraph from the top section.
That would undermine the purpose of doing it.
Because we mention employers in, it says, it's primary responsibility.
We will move it around, we are not going to change the wording.
No, I'm not asking you to change the wording.
Well, it sounds like you're trying to get round and round in circles. Mr Giuliati?
Ultimately, like I said, this is a survey that's trying to capture everyone's interest in one go.
I understand the need to put it up there, but if we're being open and transparent,
you know, scheme members would need to understand how does this impact,
and performance is impacted positively or negatively, we're not saying this is going
to be detrimental.
The analysis that Mercer have come up with has shown that it could be a positive decision
in doing this and it could mean that contributions are lower for employers as a result of some
of these changes that we're looking to seek to do.
However, if the purpose of putting it up and above is to demonstrate how does the fund
work, it is reasonable to explain that the fund works by them having a fixed contribution
rate and employers having a variable contribution rate that is based on performance.
That is what would be open and transparent.
The decision as to whether or not you want to make non -fiduciary decisions and everything
else, you need to take and reflect as part of your duty as Committee the impact it has
on employers.
The entire point is...
Councillor Dickardam, Councillor Sarah has been trying to speak.
The whole area has already understood fully now that it is totally asymmetric.
It's the interest in members of the city.
Quiet!
Members of the city...
Be quiet!
It depends on actually not being bullied.
Be quiet!
Thank you, Chair.
Councillor Dickardam, you've had a chance to sort of say what you wanted to do.
I've been listening carefully.
I'm just conscious that Councillor Davis wanted to make a point,
But because she's not as vocal, she hasn't had a chance.
Can we just hear what your amendment was?
Because that wasn't very clear to me.
If that's OK, Chair.
Well, it's so much debate.
I think I've lost what I was actually going to say.
I think the point I was going to say
is I think we have to take the whole paragraph.
I do.
Because it describes how the fun works.
And I was thinking of putting, what I was suggesting, please,
I was suggesting that that goes in front of where we say,
you may approach this from several perspectives.
Oh, gosh.
So it would be, I guess it would be, let's say, alongside financial considerations.
Well, I'm just trying to think what makes sense in terms of where the order would be.
Invest money is part of members '…
Can I just point out…
Pat, please.
Let me be very clear.
We have said that we will move it.
We are not going to remove part of it, we will move it.
So much.
No, that is what it is.
If we do not agree to this survey, we will not meet the March date.
So if you want to have a vote and vote against it, so be it.
You can't fix the vote.
No, no, no.
I'm making a point.
We have been debating this for some time.
Councillor Davies.
So, a thought. If what we're trying to do is explain this fund, this – sorry, wait,
give me a second. If we're trying to explain this pension and how it is different, right,
so that people understand, the members, it's not the same as, you know, as other pensions.
If we move the whole paragraph, which explains the LGPS, for me it would sit in the – would
become a new third paragraph. So we say thank you. Then we say the pension fund invests
money on your behalf. Then we say it's a pension scheme and as such individual benefits blah,
blah, blah, blah, blah, however. So just lift that full thing so that it is then the new
paragraph three and it goes ahead of saying alongside financial considerations. So for
For me, that would be both having it upfront, and we're only literally, it's a third paragraph of which the first is a thank you.
But it lifts the whole thing and it describes what LGPS is.
And it lays that out, I think, to be honest, quite clearly.
And we have had a working group of all three parties who have agreed the wording here.
We're just talking about the movement.
So that's my a thought.
One last comment from Council.
Thank you, Chair. So look, thank you. If that entire paragraph from Section 7 is copied,
because that was worded by I think Paul Giulotti as well to make it compliant and so on, if
that entire section is just copied, left in Section 7 anyway, inserted in as the third
paragraph in between the pension fund and alongside, I would be happy with that.
Can I just say the entire point, because you're reading just the whole reason I made this amendment in the first place,
is because if you scroll to section one and section two, that entire part is the bit that is coded around fiscal and fiduciary duty.
That weighs towards the employer.
We have come to a compromise.
No, no, no, you're shutting down and changing the vote that I've asked for.
No, I'm not shutting down anything.
Because I asked for a very specific wording, which I read out and everyone agreed, and now you're trying to take the whole paragraph and not get to the top.
No, no, no, we said we would move it.
No, we haven't had a vote, I think.
So let's have a vote.
Please, if we do not agree, okay, this survey will not go out.
That is the consequence.
No, I'm saying let's have a vote on the amendment that I've made.
That's fine. If I lose it, it can go as it is.
No, no, no. We're not having any more changes to this.
No, you just agreed. The problem is, Melanie, the problem is,
is because you do not have a majority on this committee.
So you keep shutting down the democratic rights of this committee.
You have had so much air time tonight, so much air time.
In the spirit of compliance, we have said that we will move the paragraph.
You are now changing it around, and that is not agreed.
You either agree to the survey or you don't.
If you do not agree to the survey, then the survey will not be able to go out.
And it will not meet -
That's not my position.
It is.
No, it's not.
Because you are trying to change the rules.
I'm not trying to change the rules.
Because I've explained very particularly, which is that the weighting of the current ordering of the questions on the survey do not emphasise the fact it's a defined pension scheme.
So I read out a very clear set of lines identical to wording already in it.
But I think, and everyone agreed, and then at the last moment you want to take the entire paragraph which undermines the entire point of that.
And if I lose the vote on this, the survey can go through.
I just want there to be a vote on that very specific point.
and everyone is welcome to vote in different ways.
That is democracy, I'm happy for that to happen.
But what I don't like is that you changing
the parameters of the vote mid discussion.
I would say that you are changing them.
So can I ask a question to the,
can I ask a question to the.
Will you all be quiet?
Can I ask a clarifying question?
So, I think what Councillor Dickerton is talking about is to effectively take a part of the
paragraph on Section 7.
So my, I mean as we know with the Trump edits, the editing is tricky.
So my question is, if we were to take a part of that paragraph, does that still mean we're
meeting our legal requirements?
This is, like with everything, it's all subjective on this.
So I can't, I'm not going to sit here and say moving part of a paragraph will make it
illegal or moving it up will make it fully.
My own point is saying is that if you want, if the aim to be is open, transparent and
explain how the fund works to everybody, how the fund works and to employees, because employees,
you know, when you're seeing how does it work then, because it's, you know, money doesn't
magic itself and returns don't just magically appear.
If returns are not delivered, they are substituted by contributions.
That's fact.
And that's what needs to be explained to members.
Money just doesn't magically appear if performance isn't there.
It has to be put into by employers' contributions.
So that is why I'm saying from my perspective as the Senior Responsible Officer, if you
want to be fully open and transparent about how it works, that is what you say.
Councillor S
Okay, great. So it's part of the paragraph from paragraph 7. I'll read it out again.
That the Wandsworth pension fund is part of the local government pension scheme. As such,
individual benefits, i .e., your pension, are determined by their salary and length of service
rather than the poor performance of the fund. And I would like that inserted. If the vote
goes my way, if it doesn't, that's absolutely fine. But I would like that put directly at
the end of paragraph two where it says this pension fund invests money on behalf and before
alongside financial considerations.
Jay, if I may ask, Councillor Dickerton, what is wrong with the rest of the paragraph?
I'm trying to, it's totally fine, it's totally fine.
The reason I'm doing that is because part of my, part of the reason for doing it is
I think the survey as it stands is slightly weighted towards employers.
And it mentions a lot of the responsibility of employers, and I think that might be confusing to the pension members.
And I think the employers have a very good grasp of this.
They will know it inside out.
They're a much smaller percentage.
I mean, they must be in single figures as a percentage relative to the pension members.
So it's just about when you start reading the survey below the introduction, it's very heavy on fiduciary duty, and I just want to rebalance that.
That's the only reason I'm bringing this amendment.
If this amendment falls, I will support the survey because I want us to get on and set the investment strategy.
Thank you, Chair.
So what you're saying is you just want the -
Be quiet.
You just want the first sentence in section seven.
That's all you want.
Chair, I would be happy with.
In conjunction with what Councillor Davis has said, if that's what we're saying, that we're just including one sentence,
we can put both of them to the vote, the amendment by Councillor Davis and the amendment by Councillor Dickerton.
It's actually two sentences.
The two sentences, one sentence.
Now even I'm losing the track of this.
Oh, yes, the first two sentences. We can put that to the vote.
A long time ago, I asked about the effect on the funding level.
So, unless I'm completely misunderstanding this, Tony, didn't you say that this would have like a fraction of a percentage difference in the funding level?
So what are we looking at as a consequence of the effect on the employer?
Do you understand what I mean?
If the funding level changes, it can have an impact on the contribution an employer will make,
not an employee, an employer will make.
So the level of the changes as a result of this, I think we said earlier, was a fraction of 1%.
So what is the big deal?
Sorry, unless I'm being really ignorant here.
It is three and a half billion pounds. I know I know but but what are we talking about here?
Okay, wait we're going to go to a vote because we were going round and round and round in circles
so the first vote is in the spirit of collaboration, which we agreed that we would put the
the paragraph up a
To but in totality
Sorry, sorry.
Committee, there's going to be two votes.
There's going to be one to copy the paragraph in its entirety
and add it between paragraph two and three on the first page.
And then a second one with Councillor Dickerton
having the short of the two sentences
and putting it in the same place.
So the first vote is about the copy and paste
to put it after the second paragraph in entirety.
the second vote is where you strip out some of the wording.
Surely, Chair, we should be voting between the two amendments and then between the results
of that and the extent.
We have a proposal from Councillor Davies, we have a proposal from Councillor Dickardam.
Shouldn't we vote between those two and then vote between the results of that and the...
I think because we can't go with both.
Sorry, can I clarify?
As I am somewhat, what, what?
Just being rude.
That's exceptionally rude.
I won't have that.
What Councillor Cardy is saying is we vote on the Councillor Dickerton, which is the
first two sentences.
we vote then separately on Councillor Davis's one of the entire paragraph.
That's what he's saying.
Essentially, because either way the first two sentences are going to be included.
So if you agree the first two and then refuse to add...
Right.
We'll put this to the vote.
So this is Councillor Dickerdon's proposal
excluding some of the wording.
that place.
Right, so the recommendations the Pensions Committee agree the revisions made for the
responsible investment member survey following consideration by the member working group
including our recent amendment.
Does that go there?
Okay, so are we in agreement to that?
Agreed.
Note that the revised survey has been developed in conjunction with the Council's consultation
team and has been shared with recognised trade unions.
Are we noting that?
Agreed.
Note the correspondence received from the UK lawyers for Israel and Mercer's subsequent
response.
Do we agree the note?
D. Well, we've had Mercers note that the representation for Mercers will attend the meeting to respond members questions regarding the issues raised in the correspondence.
We agreed?
Good. Right, now we will move on to item 6.

6 Pension Fund Annual Report 2025/26 (Paper No 26/197)

And we have spent a considerable amount of time, and it is the absolute right of the committee to do that.
We are now two hours in, so I propose that we move fairly swiftly through the rest of
the very important agenda.
So pension fund annual report, which is item six, and Mr. Giulotti is going to give a very
brief introduction.
I will be very brief.
So the report in front of you is a statutory report.
It brings together a load of information that may well have already been presented to here,
including the accounts which you heard earlier on in this meeting. It also
highlights and shows you the performance of our pension admin team. I'll remind the
committee that the details on the pension admin team, the performances
that you are seeing here are purely for the Wandsworth Fund but they also
provide services for a number of other London LGPS funds. So in the spirit of
Speeding up the meeting I will end there and throw it open to questions. Although I may direct you to coral Martin who?
Here from their respective teams to answer any particular questions
The the thing that jumps out was the average drop to 88
compared to other local government funds over the 30 -year period we perform well, but then
Is that a way of
Sorry, which page are you referring to?
So page 62.
Page 62.
Within the, yeah, within the...
Page 62.
Yeah.
It's the ranking procedure.
So you want to about performance?
Yeah.
Yeah, but we've, I mean, that's been brought to this committee numerous times.
It's as a result of the active managers.
Active management managers.
And the follow -up question is basically like,
when everything moves to the sieve,
are they going to have,
like are they going to have a more active approach
to changing managers than we would have had
were it not us being in control?
There's a separate paper which you can answer
those specific questions later on,
so there's on performance,
so I would suggest that we cover that
in that particular paper.
On page 156, page 18 of 9500, the last paragraph that it refers to payslips, assents, pensioners,
home addresses every month.
Is that actually the case every single pensioner in the scheme gets a payslip every month?
Because some of these pensions are rather small.
Somebody's only been in for a couple of years part -time and they're now the spouse pension.
We're changing the whole process around how we operate. So for some schemes within the fund,
pensioners do receive them all the time, others it isn't every month. But Martin,
you want to add to it about the direction of travel that we're moving on that particular point?
Yes, we are moving to electronic pay slips in 2027 to be more in line with local authority
standards now.
So it is a project that's ongoing to change delivery.
With, I hope, an option for those who don't do email.
But that's right.
There's a paper option for all.
I recently had two elderly relatives.
One of whom was very much using email right through to 97
or something.
and the younger one was definitely not using email.
But yes, I was a little bit surprised when I saw that
because I thought the total amount of dead trees involved
would be significant if everyone was getting that.
I think this just illustrates the point
about the survey, doesn't it?
I was just saying,
and that could be, you're talking about less trees being felled, and also be a cost saving as well, postage cost.
Good to hear it's under review, thank you very much. Do we have any other questions?
It might have come up before and I've forgotten, but do we know why overpayments have gone up so much?
The payments of pensions, although the Martin or Cora has got any particular elements as
to the reason.
I mean, some of the times it's linked to, we find, about NFI when that's done, in
the number of people who have passed and the length of time it takes us to be notified.
But we are, on our mortality elements, which should help and assist that, we are looking
and changing some of our approaches on identifying the issues on mortality.
So Martin, do you want to add anything around our provider and how we operate on that element?
There has been a lot of work changing processes and identifying overpayments.
It does depend somewhat on the cyclical or it depends in any given year the level of
overpayments, but we're fully audited and there's no kind of structural issues with
the monitoring pension overpayments.
but we are working on identifying and processing,
actually our processing of overpayments.
And how wonderful to know that those of us
in the pension fund, we all live a very long time.
Thank you, Chair.
On that front of living a long time,
I just wanted to raise an eyebrow over
page 215, the very last line of it, not only do we have three pensioners who are in the
age band 106 to 110, we have a deferred member who's not yet, maybe I need an explanation
of some point of valour apparently, but I admire the optimism of somebody who's at that age,
reach that age and is still deferring that pension for a time when it might become more
useful.
We share our data with public bodies, DWP, for people claiming pensions, so we have the
National Fraud Initiative, which all public body data is shared, and if there is an address
out there for a deferred pensioner that should be receiving a pension will make contact.
So if – but if they don't have an address with DWP, no pensions are paid out, so you
have to go through validation cheques so it does sit until it's claimed by a mistake.
But yes, in terms of we have mortality tracing, another third -party search of records and
deceased records.
So we do have – so out of thousands of pensioners, we only have a handful of people who haven't
been able to trace.
Thanks, Chair.
Just on page, either 92 or 230, depending on how you look at it, looking at appendix two on the KPIs.
I was just noticing, particularly on, which ones?
Communication issued to a ski member with completion of transfer in and the one below transfer out.
There seems to be a significant drop in meeting that 15 day target last year to this year,
sort of from nearly 100 % down to sort of 60 % or whatever.
I was wondering if there was a reason why we're falling behind on that particular target.
If anyone knows.
Yes, we did identify last year an issue due to recruitment, long -standing staff leaving
and the gap between recruiting new staff.
There was a backlog and we have in our latest partners meeting, we did discuss the work
that's gone on to really turn those figures around.
So the latest figures are better in this year than they were
in last year, so it hasn't been identified and addressed.
Good. We're tracking it.
Thank you.
Councillor Codd.
On page 231, page 9395, if you're looking at this
on your computers, I'm sure it does show four different colours.
If like me, you're looking at a printed version,
And the deferred and active do seem to have been effectively combined in one grayscale.
So if I may put out a plea for next time when this report's being updated, for those who
are looking at this on black and white televisions or printed, et cetera, can we have either
patterns in there or four different colours that do appear differently on grayscale.
I'm sure it's not the only example in this, but just as a plea for the future.
So just two points of clarification, maybe I've just misunderstood.
So on page 231 of exactly the chart you're referring to, if I've understood the table
then on page 215, the data seems to be different.
So as you just called out, we have folks 106 plus on the table on 215, but the membership
by age band, unless that's somehow a different data set.
There's only one member, so.
Oh, so it's so small.
So small.
Okay, fair enough.
Y axis, okay, got you.
My other question then, my action was, do we have data on, and I'm just, it's a hypothesis
about perhaps why, even in that individual situation, how many people are overseas who
are in different countries getting their pensions?
Do you know how we do about our overseas members?
Our overseas pension is about 300 overseas pensioners in that region.
The Joint Pension Committee is recommended to note the updates provided in this report.
So, and then we have a short item, don't we?
This is the recommendation.

7 General Matters (Paper No 26/198)

The Joint Pensions Committee approve the process for appointing an independent person outlined
in paragraph 11 and the person's specification for the role in Appendix B. And I think that
Mr. Giuliati is going to give you a very quick explanation of what we're agreeing to.
So this paper's actually got two parts to it.

6 Pension Fund Annual Report 2025/26 (Paper No 26/197)

So the first part is an update on where we are on training.
So thank you to all of those who have completed their training needs assessments.
I think at the time of this report was issued, we've had seven returns and responses.
We're still awaiting two.
It is a requirement of you to complete those to enable us to build in the training requirements.
So if you haven't already done so, can you please get into Coral ASAP so that we can help do that?
Because we are required to report to this committee on the approach that we're taking,
and it is a legal requirement for you to be able to demonstrate that you have the relevant experience and knowledge to be part of this committee.
Without that training, we can't give that assurance.
And then the second element, which is the appointment of an independent person.
For that element, I think we mentioned before that the regulations have changed,
that we can no longer take our primary advice from companies such as Marsh,
for which Tony is a long standing employee who's done a good support to us in providing that.
We take that now from the London CIV.
but in order to ensure that there is suitable challenge and with expertise to
support both the committee and officers to the work not just what they do but
also challenge the work that I do as the senior responsible officer and what

7 General Matters (Paper No 26/198)

Martin is doing and what Cora is doing within their respective teams we need to
have an independent individual who can you can rely upon to provide that
support we have to have someone in in place by the end of next December so we
looking to go out and recruit in order to do that so what we're we're doing
quickly because London are still going out soon with the rest of them are
trying to beat them all to hit and get out quickly I've got a JD here and a
route forward for how we're seeking to appoint that so that's what it's in front
of you that's you have to have one whether you like it or not we were we
are making it as broad as possible so it might be an individual who may want to
through and under their own umbrella and do whether it be an IR 35 or we might
use a company I'm trying to say I want whoever we can get the best person as
quickly as possible in place because there are only very one they've got to
have knowledge of not just investments but governance and administration so
there aren't that many of them so I'll try to get out quickly so that's what
it's in front of you today and I think we all agree that we want to crack on
and get a good one.
We all have to dig it up?
Would they come to these meetings?
They'd sit in these meetings, we'd meet them,
they'd see, yeah, great.
So the ream of what they'd be doing is
at the bare minimum, they'd be expected to be here
at every single committee.
How we do it and how we look at it,
I mean, that's why I've been quite vague
in looking at remuneration.
So it can be done either as a day rate for us
and when we use them, you might need to put them
on a retainer to do a minimum.
But I wanna go out and give myself
as much option as possible, whether it be an individual or a firm, to see who's most
suitable and you know the price point that they will change will be variable depending
upon whether we go for a firm or an individual.
I don't want to be restricted, I want the ability to get someone in who can meet the
deadline and be able to provide you with adequate and suitable advice and that I want them in
soon so that they can help you do that investment strategy statement which is going to be more
challenge than today if I want to see and making sure that we get it right and
proper that you've got good independent support to help you on that journey I
think we're all agreed on that slightly flexible approach so that we just get
the best are we all happy with that agreed so then we will move on to item

8 Local Investment Strategy (Paper No 26/199)

eight the local investment strategy again very short this one because I
I think this is very interesting.
We've all read the papers, so I think we can have a debate.
So just a quick one.
Again, to be very brief, just to set you why it's here.
Again, it's a legal requirement for us to identify
and set a particular percentage.
It could be zero, but in the spirit of things
about where we are, we know that we roughly have
approximately 2 % already through our infrastructure
of stowed property portfolio.
I'm very clear, and we've raised this several times
at this meeting that when the government set up this approach and looking at taking your
pool as being broadly diverse, London's not diverse, so we've got a big challenge in London.
This is not fit for purpose in my view in what we're bound by because at least with
other pools they've got the whole breadth of the country.
So I've written it in a manner that is compliant with legislation but being de minimis on the
level that we're going to set.
We are saying that in the spirit of what we're looking to try to seek to do, we're setting a two -tier target,
so it will be broader and the outliers of South East London and South, sorry, our South East England.
I don't want us to have a target explicitly for the funds local area, because Richmond or Wandsworth,
London's too narrow, Richmond or Wandsworth seems narrower.
So it would be remiss of us to have a diversified portfolio set in targets explicitly in the borough.
That doesn't mean that if we find good investments in our area we can't put them forward to the
SIV for them to make sure they invest broadly across the whole of London, which is what
the aim, which I'm trying to get at is, it's not for us to invest directly, we do it through
the pool, if we find a good investment that's diversified.
So that's why we're setting it in the way and that's why the lumber is as low as I've
written it, it's because we're London and our pool is London, we're not one of the other
and the ones that cover the whole breadth of the country?
I mean personally I think this is a very exciting opportunity
and every member of this committee and all the people who are listening,
I think if there are investment opportunities out there
that you think might apply, bring them forward.
I mean, you know, I think it's very, very exciting
but it will also be interesting how it's going to play out.
I mean it really is. This is a big ask.
we were on that meeting with the London CIV
and everybody's fighting about, I want it in my area.
So Councillor Serra's first, then Councillor Zickler,
because he did ask first.
Yeah, thank you, Chair.
Thank you, Chair.
I apologise if I've missed this,
but what I wanted to ask is,
what would the implications be if we didn't reach that
5 % or 2 % target consistently,
as in if we were underweight?
It's a target.
So, you know, but the aim will be, it's a bit like tracking errors, isn't it?
I mean, you'll be judged by, this is what you're seeking to achieve, why aren't you
achieving it?
And when we're, but it will help shape the investments that the London SIV do on our
behalf.
So if we're targeting certain levels, then it cuts across a range in the portfolios,
whether it be property, whether it be infrastructure and other areas, about directly how the investments
are made.
But they are, you know, the SIV are there to implement our strategy.
the higher we set, the more they'll allocate to it,
and then we're gonna come on to
performance paper in a minute.
And so I would be saying, if we're not meeting it,
we'll be asking the CIF, why aren't they?
Yeah, that was my point, as in we don't wanna just invest
for the sake of investing, it needs to be something
where we do our due diligence and get it absolutely right.
That's Dickerton.
One of the things I asked for in the training
was a bit more detail on how the CIF works,
because I'm still, but this is primarily the reason
the CIF has been set up and all the centralization
is happening is it's not, not just this but it's one of the reasons.
Because is the aim that it's a genuine target for the government to try and keep some of
our pension money in the UK basically as a low level target and for us then it becomes
a regional target.
Have I got that right or is this, unless I have a second question.
The message that you seek, the government are seeking to try to force us to invest more
locally in the consultation.
I was happy with that if local meant UK.
Because if we're putting in a 5 % target, even a 10 % target to UK investment, it's broad
enough for us to be able to capture it with the power grids moving north and other things
being done.
There'd be sufficient opportunities for us to do it without there being a concentration
of assets in a really niche, narrow area.
London, unfortunately, because of our way we've been done, it's not a good investment
in the majority of the time.
So why would we want to target a real high level?
If they'd said it, like I'll ask from the consultation for UK, I would have been setting
and recommending to you a much higher target than I have.
I've tried to do it broader by having that two tier one to demonstrate I'm trying to
meet what the government is wanting us to do.
I think this is a pragmatic way of demonstrating that.
That's really interesting.
And actually, it's really interesting to hear about the regional variation that you actually prefer a broader brushstroke than a smaller one,
which when I was doing the paper was not what I would have thought five years ago, ten years ago.
Have, because if we do have to do some of it in a very specific geographical location,
has anyone at the ELSEF, when you have met up, talked about institutional investment in things that benefit all the London councils that they could all agree on,
like capped CPI plus temporary accommodation,
nightly accommodation with big providers.
I know institutional investments are starting to move
into that as an area of focus
because it's a regular stream.
But I just wondering if that has come up yet
because capital letters talks about that at some point.
And it's very niche.
It could be, probably wouldn't even touch the edges
of the targets, but just wondering if that's been raised.
It is a hot topic.
And I speak with a lot of my current colleagues
in the same area about trying to find,
I mean, I'll speak for a bit, and we've got some
ELSIF colleagues at the bottom of the table,
so I will bring them into this to help answer that.
But I can talk to you from my perspective,
then I'll let Sif talk about it on a much broader from them,
and then hopefully you'll have it from both.
My personal approach ties in with what is looking at this,
is if we could find a way to get a good IRR return,
and things such as temporary accommodation
could potentially deliver north of that,
know our discount rate you know so we're not looking to do it to save the council
money we're doing it for a good strategic financial benefit and it will
save the council money as an add -on but it won't necessarily be built in London
in Wandsworth or Richmond it might be in Camden it might be in Waltham Forest it
might it might be in Havering so we ourselves may not capture and benefit it
from it the broader public purse will but what we'll get out from it is a good
diversified return that will be above our discount rate. That's the approach
that I've been talking with my peer group but I'll let the CIV talk about it
from their perspective. Good evening committee very nice to see you. So in
response to your question yes housing in its wider context is something that
we're looking at at local but I think I've been heard to say publicly before
for this to work I believe it's absolutely crucial that the investment
return from the local meets the minimum of where your expected returns are coming from
your rather asset collection, whether it's property or infrastructure, et cetera.
There is lots of talk of housing, and I know how critical and crucial housing is to London.
But I'm going to be open with you.
It is quite hard to make the numbers work, and there are a lot of temporary accommodation
models out there which sound very good, but they're not things.
So my commitment to you is I want to leave a legacy here for us all, but for it to work,
the early investments especially need to be really, really robust.
Councillor Cote.
Thank you, Chair.
There's a question in my mind as to whether we're talking here about a target or a cap,
because when I look at the words at the top of page 253, I'm looking at up to 5 % of total
fund.
And to my mind, a target of up to is a cap rather than a target.
That was the first one.
And the other one is that we've already got within our portfolio
a whole bunch of property funds, et cetera,
including UK property funds.
I suspect that an awful lot more than 5 % of UK property
is actually in London and the southeast,
because London itself is more than 5 % of the UK by population and a lot more than
5 % when you're looking at the property prices. So a portfolio that
includes private rented properties, I'm sure more than 5 % of
that is private rented property values is in London. So we might find our
existing property investments, if they asked them, they would say, well, yeah, 10 % of this
is in London.
Unfortunately, that is not the case. This isn't about property valuation. This is about
money invested. If you've got a million, if you've got a hundred million to invest and
you've got a million pound properties, you're only getting a hundred properties. If you
go to Bradford, whenever there are a hundred thousand, you've got 10 times the amount of
properties that you're investing in. So that's why, this is not a property recommendation.
This is local for what we invest directly in Richmond stroke Wandsworth and or London as a as a whole
Valuation, you know, so therefore the opportunities in our borough and in London are
Not as great on mass as that of the UK as a whole there are much broader opportunities
Like I said, this is not a property allocation
This is a local allocation and there are fewer opportunities in London than there are in the UK
And also, I think what was very clear to me is that this is designed to be infrastructure
to make a revenue stream for the fund.
One of the good examples was Croydon and the Whitgriff Centre, for all of you that know
that.
That's a huge project, and that would only benefit Croydon, but it's obvious that you
would need huge amounts of money to invest in that, and the returns should be good on
that because it's not just housing,
it's a combination of things.
So that to me was a good example.
But the other thing that was really interesting,
and Councillor Sarah was on the line as well,
was you've got all those 33 boroughs.
And of course, everybody was going, well,
I want that in mine.
And that isn't the point.
This is about collective investment.
And the other interesting thing I thought
was that quite a few boroughs and quite a lot of labour
control boroughs were saying actually
that what they had tried to do in the housing piece had not made the money.
In fact, sometimes it had lost the money.
So that effectively wipes that off the table.
I mean, it was a very interesting, it was interesting, Councillor Serra, wasn't it?
I don't know whether you wanted to add anything to that.
You may be mistaken. I wasn't at that meeting.
We were all online. We were all online. Humble apologies.
But I think those strands that came out are very important to share with all of you.
So it's more infrastructure.
Questions?
Office, nearly at the last lap.
So I'm not going to read all of those out,
but the recommendations are approve,
agree, agree, agree, authorise, note.
Are we happy with those?
Office.

9 Quarterly Investment Performance - 2026/27 Q1 (Paper No 26/200)

So that leaves us with the quarterly
investment performance number nine and our recommendation is to note it but
colleagues do we have anything that you would like to raise the London CIV are
here if we need to ask them we've got our marvellous director I don't think you
need to. I'm going to say that this was a very round council Dick and I'm asked a question earlier on I just
just to note that this is the time really where that question should be
asked that that's the anything I was just going to raise. It's the courtly performance
that you get all the time and Jenny and Stephanie are a much better place to talk through what
they're doing for you in that return.
Marvellous. Does anybody have any particular questions?
Councillor Davies.
Are we, I think some slides were circulated today, is that right? No. There were some
additional slides? Is that right? I think there were some additional slides. It's the
The idea that, because they're not in this pack,
is the idea we're going through those
or we're not going through those,
or I don't quite understand.
You're quite right, they were late,
and I have asked, as I circulated to everybody,
that we have that information.
I understand that we didn't normally have that information,
and I have pointed out that we are all busy people,
we have working lives,
and we need these papers a lot earlier.
So I've asked for that,
But I think they came online, didn't they?
They were quite late.
So I only had a chance to skim them.
I mean, this was 300 pages before even that.
I struggle to be honest.
But there was just a comment on there about cash flow negative, and I just wanted to understand
that.
It was on the front page, I think.
Yeah, I can't remember.
It was so many materials.
So if the point's on cash flow negative, okay, so on that particular point about what cash
flow negative means, we are a maturing fund, we are a mature fund, so we are naturally
paying out more to pensioners than we collect from contributions combined from both employees
and employers.
So when you see the paper that goes up in February normally which sets the budget, that
outlines the exact differential between the two, that does give us a steer for how we
and what type of investments that we want to because you can meet that short
through through asset returns and selling assets or you can meet it
through naturally getting yield that comes off and then you rather than
reinvest that yield you use that to pay so the style of type of investments when
we're looking at how the civil start implementing it that you have to bear
that in mind if we were collecting more money than we were paying out they can
invest in a different way potentially than what they would be in our situation
whereby we are paying more than what we're collecting and with 33 funds that they've
got to do, not all funds are in the same position so they'll have a mishmash of investment strategies.
But that's part of what we look at when we're setting our asset allocation review and it's
part where we monitor when we set our annual budget, we do a three year forward plan of
where we anticipate our cash flow needs to be and that can influence how we will ask
the SIV to invest.
So, in short, just so I understand, it is as expected.
Thank you, Chair.
I think I'm going to expose my ignorance on investment subjects generally, but on page
266, page 8 of this report, it refers to an AI boom emerging as a powerful, countervailing
falls to the energy shock.
I've heard a lot of things in various courses
about an AI bubble or a potential AI bubble.
And I was just wondering how exposed we are or otherwise
to the possibility of an AI bubble,
or is it that that's mainly if you're mostly
in US -based stocks and we're mostly
in UK -based stocks and others?
Good evening.
Very good question.
How would I say?
Tony had mentioned earlier in your conversation
about something called the MSCI AQUI Index.
But that's generally this index of these 2 ,500 companies.
74 % of that index is what we call domiciled in the US.
So you've got a lot of exposure in the US.
That doesn't mean that all the revenue is derived from the US,
but you have got a lot of exposure to the US.
We often talk about what we call about the magnificent seven.
That makes up about 25.
It can go up a little bit further, 30 % of the index.
Those companies have different connexions with technology.
Again, you might quite often hear in the press people talk about hyperscalers.
Those are those companies like Meta, Facebook, Microsoft.
And then you'll also hear, this is where it all gets very confusing,
and software and hardware technology companies.
But again, the software companies
are like your Microsofts and the things that you can't see,
but they provide us services.
The hardware are sometimes things
that you might hear about semiconductors or these big data
centres.
Over the last year, different components of that
have performed.
So some quarters, it's been driven by the hardware.
Sometimes it's been driven by the software.
In Q2, there were very strong performance
from the semiconductor type of companies.
So in particular, there are some companies from South Korea
which did very well.
Now in general, in terms of the boom, if I was to say to you,
and hopefully this makes some sense,
the price that somebody pays for a company
is typically what we call a multiple of the revenue that
comes off that company.
So if a company is producing 100,
quite often somebody might pay 20 times for the value of that company. So 100
times 20 would give you the accordingly number. That has been probably on average
the multiple, the multiple, the 50, the 20 has sort of been on average between 50
and 20. At the moment these really big technology companies are being priced,
people are prepared to take 40 times, so nearly twice the amount that on the
long -term average you would expect to pay for a company.
But these companies are producing the revenue growth
to justify that price.
So at the moment, the market is struggling
to work out whether the prices are too high,
but the revenue is still coming through.
And the big question in the market at the moment
are, are regulators going to step in and try and slow down
on the impact that AI and technology is having
in the world today.
And at the moment, it's a little bit of a ying and yang.
So the market is very worried about it,
but at the moment, the revenues that are coming through
from those companies are quite strong.
So momentum is persisting.
So people are continuing to buy into the storey.
Is the whole storey of the listed equity,
Is it that Longview and those companies were too late to that growth and that's why they're
trapped in a kind of underperforming cycle of – because that's what the summary says
that they lost ground basically because they were behind and they had small amounts of
stock in those specific companies.
Does that mean that in some ways the area where we're most behind has – is more
resilient to any shocks that might come down the line? In some respects yes.
And you've exactly pointed out the point that in the companies that
you've had they are what we call growth quality companies so they try and buy
good quality companies but at the right price and therefore they tended to be
underweight some of these these companies not only that some of them
Longview in particular has got some stock selection buying the wrong
companies. So yes, your interpretation of that is correct.
Thank you, Chair. I just wanted to add something to what Councillor Cardy was asking as well.
Your explanation there, Jenny, was absolutely top notch. I just wanted to say, regarding
the AI bubble, first of all, the Governor of the Bank of England said this last year
I think it's the chief executive of JP Morgan who also said this last year.
We are expecting an AI related crash at some point or correction as he put it.
But had everyone listened to them last year we would have missed out on something like 15 %
growth this year. So yes, you could make the point that AI companies are really overpriced,
but at the same time they are delivering value.
So as some of these investors like Warren Buffett and all the really successful investors over the years say,
you can never time the market.
There will be opportunities, sorry, there will be times when stock markets will misbehave,
where they will go down sharply, but the key points for us here is that we are investors for the very long term.
And yes, we may get some drops because of the AI bubble,
but things will pick up again.
On the AI side of it,
if it is just AI related chairs at fault,
sorry, it won't just be AI related chairs
because when you get that market sentiment shifting,
it leads to a contagion effect.
There's what they call risk off.
They decide to sell all the stocks.
People run scared and they sell all sorts of stocks.
So that's where you hear on the news about, you know,
stock markets across the world have fallen.
It's not just AI shares, it's everything falls.
So you get to that type of contagion effect.
But then what tends to happen,
and I've been in this industry for some 30 years,
is those shares which were overpriced,
they look cheap once again.
And then people start buying them,
and then the whole cycle starts again.
So I wouldn't worry about that too much.
is basically what I'm saying.
Councillor Di Ciano.
We're still in a position whereby we're missing out
on the benchmark.
And I guess the question that I raised
around relative performance with other local authorities,
our long -term relative performance has been well.
The short -term has been bad for us.
I've sat on this for a while now,
and that is a continuing position.
And I just wonder like at what point does this committee?
There's another lever to pull there's another decision to be made or there's another fund manager to move on it just
88 is not where Wandsworth would normally want to sit in comparison to its colleagues, right?
And if there is anything that I wanted to talk to you tonight
It was about that your your nominal numbers over one in three years are reasonably solid
But relatively, it's not good enough.
And it needs to be addressed.
And from a London SIB perspective,
there are two things that we need to be doing.
We need to fix our products.
And there is some work for us to do on your portfolio.
So in terms of fixing our products, in the last year,
we have created something called our London.
I think my colleague may have talked about it last time
she came.
But we've created something called a core active equity product, which is a product
which rather than just investing in one manager, which your Longview and your RBC and your
Bailey Gifford, it's a fund which invests in a number of different funds with different
styles.
So if there is a cyclical change or if there is something, they have different styles,
so it should be quite complementary.
and therefore the intention of this product
is to provide you consistent, hopefully outperformance,
but is to reduce those what we call
drawdowns of underperformance.
We are also in the process of changing
our global growth product,
that's your Bailey Gifford fund,
into a multi -manager to again to give us,
and to your point, that then makes it a lot easier
for us to rebalance and reshift positions,
because it means that we don't have to come out of a fund
and find another fund manager,
we can just do that in a much more timely way.
From your portfolio in terms of your portfolio,
this year you have already taken $100 million out of it
to go into a fixed income product.
I know Paul has also done an awful lot of work
to shift so that you've got just under, I think,
half percent of your allocation.
So you've got a 50 % allocation into passive.
So you should always be getting that side of things.
And one of the things that we maybe haven't done more with
is we really want to make sure that where we move you to
is consistent with your RI preferences.
It is quite expensive.
There is quite a lot of money in equities,
and it is quite expensive to move it from one fund to another.
So one of the things that we're talking with Paul is,
when do we do that?
But what we don't want to do is move that,
and then as a result of all the work that you're doing at the moment,
then have to move it out of something,
can move it into another.
And that, we could move it now, but the round -trip costs of moving can be quite expensive.
Yeah, I think we're all getting, we're getting fatigued, so if we can...
This is the most important paper.
Well, in terms of the performance of...
Well, no, but this feeds into that.
So my question about the responsible investment position,
like from what I understand, that
could have a positive effect on the way
that the listed equity, global equity focus,
we could end up doing ourselves a favour,
because those are the funds that are performing the worst.
And I know you can't say yes to that at this committee,
given the two hours of debate we just had,
but is that a possibility?
Yeah, no, so what we have created,
what I'm calling this global core fund,
That is up and running and ready to invest in it.
But it's been open with you.
It's a pillar two.
So it doesn't have the final pillar three.
But the intention is that it would
be available by subject to demand
and meeting people saying by the end of Q1 next year.
But just to add to that, obviously, as I say,
we're still building on that across the 33 partner funds.
And we'll be working, obviously, with the CIV in order to do it.
You've got two tiers of approaches.
You've got your asset allocation.
and then you've got your RI strategy,
they're not directly the same.
One sits on the top of the other.
So we would be needing to work so you have sleeves
within products that can facilitate.
That's part of the reason why you can only have
three pillars in order to help and manage that.
And that's what we'll need to engage and work with
the CIV on a longer term approach.
Because you may want to be invested in certain types
of products with certain types of managers.
And it's how you address and how you can build on that.
We can't go in silo.
There needs to be sufficient number of funds that want that.
That's how, when you asked me the question about engagement with our peer group, that's
how we need to work together to blend that, not just on things like temporary accommodation,
but also on how RI is then embedded into the various different sleeves within the asset
allocation across the mix.
I don't think anybody here would agree to moving it now to have to move it again, potentially.
I think we're all in agreement with that.
Councillor Craig is going to finish us off,
unless anybody else has got passionate questions to ask?
Well, everyone will be pleased to know that actually,
I've just sort of reread what I was going to ask about,
I realise I've managed to answer my own questions,
so no questions.
Well done, Councillor Craig.
Wonderful.
I think we are all quite, it's been a very long meeting,
we've discussed lots of things,
So I think we're fatigued.
So I think if we can turn to our recommendation, which
I think is just note, it is just to note the investment
performance.
Thank you very much, Siv, for coming.
I think that this is something that we do want to track.
We do want to understand what you're doing.
We do want to understand if there's any flexibility
that we can or cannot do.
So Council Dickerton, the Siv was 2013.
so it's not that new. Yeah yeah yeah it is slowly nibbled away and nibbled away
and nibbled away so it is something that we are genuinely engaged in so might be
lively next December but we will get around to it so thank you very much this
December. Wonderful thank you so much for your time and that's a good night for me
And from them. Thank you very much.