Agenda item

(To receive a report from Jo Ray (Pensions Fund Manager), which updates the committee on activity within Border to Coast Pensions Partnership, and considers how the Fund's investment strategy may be implemented in the asset pool)

The Committee received a report which provided an update on activity within the Border to Coast Pensions Partnership, and considered how the Lincolnshire Pension Fund's investment strategy may be implemented in the asset pool.

The Pension Fund Manager highlighted the following:

• The Border to Coast partnership had become fully operational and now had £7bn of assets under management, following the transition of a large part of the internally managed assets of three of the partner funds.
• Daniel Booth had been appointed as the Chief Investment Officer for Border to Coast. The Committee noted that Daniel had significant experience across asset classes and markets as well as in building investment functions for asset owners.
• An update was given on the Joint Committee meeting that had taken place on 10^th July 2018.
• An advisor day had been held in September for the partner fund's investment consultants and advisors to enable them to meet the senior management team.
• Border to Coast had been liaising with MHCLG regarding options for the sharing of transition costs between Partner Funds. There were two options for transition costs to be shared, either within the sub-fund ACS, or outside of the sub-fund ACS. It was noted that Border to Coast would provide analysis of potential costs and benefits of transitioning inside or outside of the ACS before any transitions were made into each sub-fund.
• The Committee were reassured that the officers were working closely with Border to Coast to ensure that the sub-fund offerings and the strategic asset allocations of the Partner Funds were aligned.
• The Investment Strategy was outlined with the expected transition pathway across to Border to Coast for each of the current mandates.

The Committee unanimously voted to approve the following recommendations:

1.    To move the 5% to diversifying growth assets instead of Global Equities.

2.    To commit to the transition of the current Global Equity (high conviction active) assets to the Global Equity Alpha sub-fund within Border to Coast

3.    To delegate authority to the Executive Director of Finance and Public Protection, in consultation with the Chairman and Vice Chairman of the Pensions Committee, to agree the transition of Fund assets following appropriate due diligence.

Questions and comments from members and officers included the following:

• The Chairman explained that the Joint Committee was made up of all the Chairman of the partner funds, and that the group worked well together.
• In response to a question, the Pension Fund Manager explained how the costs of transition would impact the Fund differently depending upon whether the transition was completed inside or outside of the ACS.
• Officers clarified that full due diligence would be undertaken ahead of any transitions into the Border to Coast sub-funds.
• It was noted that it was expected that the first transition date for Lincolnshire Fund assets to Border to Coast would be in Q1 or Q2 2019.
• One member asked how much information had been given to scheme members regarding the move to asset pooling. It was clarified that this had been communicated in newsletters but the changes did not impact scheme members.

RESOLVED:

1.    That the report and comments be noted

2.    That the Committee approve the following recommendations:

a)    As the opportunities arise, to reduce UK equities by 5% in favour of diversifying assets, to be allocated following further discussion at a future Committee meeting

b)    To commit to the transition of the current Global Equity (high conviction active) assets to the Global Equity Alpha sub-fund within Boarder to Coast.

c)    To delegate authority to the Executive Director of Finance and Public Protection, in consultation with the Chairman and Vice-Chairman of the Pensions Committee, to agree the transition of Fund assets following appropriate due diligence.