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Pensions Committee Annual Report 2022/23

-  Report of the Pensions Committee: Enclosed

Decision:

RESOLVED: To note the report and appendix.

 

 

Minutes:

14.1  Cllr Chapan, Cabinet Member for Finance, Insourcing and Customer Services introduced the report. He highlighted the work the Pensions Committee had undertaken over the past two years relating to Climate Change.  He was pleased to report that the Pension Fund had reduced its exposure to fossil fuel reserves by 97% far exceeding the Fund’s original target to reduce exposure by 50% by 2022. This was achieved whilst the fund continued to perform well, with a funding level of 106%. He thanked the Pensions Committee Chair and Members of the Committee.

 

14.2  Cllr Adams, Chair of the Pensions Committee, thanked officers past and present and Members of the Pensions Committee for their commitment to the responsible management of the 1.87 billion pension fund. This was in spite of considerable challenges for the Local Government Pensions Scheme (LGPS) and the economy at large. In reference to Climate Change, Members were informed that carbon risk had been integrated into the strategy setting process. The committee’s ambition was for the Fund to achieve net zero emissions by 2040; with 3 shorter term targets to help monitor progress. The increased funding position from 92% in 2019 to 106% was due to better than expected investment return and had enabled the Council to reduce its contribution rate.  Cllr Adams highlighted the work of the administration team in collaboration with the Committee as set out within the report.

 

14.3  Cllr Binnie-Lubbock stated that although commendable, the reduction to the exposure to fossil fuel risk was not an actual reduction to fossil fuel company investment. He stated that the call from divestment campaigners was to divest from fossil fuel companies. Cllr Binnie-Lubbock asked if a country was found to be committing genocide in the international criminal court, or in violation of resolutions by the United Nations Security Council, whether the Pensions Committee would consider as part of that review, (following its recent actions to divest from Russian stocks) taking the precedented step of looking to divest from stocks in such countries. Cllr Adams explained that the Pensions Committee followed guidance from the Law Commission. Divestment was permitted where there was no risk of significant financial detriment and where scheme members and employers share concerns. The Committee had noted the legal position with regard to divestment, boycott and sanctions. It had become clear that the UK Government had prohibited divestment that was motivated by political or moral disapproval of the foreign state. The Fund was able to divest from its holdings in Russia due to a number of reasons including long term financial concerns relating to assets and the alignment with the United Kingdom’s foreign policy.

 

14.4  Cllr Garbett asked how the Pensions Committee was engaging with pension holders with regard to how they want their pensions invested and whether there could be seats reserved for union representatives on the committee, considering how many members they represent. Cllr Adams advised that scheme members had not been solicited on their views in the recent past. Occasionally, questions are received relating to the Fund’s investments by scheme members but more commonly by lobby groups. There were currently two scheme member Freedom of Information requests relating to investment of companies that were active in the occupied Palestine Territory. The Fund had approximately 25,000 members and consideration would be given to surveying members to identify environmental, social and governance factors that may be of importance to them. Cllr Adams stated that it was vital that the Pension Fund did not become politicised and it was therefore not appropriate to ask scheme members questions that were deemed to be politically sensitive. Trade Unions had been offered representation on the Pensions Board as a scheme member representative which was a statutory role.

 

14.5  Cllr Premru asked a question about the Pensions Committee’s intentions to divest from the arms trade and when the deputation referred to it regarding divestment from companies complicit in human rights abuses in the Occupied Palestinian Territories would be heard. Expressing sorrow of the ongoing conflict and the impact on innocent civilians, Cllr Adams stated that the Council was required to support good community relations. As such, the decision taken last year to postpone hearing the deputation was subject to review. He advised that the Committee’s ambition was for the Fund to achieve net zero emissions by 2040; with 3 shorter term targets to help monitor progress. In response to a supplementary question from Cllr Premru, Cllr Adams reiterated that the divestment in Russia was in line with UK foreign policy and not detrimental to the Pension Fund.

 

RESOLVED:  To note the report and appendix.

 

Cllr Binnie-Lubbock moved a motion to extend the meeting beyond 10.00pm to 10.30pm in accordance with Part 4A Rule 7 paragraph 7.1 of the Council’s Constitution. This was seconded by Cllr Garbett. Cllr Adams suggested that 10:15pm which was seconded by Cllr Rathbone. This was put to the vote.

 

The Speaker declared the procedural motion to extend the meeting to 10.15pm CARRIED

 

 

Supporting documents: