Steve Pearce gave a presentation on this item and made the following comments. He also responded to questions from Committee members as follows:
· The Investment Strategy continued to be reviewed with a series of workshops that had taken place over the last 6 months – a final decision would be made on 27th/28th March 2020
· The process for 2019/20 was being reviewed
· There were over 400 participating employers in the scheme, nearly half of whom have a small number of employees
· Academies were not currently represented at meetings. Therefore, if more schools became Academies, representation needed to be increased to reflect this
· 2018 Interim Valuation indicated that the funding deficit had improved significantly. 2018/19 had been a significant year for the pooling of investment assets
· £4 Billion remained to be transferred into the Brunel Fund and would be the main activity over the coming years
· More money was being put into low carbon investments. The Board had now accepted the moral argument as the economic argument for this was self-evident. Many industries that purely specialised in fossil fuel industries ran the risk of going out of business and therefore many were diversifying.
· Many Pension Funds were de-carbonising their assets rather than divesting them completely. It was noted that building infrastructure would require some products that led to carbon increase ie cement. The Avon Pension Fund was a leader in de-carbonising
· The Avon Pension Fund needed to engage with businesses such as EXXON and get them to change their approach
· Most large businesses with cash flow are energy companies – there were not yet enough other companies involved in wind or solar farms and battery storage
· The fund is using electronic technology to communicate with its members in order to save money
· The attention of Committee members was drawn to Tables 10 to 16 in the report setting out staffing levels, the number of members and employers in the fund and the costs and savings of the pooling of assets
· Steve Pearce advised that his role was to influence where assets were invested, to ensure the maximising of income while reducing risk, The fund had accurate cash flow predictions over 100 years
· It was challenging that Bristol only had one representative on the Pension Fund although it had the largest investment. However, BANES operated under regulations. If Bristol administered the fund, it would have more representation. Carla Denyer was the nominated substitute for Steve Pearce and had attended on a small number of occasions over the last three years
· A large number of academies transferred out of Local Authority control but many of their existing employees retained their pension rights and therefore the number of employees who were members increased
· Whilst the Risk Register indicated that it was difficult to recruit skilled labour, the pension sector remained strong in Bristol and attracted pension professionals.
Officers advised that BANES employed Pension Fund staff. However, since the Bristol area was a major financial centre, it would be difficult to recruit staff in this area of work at the market rate.
Committee members made the following comments:
· The switch to ethical investments was part of a market drive towards more sustainable solutions, many of which were more successful than the average stock market investor
· Committee members expressed confidence in the way the scheme was being run. The performance had significantly improved over the last few years
(1) That a letter be sent to BANES expressing concern at the lack of representation for Bristol City Council as such a major investor in the Avon Pension Fund – Mark Williams
(2) That the University of Bristol and the University of the West of England are contacted to see if they wish to specialise in pensions – Councillor Steve Pearce
(3) That a further update report be provided for the next meeting of the HR Committee once the Investment Strategy consultation period has finished and to include information concerning addressing the issue of rates of pay for employees who work in this area – Councillor Steve Pearce/Mark Williams