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Avon Pension Fund - information item
Minutes:
Councillor Steve Pearce (Avon County Council’s representative on the Avon Pension Fund) introduced this item and made the following points:
· The assets of the Avon Pension Fund (APF) had increased by £615 Million to £4.3 Billion
· There had been significant rise in equity markets and further falls in EU Bond yields following the EU Referendum
· The Government had announced in 2010 pooling arrangements to reduce costs but, whilst savings had been made, these were not as dramatic as originally anticipated
· Currently, 98% of the APF was self-funded
· The APF has 12 voting members with one from Bristol – BANES had the largest number (5) since they were the administering Local Authority
· The investment strategy was determined by investment principles. The fund was a signatory to the financial reporting Councils’ UK Stewardship Code
· There were a total of 305 companies, with 107,000 members in total. There was some concern about the very small size of some participating employers
· The fund was a member of the Pension Fund Forum which met quarterly
· The objective of the APF was not to maximise returns but to achieve an investment return to fund the pension liability
· 3,000 resolutions had been approved by external fund managers in the last quarter, whilst 85 had been refused
· The scheme’s approach was to continue to remain engaged with companies where there were concerns about the way they operated in order to influence their approach, rather than not continuing with them ie TOTAL (France) had moves slightly way from their use of fossil fuels recently from 50/50 to 40/60
In response to Councillors’ questions, Councillor Pearce made the following points:
· The situation with APF had greatly improved and was now close to being fully funded. Members of the APF would be working to ensure the recent gains were fully locked in
· It would be appropriate for employers to contribute a little less. He would shortly be recommending to the Mayor to engage with the Pension Fund Committee to reduce BCC’s contributions at the next valuation
· Whilst it was acknowledged that deferred membership was now at 25% which could cause a strain on the APF, deferred members did not accrue additional benefits
· There had been a significant change in asset type over the years with an increased allocation towards those companies promoting renewables and to those who were less damaging to the environment
· In response to concerns that there continued to be engagement with companies such as TOTAL rather than companies adopting a pragmatic approach and promoting clean energies, investment in this area was now at 2.5% which was £100 Million
Councillors also made the following points:
· There were concerns that the wording in the investment policy was too woolly and that a conscious approach was required to take decisions for ethical reasons rather than financial;
· Whilst it was not the APF’s responsibility to have detailed knowledge of all those organisations listed in the report as being members, it remained a concern that there were such a large number
· The Chair stated that he did not believe it was appropriate to reduce employer’s contributions in view of his experience at Royal Mail where a similar approach had been taken and which had ultimately led to the closure of the scheme.
Councillor Pearce requested that any further questions be sent to him to provide a response.
Supporting documents: