Investments

Overview

The regulations that govern the Local Government Pension Scheme require that the Tyne and Wear Pension Fund prepares and maintains a written Investment Strategy Statement (ISS) setting out the decisions that have been taken on the Fund's investment policies.

The ISS is intended to provide evidence that the Fund has considered the suitability of its investment policies and the approach to implementing those policies.

The Regulations require the Fund's ISS to cover the following areas:

  • The suitability of particular investments and types of investments
  • Investment of money in a wide variety of investments
  • The approach to risk, including the ways in which risks are to be measured and managed
  • The approach to pooling investments, including the use of collective investment vehicles and shared services
  • How social, environmental or corporate governance considerations are taken into account in the selection, non-selection, retention and realisation of investments
  • The exercise of rights (including voting rights) attaching to investments

The ISS includes a section on the six principles of decision making for occupational pension schemes and a schedule of the Fund's investment beliefs, in addition to the areas required by the Regulations.

View the Pension Fund's Investment Strategy Statement

For more information see:

Responsible investment

The Fund requires that investment managers take into account non-financial factors when selecting, retaining, or realising its investments. Financial factors take priority given that the primary responsibility of the Fund is to invest the Fund's assets to meet its pension obligations. The Law Commission's review of financial and non-financial factors in investment decision making is taken into consideration.

It is recognised that Environmental, Social and Governance (ESG) factors can influence long term investment performance and the ability to achieve long term sustainable returns. The Fund considers its approach to responsible investment in two key areas:

  • Sustainable investment / ESG factors - considering the financial impact of environmental, social and governance factors on its investments
  • Stewardship and governance - acting as responsible and active investors/owners, through considered voting of shares, and engaging with investee company management as part of the investment process

The Fund's Investment Strategy Statement, how social, environmental or corporate governance considerations are taken into account in the selection, non-selection, retention and realisation of investments. It also describes the exercise of rights, including voting rights, attaching to investments.

The Fund has developed a corporate governance and responsible investment policy which provides details on how the approach to managing assets incorporates environmental, social and governance factors, and the Fund's role as an asset owner and creditor.

Corporate governance and responsible investment policy

The Pension Fund's Investment Strategy Statement highlights how environmental, social and governance considerations are take into account in the investment decision making process. The corporate governance and responsible investment policy provides more detailed information on the approach and application, and includes:

  • the development and co-ordination of policies and the approach to voting of the Fund and its investment managers
  • responsible investment in actively and passively managed investments
  • collaborative engagement on responsible investment issues

View the Pension Fund's Corporate Governance and Responsible Investment Policy

Stewardship Code

The Pension Fund's policy takes into account the UK Stewardship Code that has been prepared by the Financial Reporting Council. Investors are encouraged to report their compliance with the Code. The Pension Fund has set out its position in a statement.

View the UK Stewardship Code Compliance Statement

ESG index investment

The Fund's commitment to ESG has been further demonstrated by its £650 million investment through LGIM Future World Equity Index Funds.  These Funds provide similar performance and risk characteristics to the equity markets through an indexed fund which allocates more capital to those companies with good credentials on a range of ESG scores, including climate change. More details can be found in LGIM's ESG Index Investment article 'Less is more: reducing more than just carbon emissions throughindex investment'.

View LGIM ESG Index Investment article

Climate change

Climate change presents a particular systemic risk to the financial stability of the global economy, and has the potential to impact on investments, members and employers. It could negatively impact on the Fund's financial performance, and as such it represents a long term financial risk to the Fund and its holdings.

The Investment Strategy Statement and the corporate governance and responsible investment policy make particular reference to climate change, reflecting its growing importance.

Recognising the issues climate change present, the Fund has taken advantage of opportunities to diversify into renewable energy and green technology. Investments include:

  • EnfraGen aims to provide 1.4GW of back-up power and grid stability through thermal, hydro and solar energy sources in Latin America.
  • The Grassroots Renewable Energy Platform will provide 1.3GW of wind power, solar power and battery storage in Australia, enough for over 500,000 homes. The on shore wind farms will save over 1,000,000 tonnes of carbon emissions each year.
  • Bioenergy Infrastructure Group is an energy-from-waste company operating across seven sites in the UK. Every year, these sites will divert over 1,000,000 tonnes from landfill and will produce enough energy for 250,000 homes.
  • Eteck uses geothermal and solar technology to provide sustainable collective heating and cooling in the Netherlands, as an alternative to gas. The company works with property developers to construct homes with an EPC (energy performance certificate) rating of zero.

View the Pension Fund's climate change policy Plans and Policies - Climate Change Policy

Pooling of investments

The LGPS is managed by a number of separate pension funds across the country, of which the Tyne and Wear Fund is one.  Historically, each Fund has been responsible for managing its own investments.

In 2015 the Government announced that LGPS investments would no longer be managed separately by each Fund, but would be merged into smaller investment pools to achieve economies of scale.  The objectives of the pooling of assets are:

  1. Cost savings through economies of scale
  2. Improved governance
  3. Improved approach to responsible investment
  4. Improved ability to invest in infrastructure

Responding to this initiative, the Tyne and Wear Fund joined with eleven other like-minded LGPS funds to set up an investment management company called Border to Coast Pensions Partnership, otherwise known as Border to Coast. The company's objectives include improving investment returns and reducing investment costs.

The transfer of investments to Border to Coast started in 2018 and is expected to take a number of years to complete.

Although the investments of the Fund are being pooled with those of other funds, the administration of pension benefits will remain with the individual funds, including the Tyne and Wear Fund. The value of pension benefits will continue to be set by the LGPS Regulations, and are not affected by investment pooling arrangements.

To help members and Fund Employers an FAQ has been produced by BCPP.

For the latest updates on BCPP please see  Border to Coast Partnership News.

Annual meeting information

The Fund invites it's employers and member representatives from the trade unions to an annual meeting. 

This is normally held every November. 

The purpose of the meeting is to provide updates on current issues within Local Government Pension Scheme (LGPS) and Tyne and Wear Pension Fund (TWPF).

This includes updates on:

  • the fund's latest reports and accounts
  • reports on the fund's investment performance from Hymans Robertson, our investment advisor
  • the latest fund valuation from Aon Hewitt, our actuary

Annual employer meeting information

11 November 2022

9 November 2021

10 November 2020