ESPF remain a signatory of the UK Stewardship Code

The UK Stewardship Code 2020 sets high stewardship standards for those investing money on behalf of UK savers and pensioners, and those that support them. Stewardship is the responsible allocation, management and oversight of capital to create long-term value for clients and beneficiaries leading to sustainable benefits for the economy, the environment and society.

To become a signatory to the Code, organisations must submit to the Financial Reporting Council a Stewardship Report demonstrating how they have applied the Code’s Principles in the previous 12 months. We are pleased that East Sussex Pension Fund continues to meet the expected standard of reporting and will remain a signatory to the Code.

Stewardship Report - East Sussex Pension Fund

The importance of investment

Most modern Pension Schemes are defined contribution Schemes. The value of pension pots are based on the highs and lows of the investment markets. The Local Government Pension Scheme (LGPS) is different. The scheme is a defined benefit Scheme with member benefits guaranteed. The investment market risk falls on the Fund, as opposed to the individual member.

Funding comes from three primary sources:

1. Employer contributions

2. Employee contributions

3. Return on investment

Employee contributions are set centrally by government and not linked to investment returns. But generating positive investment returns is an important element of the Fund. Without investment, contribution levels for employers would be much higher.

How do we invest?

Generating sustainable long term investment returns is the Fund’s primary goal. It does so by investing across a range of asset classes such as:

  • equities (i.e. stocks and shares)
  • bonds
  • property, and
  • infrastructure

Both active and passive management styles are used. Asset allocation is the Fund’s main driver of returns and risk over the long term. Our Investment Strategy Statement describes how we make investment decisions and manage the Fund.

The statement explains:

  1. how much we invest in different investments, together with
  2. the returns we expect investments to achieve.

Read the 2023 Investment Strategy Statement

ACCESS Pool

Government guidance states that LGPS Funds should work together to pool investments. They should do this to reduce costs, while maintaining investment performance.

East Sussex Pension Fund is part of the ACCESS LGPS Pool. This is A Collaboration of Central, Eastern and Southern Shire Local Authorities. This Pool comprises 11 local authorities, supported by a strong governance framework.

ACCESS has many investment opportunities available for its member Fund’s. Where a suitable investment opportunity exists, the Fund uses the ACCESS pool. Approximately 50% of the Fund's investment is through the ACCESS pool (as at 31 March 2023). Find out more about ACCESS progress in the document below.

Access Annual report 2022-23

ACCESS have their own set of Responsible Investment Guidelines. These compliment the Fund's Investment Strategy Statement and Statement of Responsible Investment Principles. You can view a summary of their guidelines in the link below.

Access Responsible Investment Guidelines - in summary.

Access Responsible Investment Guidelines - in full

Responsible investment

The purpose of the Scheme is to provide retirement income. Responsible Investment (RI) supports this.

Responsible Investment aims to incorporate environmental, social and governance factors into investment decisions. RI helps manage risk and to generate sustainable, long-term returns.

The Fund believes a philosophy of engagement is essential to effecting change in companies and with policy makers. To be effective, it is best done in conjunction with other parties. East Sussex Pension Fund commissioned ISIO Investment Advisory Team to produce a paper that explores divestment versus engagement in relation to fossil fuels. ISIO provide an overview of the research, with a focus on key recommendations in the paper below. The reports below detail voting and engagement activity carried out each quarter.

Engagement vs Divestment PaperEngagement Vs Divestment Report September 2023

Investment Strategy Statement 2023 - including rebalancing policy and Statement of responsible investment principles

ESG statement - fund manager engagement Q3 2023

ESG statement - fund manager engagement Q2 2023

ESG statement - fund manager engagement Q1 2023

ESG statement - fund manager engagement Q4/2022

ESG statement - fund manager engagement Q3/2022

ESG statement - fund manager engagement Q2/2022

ESG statement - fund manager engagement Q1/2022

Statement on Israel and the Occupied Territories

We are a signatory to the Financial Reporting Council's UK Stewardship Code.

Stewardship is the responsible allocation, management, and oversight of capital. Good Stewardship creates long-term value for clients and beneficiaries. This leads to sustainable benefits for the economy, the environment and society. You can view our Stewardship report below.

Stewardship report - East Sussex Pension Fund

We are also a member of the UK Sustainable Investment and Finance Association (UKSIF). UKSIF are the leading UK-based membership organisation for sustainable and responsible finance.

Find out more about the work of UKSIF

Asset allocation and performance

The Fund invests across a range of asset classes. We do so using both active and passive management styles. Asset allocation is the Fund’s main driver of returns and risk over the long term. Our Investment Strategy Statement describes how we make investment decisions and manage the Fund.

Read our Investment Strategy Statement

You can view the asset allocation for the Fund at 31 December 2023 below.

Asset type % Allocated
Equity 40.7
Private Equity 7.7
Absolute Return 17.0
Property 7.1
Infrastructure 11.1
Public Credit 9.5
Private Credit 0.8
Index-linked Gilts 5.1
Cash 0.9

The value of investments can go up or down in value, so we have processes that mitigate the risks involved. A fall in investment returns does not affect a members benefit payments, which are guaranteed. The Fund monitors its performance, by setting performance benchmarks for investment managers. This allows it to measure them and the total portfolio against the wider market.

You can view the performance of the Fund at 31 December 2023 below.

Performance Measure Q4 2023 Last 12 months Last 3 years (per annum) Last 5 years (per annum)
Scheme return 4.3% 5.4% 4.9% 6.5%
Benchmark return 4.3% 10.2% 5.9% 7.0%
Return relative to benchmark 0.0% -4.8% -1.0% -0.5%

Notes: Totals may not sum precisely due to rounding. All returns are net of fees. Unless stated otherwise, all performance figures and objectives provided by Northern Trust as at 31 December 2023. Fund Total value excludes cash held with Northern Trust. 1 - Valuation and performance information as at 30 September 2023. 2 - Valuations shown are either 3 m or 6 m lagged and adjusted for distributions/drawdowns and currency movements.

Source: Investment Managers, Northern Trust, Isio calculations.

Investment Information

Here you'll find quarterly investment information relating to ESPF holdings in infrastructure, private equity and private debt only

Latest Investment Information (infrastructure, private equity, private debt)