We held our 2016 annual meeting on 4 November 2016 at John Smith’s Stadium in Huddersfield. About two hundred members joined us for the usual comprehensive analysis of our investment and administration performance over the year. Councillor Andrew Thornton, chair of WYPF, chaired the meeting, and delegates heard presentations from director Rodney Barton and fund investment advisers Noel Mills and Mark Stevens. The panel answered questions from people at the event. You can read the answers we gave below. Question 1 Why did we not have a pension rise this year? Answer 1: The Government issues an order which specifies how much public sector pensions will increase each year. The April 2016 pensions increase was based on the increase in the Consumer Prices Index in the 12 months to September 2015. As this was a negative amount (-0.1%) there was no pensions increase in April 2016. Early indications are that pensions will increase by 1.0% in April 2017. Question 2: As part of its investment strategy has the board considered investment in social housing projects? Answer 2: The investment managers have reviewed a number of opportunities in housing which include a social element, but have not found any opportunity to invest where the required rate of return could be achieved at an acceptable level of risk. They are aware of a number of projects being developed which will be targeted at the institutional investment market and its requirements for quality. Question 3 Can you tell me how much CO2 is locked up in our investments? i.e. if we took control of our fossil fuel assets, and burnt them, how much CO2 would be released? Answer 3: As there can be a difference of over 80% in emission per barrel between the highest and lowest types of oil it would be necessary to make too many assumptions to answer this question. Question 4A: What advantages did the Panel see for WYPF in joining in the Northern Pool of pension funds? Question 4B: The costs of infrastructure works funded by national and local taxes are not burdened by future interest payments. Is it understood that such works funded by the Northern and other pension pools will inevitably prove more expensive in the medium term, as is the case with other PFI funded works? Please can you advise the meeting on the current position of the Common Investment Vehicle (CIV) for the “Northern Powerhouse” In particular, what is the makeup, and is there to be any worker or pensioner representation, or is it to consist purely of Councillor Representatives from the three participating authorities? Answer 4A and 4B: We are working with likeminded large Funds, with similar objectives of good performance, cost management and high standards of governance in the Northern Pool, which included GMPF and MPF. Infrastructure investment has to be funded, if by central government it is by the sale of gilts which bear interest, and WYPF owns a range of these which pay interest to pay the pensioners. Investing directly in the infrastructure means WYPF receives the income in a slightly different way, but it still enables the payment of pensions. The current intention is for the joint committee to have three representatives. For each fund, two to be members of the Investment Advisory Panel and one to be a representative from the regional trade unions. Question 5 Concerning the WYPF shares held in coal and diversified mining companies which have recently been sold, on who’s decision, guidance or advice were the buy/ sell orders executed, and where is this advice recorded or decisions minuted? Answer 5: Decisions are made by the internal investment managers based on internal research, broker advice and in some cases, meetings with company management. All deals are notified to Investment Advisory Panel and a full record is kept on the WYPF investment accounting system, which is audited on an annual basis. Question 6: I am very concerned about the WYPF, of which I am a member, investing in Exxon Mobil, as it lost its AAA credit rating April 2016. Was risk of investment in Exxon reviewed by WYPF after the credit downgrade? Answer 6: Exxon Mobile has held both Standard and Powers (S&P), and Moody’s top credit rating for many years. Whilst Moody’s have retained their top AAA rating, S&P reduced their by 1 notch to AA+ in April 2016. In spite of this downgrading, Exxon remains a high quality investment grade company with a very low credit risk that is the highest among its global peers. Therefore, the down grade was not a matter of concern. Question 7: What was the financial value and total number of shares held in coal and diversified mining companies at the end of financial years 2013, 2014, 2015 and 2016, and at which points and in what quantity in those years did WYPF buy or sell shares in coal and diversified mining companies? Answer 7: Valuations of each company are available on the fund’s website at the end of the financial year. The Fund held no pure coal mining companies at any point across the period mentioned. Question 8: What are the WYPF’s holdings of investments in known low carbon-impact industries, and how has the level of these investments changed over time, for example during the last five years? Answer 8: Over £120m has been invested in low carbon investments in recent years, and we also have commitments to invest a further £50m when the assets have been built, facilitating further real investment in the small but growing sector. Question 9: Oil prices dipped below $100 a barrel in July 2014 and hit $50 a barrel by February 2015. When and where is it minuted that the WYPF first discussed low oil prices and revenues as an investment risk? Answer 9: The oil price, and its implications on the wider economy, is discussed regularly by WYPF. Falling revenues were discussed at meetings throughout the period. Although share prices did fall along with the oil price at the time, the sector has since outperformed the market, up 22% since December 2014 compared with a market rise of just 14%. Question 10: Given the mounting body of evidence that climate change poses a significant financial risk to investments – and in particular long-term pension fund investments – has the WYPF considered conducting an independent risk assessment of the entire investment portfolio to satisfy itself it has taken adequate steps to measure and manage these risks? Answer 10: The City of Bradford Corporate Overview and Scrutiny Committee considered the issue of fossil fuel disinvestment on 19 October 2016. The Committee endorsed the policy of positive engagement set by the Investment Advisory Panel, and welcomed the progress achieved towards ensuring that the fossil fuel companies revise their business plans to take account of the COP21 agreement. As far as the suggestion that a risk assessment of the entire portfolio is concerned, the recent paper from the Smith School of Enterprise and the Environment argues that analysis of climate risk should be done at the level of the individual asset. Impax Asset Management, specialist investors in the environmental area, state that this approach is not yet practicable as there is insufficient data in the public arena. West Yorkshire Pension Fund is satisfied that it is taking, and will continue to take, sufficient action to protect the value of its assets in the context of climate risk. Its investment managers monitor and take account of new research and information as it comes into the public domain, which is demonstrated by a range of investments in the fossil free power generation and modern power management technologies.