Agenda item

Local Government Pension Scheme: Investment Reform Criteria and Guidance

Report of the Director of Finance and Resources

Minutes:

The Committee were informed that in the July Budget 2015, the Chancellor announced the Government’s intention to work with Local Government Pension Scheme (LGPS) administering authorities to ensure that they pooled investments to significantly reduce costs whilst maintaining overall investment performance. The Chancellor announced that the pools should take the form of up to six British Wealth Funds, each with assets of at least £25bn, which were able to invest in infrastructure and drive local growth. 

 

Authorities were invited to submit proposals for pooling which the Government would assess.  This would be a two stage process, with initial proposals, confirming which Pool(s) Authorities were proposing to work with, due by 19 February 2016. The second stage of the process required more detailed proposals from each pool and these were due to be submitted by 15 July 2016.

 

The Director of Finance and Resources  indicated that the Committee had already approved proposals for the Staffordshire Pension Fund to work alongside LGPS colleagues in Cheshire, Derbyshire, Leicestershire, Nottinghamshire, Shropshire, Worcestershire and the West Midlands (2 Funds) in the formation of an asset pool. Going forward, the pool would be known and referred to as LGPS Central.

 

Authorities needed to suggest how their             pooling arrangements would be constituted and how they would operate. Submissions needed to describe how the following four criteria would be achieved:

 

·         Asset pool(s) that achieved the benefits of scale

·         Strong governance and decision making

·         Reduced costs and excellent value for money

·         An improved capacity to invest in infrastructure

 

The Committee considered the draft Staffordshire Pension Fund’s initial proposal to DCLG which confirmed the Fund’s commitment to the            pooling agenda and its intention to work alongside LGPS colleagues in the creation and development of LGPS Central. They also received the LGPS Central joint response to this initial stage of the consultation.  It was noted that the initial responses were at a very high level as much of the detailed work around pooling would be carried out by the participating Funds between now and July 2016. This would enable both the Staffordshire Pension Fund and LGPS Central to submit their detailed responses to DCLG by the 15 July 2016 deadline.

 

The Director of Finance and Resources added that the Committee would be kept informed of LGPS Central’s progress at their meetings in March and June. However, due to the timeframe being imposed by DCLG and the fact that there were several participating     Funds in LGPS Central, there would be times when it would be impractical to bring all issues to the Committee for a decision and it was therefore suggested where it was felt than an issue could not reasonably await the next meeting of the Committee, the Director of Finance and Resources be authorised to take such decisions in consultation with the Chairman.

 

RESOLVED – (a) That the publication of the Government’s consultation paper on the Investment Reform of the Local Government Pension Scheme; including the set of criteria that must be met to achieve such reform, and appropriate Guidance, be noted.

 

(b) That the commitment to LGPS Central be endorsed.

 

(c) That the initial proposal to DCLG from the Staffordshire Pension Fund be endorsed and that any decision arising from such, in connection with the establishment of LGPS Central, which it is felt cannot reasonably await the next meeting of the Committee, be delegated to the Director of Finance and Resources, in consultation with the Chairman. 

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