Agenda item

Local Government Pension Scheme Asset Pooling

Report of the Director of Finance and Resources

Minutes:

The Strategic Investment Manager (Treasury & Pensions) introduced a report requesting support from the committee to the recommendations of the Pension’s Committee to the County Council in relation to LGPS pooling.

 

In the summer of 2015, the government announced its intention to introduce a new regulatory framework which would facilitate collective investing and issued guidance and criteria to help administering authorities to develop proposals for pooling aimed at reducing costs and improving efficiency.

 

LGPS pooling would relate solely to the assets of the 8 Partner Funds. Each administering authority would retain the decision making function about the Investment Strategy and the Strategic Asset Allocation of the Fund. As liabilities would also be retained locally, decisions about the Funding Strategy and Contribution Strategy would also remain with the administering authority’s Pensions Committee and Pensions Panel.

 

By means of a chart, the Strategic Investment Manager (Treasury & Pensions) explained the Governance Structure for LGPS Central.  A Shareholders Forum, comprising one elected Member from each of the 8 Partner Funds would act as the supervisory body of the pool and fulfil the shareholders’ role in ensuring that the company is managed efficiently and effectively. A Joint Committee, set up in accordance with the provisions of the Local Government Act 1972, would be the forum for dealing with common investor issues and for the collective monitoring of the performance of the pool against its objectives. To support the Joint Committee and the Shareholders’ Forum, a Practitioners Advisory Forum would be created, consisting of officers from each of the 8 Partner Funds. This Forum would provide day to day oversight of the company and monitor its investment performance and investment costs.

 

In order to facilitate the Governance arrangements for LGPS Central, there needed to be changes to the County Councils constitution.

 

RESOLVED That the following recommendations of the Pensions Committee to the County Council be supported:

 

A.   To enter into a shareholders agreement to become a joint shareholder of LGPS Central Ltd; a private company limited by shares, held solely by the participating funds, on a ‘one fund, one vote’ basis; incorporated for investment management purposes and regulated under the Financial Services and Markets Act 2000.

 

B.   To approve the Staffordshire Pension Fund’s involvement in the governance and management arrangements for future Pension Fund investment management activity in accordance with the Governance Structure, specifically:

 

(i)            To appoint the Chair of the Staffordshire Pensions Committee or their nominated representative, to attend all Shareholder Forum meetings and to exercise the Council’s voting rights as a shareholder of LGPS Central Ltd.

 

(ii)          To enter into an Inter-Authority Agreement with;

 

  • Cheshire West and Chester Council
  • Derbyshire County Council,
  • Leicestershire County Council,
  • Nottinghamshire County Council,
  • Shropshire Council,
  • Wolverhampton City Council and
  • Worcestershire County Council

 

to regulate how the above authorities collaborate with each other in relation to the investment activities of LGPS Central Ltd.

 

(iii)       To establish a joint pension fund investment pool, in accordance with the requirements of the Local Government Pension Scheme (Management and Investment of Funds) Regulations 2016.

 

(iv)       To establish a Joint Committee under s102 of the Local Government Act 1972, to provide joint oversight of the pool and to suggest recommendations to the Practitioners Advisory Forum from time to time, in accordance with the terms of the Inter-Authority Agreement.

 

(v)        To appoint the Chair of the Staffordshire Pensions Panel or their nominated representative, to attend all meetings of and act as the Council’s representative on the Joint Committee.

 

(vi)       To agree in principle to any future request for the Council to act as lead authority to provide governance and administrative support to the Joint Committee on behalf of the participating Councils, subject to an appropriate cost sharing agreement in respect of officer time and other expenses.

 

(vii)      To appoint the Director of Finance and Resources (and s151 Officer) or their nominated representative to represent the Council on a Practitioner Advisory Forum, providing joint officer support to the Joint Committee and support and decision making advice to the Shareholder Forum.

 

C.   To authorise the Director of Strategy, Governance and Change and the Director of Finance and Resources to enter into the Shareholders Agreement and the Inter-Authority Agreement to establish a joint asset pool, and investment management company and Joint Committee, as outlined in this report, and to implement the agreed recommendations.

 

 

Supporting documents: