Agenda item

Review of Funding Strategy Statement (FSS) and Investment Strategy Statement (ISS)

Joint Report of Hymans Robertson and the Director of Finance and Resources

Minutes:

The Director of Finance and Resources informed the Committee that all Local Government Pension Scheme (LGPS) Funds were required to prepare, maintain and publishFunding Strategy Statement (FSS) and Investment Strategy Statement (ISS) documents. The FSS must be formulated, maintained and published in accordance with the Public Service Pension Act 2013, whilst the ISS must be formulated, maintained and published in accordance with the Local Government Pension Scheme (Management and Investment of Funds) Regulations 2016. 

 

In preparing maintaining and reviewing both statements, the administering authority must have regard to guidance published by CIPFA. The latest such guidance for both documents was published in September 2016.

 

Whilst a full review of the FSS should be undertaken at each valuation and at least every three years for the ISS, it was considered good practice to review and update both documents annually, to reflect changes in the year. The FSS was consulted upon and approved by the Pensions Committee at its meeting in March 2017.  The FSS had recently been reviewed in conjunction with the Pension Fund’s advisors Hymans Robertson, and this had resulted in several minor amendments.

 

With regard to the Investment Strategy Statement (ISS), the Committee were informed that the Local Government Pension Scheme (Management and Investment of Funds) Regulations 2016 came into force in 2017 and under Regulation 7(6) and 7(7), the ISS had to be published by 1 April 2017 and kept under review and revised from time to time and at least every three years.  The ISS was a document that replaced and largely replicated, the previous Statement of Investment Principles (SIP). Authorities were required to prepare and maintain an ISS which documents how the investment strategy for the Fund was determined and implemented. The ISS was required to cover a number of areas, specifically:

 

·         The requirement to invest money across a wide range of investments.

·         An assessment of the suitability of particular investments and investment types.

·         The maximum percentage authorities deem should be allocated to different asset classes or types of investment, although limits on allocations to any asset class are not prescribed as they previously were under the 2009 Regulations.

·         The authority’s attitude to risk, including the measurement and management of risk.

·         The authority’s approach to investment pooling;

·         The authority’s policy on social, environmental and corporate governance considerations.

·         The authority’s policy with regard to stewardship of assets, including the exercise of voting rights.

 

The Committee were informed that the April 2017 version of the ISS had recently been reviewed and changes were considered necessary to better reflect the arrangements in place for asset pooling with effect from 1 April 2018; and also to better reflect LGPS Central’s policies on social, environmental and corporate governance (Responsible Investment) which the Fund would be adopting as assets moved into the management of company.

 

RESOLVED – (a) That the minor amendments to the Funding Strategy Statement (FSS) be noted. 

 

(b) That the updates made to the Investment Strategy Statement (ISS) to more accurately reflect the governance arrangements in relation LGPS Central Ltd and also the reference to the Responsible Investment Policies of LGPS Central Ltd, be noted.

Supporting documents: