Agenda item

The Committee received an update on LGPS Central.

In the ensuing debate, the following principal points were raised:

·         In relation to the Central Pool timetable, was it anticipated that the Pool would assign each of the sub-funds to a particular asset fund manager? Rob Wilson, Finance Manager – Pensions, Treasury Management and Capital responded that each sub-fund would be allocated from a selection of asset fund managers based on the nature of each Fund's mandate. Philip Hebson, Independent Financial Advisor added that there were different styles of management available for some asset classes therefore it was important that the Pool had a range of options available to meet the needs of their pension fund clients

·         Was the key driver for the introduction by the Government of the pooling system the aim of reducing costs rather than the improvement of performance? Rob Wilson acknowledged that whatever the intentions behind the introduction of the pooling arrangements, performance was a key aspect of the pooling arrangements for the Pension Fund going forward

·         Had the Central Pool introduced a protocol/policy for dealing with the media? Rob Wilson responded that he would check and provide an update at the next meeting

·         Had the imminent transfer of asset management to the Central Pool had a positive or negative impact on the performance of the Fund's existing asset managers? Rob Wilson commented that the onus was on the Pension Fund to ensure that its asset managers were maximising returns prior to the transfer and he assured the Committee that performance was being regularly monitored

·         Was the Fund paying any contribution to the Central Pool, despite assets not being transferred to date? Rob Wilson indicated that the Pension Fund had entered into a cost-sharing agreement with the Central Pool and paid an annual fee. Every effort was being made to ensure that the Fund achieved value for money from its contribution

·         It was early days in the creation of the Central Pool but there was a sense that the Pool considered itself to be in charge of the individual Pension Funds. This was not the case as the Pool had been established to work on behalf of individual Pension Funds not vice versa. If the Pension Fund was not satisfied with the performance of the Pool it could switch to an alternative Pool. Rob Wilson added that officers had been trying to change this mentality within LGPS Central and he felt that the message was starting to get through. Philip Hebson added that it was important to note that any transition of assets to the Pool must be approved by this Committee  

·         Although it was early days, the priority for the Pool was to establish the right vehicle for the investment in infrastructure. Rob Wilson added that future investment in infrastructure had been highlighted as a major issue by the Central Pool's Investment Group

·         Andrew Lovegrove expressed caution over following the LGPS Central timetable for the transfer of the Sub-funds without assessing the impact on and implications for the Fund's Triennial evaluation and investment strategy

·         had any assurance been received from the Pool about the relative value of the funds being pooled? The danger was that poor value assets could be deliberately pooled at the expense of other Pension Funds investment? Rob Wilson agreed that this was a matter that the Pool should be mindful of and consequently a corporate business case would need to be submitted in each case by the relevant pension fund.  

RESOLVED: that the LGPS Central Update be noted.