Agenda item

The Committee considered the Local Government Pension Scheme (LGPS) Central Update and received a presentation from Joanne Segars, Chair and Mike Weston, Chief Executive of LGPS Central which set out an overview of their work, details of recent activity and a look forward.

In the ensuing debate, the following points were made:

·         Had a replacement been recruited yet for the key role of Compliance Officer? Mike Weston recognised the importance of having the right people with the right capabilities in the right roles. An interim Compliance Officer had been appointed and efforts were underway to make a full-time appointment

·         In response to a query the decision to relocate the office accommodation within Wolverhampton instead of Birmingham, Joanne Segars commented that suitable accommodation had been sought from across the region. It was found that accommodation in Birmingham was extremely expensive and not of sufficient quality to represent good value for shareholders. The lease on the offices in Matlock had a further two years to run. It cost a small amount and it was a matter for the shareholders to determine whether to continue with that lease

·         In response to a query about office working, Mike Weston commented that the balance between office and home working was being looked at. At present, staff were being asked to work in the office four days a week because there were a large number new staff who needed to be integrated on a face-to-face basis. The eventual aim would be a 3:2 office/home ratio model. The introduction of hybrid technology, which had not been possible with the constraints of the old office, would help this process. There was a recruitment issue in terms of staff unwilling to relocate from London which also had implications for the location of the investment team

·         Had LGPS Central been losing staff as a result of the move to flexible working? Mike Weston indicated that it had been more an issue in terms of the recruitment of new staff. Joanne Segars added that it was an issue for all businesses as flexible working had become a key staff demand

·         In response to a query about graduates, Mike Weston indicated that graduates had been working in all aspects of the LGPS Central business

·         Personality profiling was a good mechanism to ensure the right mix of personalities within an organisation. Had LGPS Central adopted this approach in the selection of its graduates? Mike Weston indicated that LGPS Central had introduced a testing regime but this did not include personality profiling

·         There was no evidence to support any assertion that working from home improved productivity. Was there an expectation amongst staff that they should work from home? Joanne Segars responded that during the pandemic, staff had got used to working from home. However, the key issue was to find the right balance for the organisation

·         The overhead costs, terms of the lease and room for expansion of the new premises in Wolverhampton were queried. Mike Weston commented that there was a degree of flexibility in the set-up of the new office accommodation in Wolverhampton that would meet the organisation’s needs. The lease on the building was for 10 years with a break clause at 5 years. A cap had been put on service charges including energy costs. The building was far more energy efficient that the existing offices. Joanne Segars added that there was no car parking available but the offices were next to the train station and not far from a public car park. It was also intended to introduce a cycle to work scheme

·         One of the biggest issues with graduate training was graduates leaving the organisation after the training had been completed. How many graduates had been retained at the end of the training programme? Mike Weston responded that 6 graduates had been retained and had been appointed to formal positions within the organisation. Joanne Segars added that as part of the training, these graduates had rotated through different aspects of the work of the organisation to gain experience

·         Given that WPF was a low cost base fund, the performance of investment managers was a key issue. The poor performance of one of the emerging markets investment managers was a particular concern and it was queried whether LGPS Central should consider terminating their contract

·         Philip Hebson added that the poor performance of one particular investment manager had impacted on the overall performance of the Emerging Markets multi-manager fund in total. This seemed to underline the Fund’s reservations about the performance of multi-manager funds. WPF had a history of being less risk averse and adopting a conviction investment approach. Bearing this in mind, LGPS Central might wish to consider adopting a more flexible approach to investment management

·         In response to a query, Mike Weston indicated that the appointment of the three sustainable investment managers would be announced as soon as the due diligence arrangements had been completed

·         Concern was expressed about Government interference in the LGPS, particularly as a source of funding for infrastructure investment. Joanne Segars responded that LGPS Central had made the point to Government and would continue to emphasise that the Fund was there for the benefit of its members.

RESOLVED that the LGPS Central Update and presentation be noted.