Agenda item

The Committee considered the Local Government Pension Scheme Central (LGPSC) Budget and Strategic Business Plan 2020/21.

Michael Hudson introduced the report and made the following points:

·         The Shareholders Forum meeting due to take place on 11 February had been postponed due to concerns expressed by a number of shareholders (from partner funds) about the proposed budget. As the budget needed to be approved unanimously, it had been considered appropriate to reconvene the Forum meeting to allow further discussions between the concerned partners and LGPSC. To ensure that there was no further delay of the Stakeholder Forum meeting beyond this financial year, he requested delegated authority, in consultation with the Chairman of the Committee to agree to waive the required 30 days notice period for the convening of the Shareholder Forum meeting, should it be necessary.

·         The main issues associated with the LGPSC budget related to the launch budget together with the creation of surpluses and their use. LGPSC had stressed the need for a larger launch budget despite not spending all of their existing launch budget. There was also uneasiness amongst partner funds that they would be contributing towards the creation of a surplus and consequently the impact this had on the cost-sharing agreement

·         In light of the fact that the Shareholders Forum meeting was likely to take place in advance of the next scheduled meeting of the Committee and to avoid any unnecessary delay, he requested delegated authority, in consultation with the Chairman of the Committee to carry out due diligence on the LGPS Central budget updated proposals and to enable the Chairman as Shareholder to agree the proposed 2020/21 LGPSC budget unless the updated budget extended the break-even position of the Worcestershire Pension Fund beyond 2038 thereby impacting on the original cost-sharing agreement.

In the ensuing debate, the following points were made:

·         Were all partner funds affected by the budget proposals to the same extent? Michael Hudson advised that some partner funds had different positions with regard to funding levels and those stocks that had or had not been transitioned into LGPSC

·         In response to a query about the basis for the partner funds’ concerns, Michael Hudson explained that it was a combination of concerns about the current performance of some of the investments although it was acknowledged that these were long term investments and it was early days and the increase in the overall budget. Rob Wilson, Finance Manager – Pensions and Treasury Management added that the report set out the extreme sensitivities of the cost savings model to changes in relative investment performance. It was important therefore for partner funds to ensure that LGPSC were monitoring the appointed investment fund managers closely to deliver on investment performance.

RESOLVED: that

a)    the Chief Financial Officerbe granted delegated authority, in consultation with the Chairman of the Committee to agree to waive the required 30 days notice period for the convening of the Shareholder Forum meeting, should it be necessary;

b)   the Chief Financial Officer be granted delegated authority, in consultation with the Chairman of the Committee to carry out due diligence on the LGPS Central budget updated proposals and the Chairman as Shareholder to agree the proposed 2020/21 LGPS Central budget unless the updated budget extended the break-even position of the Worcestershire Pension Fund beyond 2038 thereby impacting on the original cost-sharing agreement; and

c)    LGPSC latest version of the LGPS Central Budget 2020/21 presentation attached as Appendix 1 to the report and the LGPS Central Strategic Business Plan attached as Appendix 2 to the report be noted.