Agenda item

(Report of the Assistant Director – Finance. To be introduced by the Cabinet Member for Finance, Employment and Carbon Reduction).

REPORT TO FOLLOW

Cabinet considered a report, introduced by the Cabinet Member for Finance, Employment and Carbon Reduction, which sought agreement to the planned structure of the collective investment vehicle as detailed in the report.

It was noted that the creation of a collective investment vehicle would provide significant savings to Council’s currently operating individual pension schemes and that at a recent meeting of London Council’s twenty-five Boroughs had indicated that they would be signing up to this.

RESOLVED:

        i.            That the  planned structure of the Collective Investment Vehicle be agreed;

      ii.            That it be agreed that the Council should become a shareholder in a private company limited by shares which would be incorporated to be the Authorised Contractual Scheme Operator (the “ACS Operator  ”) of the Collective Investment Vehicle;

    iii.            That it be agreed that a contribution of £1 be given to the ACS Operator as initial share capital;

     iv.            That approval be given to the Leader of the Council to act for the Council in exercising its rights as a shareholder of the ACS Operator, and to authorise the Chair of the Pensions Committee, once established, to act in her absence; and,

       v.            That agreement be given to join the London Boroughs “Pensions CIV Joint Committee”, to be formed under section 102 of the Local Government Act 1972 and to delegate to such Joint Committee those functions necessary for the proper functioning of the ACS Operator, including the effective oversight of the ACS Operator and the appointment of Directors.

Alternative options considered

The Society of London Treasurers has considered a range of options for increased collaborate working in London to enhance the efficiency of individual London Funds. A report was commissioned from the accountancy firm PWC in 2012 to look at a range of options including business as usual to a full blown merger. The options set out were:

Ø  Shared procurement – easy to implement, but relatively low impact and savings limited

Ø  Shared procurement with fund manager oversight – relatively easy to implement, savings higher than option 1, but still not significant

Ø  Collective Investment Funds – less easy to implement, but significant potential for cost savings, whilst at the same time enabling funds to maintain local governance of funds

Ø  Scheme merger of London funds – whilst cost savings are high, this would be very difficult to implement and would have a major impact on local accountability and governance.

Ø  Centralised administration – again cost savings would be high, but issues around accountability and governance.

Consideration of the options led to the decision to explore ways of working more closely together to develop a collective investment vehicle for pension funds in London to achieve benefits of scale, bringing cost savings, but maintaining local decision making, governance and accountability.

Reasons for decision

The London Borough of Haringey is the Administering Authority of the       London Borough of Haringey Pension Fund and has delegated         responsibility for decisions regarding the Pension Fund to the Corporate    Committee.

The Pensions Working Group has previously considered discussion            papers on the formation of a CIV for London along with the recent ‘Call     for Evidence from Communities and Local Government (CLG) to      consider structural reform of the LGPS. There is pressure on LGPS funds       to demonstrate efficiency savings and work collaboratively.