Agenda item

This report provides the Pensions Committee and Board (PCB) with an update on the outcome of the government’s consultation on Local Government Pension Scheme (LGPS): Next steps on investments, (the Consultation) which waspublished by the Department for Levelling Up, Housing and Communities (DLUHC) on 11 July 2023. The Consultation closed for responses on 2 October 2023.

Tim Mpofu, Head of Pensions, introduced the report for this item. This report provided the Pensions Committee and Board (PCB) with an update on the outcome of the government’s consultation on Local Government Pension Scheme (LGPS): Next steps on investments, (the Consultation) which was published by the Department for Levelling Up, Housing and Communities (DLUHC) on 11 July 2023. The Consultation closed for responses on the 2^nd of October 2023.

The following was noted in response to questions from the committee:

·         John Raisin explained that where pooling had suited this fund; pooling had occurred. There were a few funds that had set themselves against pooling on principle; however, most LGPS funds had taken the logical and sensible approach, which was where the pool provided an advantage it was used.

·         Cllr White queried on how the fund supported levelling up. John Raisin explained that there were investments in assets which supported levelling up, this could be seen particularly through the infrastructure debt investments. The London Fund within the London CIV would also support this. The allocation to the UK’s infrastructure debt investments was around 2.5% of the Fund’s investment portfolio. The intention of going into these investments was primarily to meet investment strategy objectives rather than to achieve levelling up objectives.

·         Regarding the Government’s statutory guidance there would be no compulsion in terms of levelling up, private equity or pooling. The Government’s response had signalled that the approach to the new statutory guidance would be a comply or explain regime. Within the consultation response, the Government noted that the Fund would be required to set out its approach to levelling up, private equity and pooling within the investment strategy. For example, in setting out its asset allocation as part of its investment strategy statement, the Fund could provide an explanation as to why it was an unable to allocate to a particular asset class given the factors specific to the Fund.

·         John Raisin noted that there were few civil servants working on LGPS issues. This may account for the Government not issuing outcomes in respect of earlier LGPS Consultations such as on Fair Deal and Climate Reporting. In response to a query regarding any penalties for non-compliance, it was further acknowledged that if the Government could penalise funds for not complying, then one could argue that the Government may be indirectly mandating funds to a particular course of action. As such, it would be expected that any statutory guidance issued would consider this carefully.

·         Cllr Bevan queried investing in more than one pool, John Raisin explained that LGPS funds could not do this directly. The London Fund was essentially an investment strategy managed by one of the other pooling companies, the Local Pensions Partnership Investments (LPPI) , and the London CIV had come to an arrangement with the LPPI to give access to the London boroughs. The Government expected there to be more inter pool collaboration, this would allow for easier pool amalgamations in the long term.

·         Cllr Hymas commented that it was incredibly concerning that the government seemed to have little regard as to what members did on this committee and their elected responsibilities. She explained that it felt contradictory that on the one hand, the Government wanted more training for pension fund members and then on the other hand, also wanted members to make less decisions.

RESOLVED

To note the Independent Advisor’s LGPS Investment Consultation and Outcome 2023 paper, appended as Appendix 1 of this report.