Issue - meetings

Chris Norton (Head of Investments, Treasury and Audit) introduced the report which provided details of the Government’s ‘LGPS Fit for the Future’ consultation. He advised that the Government had instigated a review of the Local Government Pension Scheme (LGPS) and the wider pensions industry. The Fund had recently responded to a ‘call for evidence’ relating to the review. Since then, the ‘LGPS Fit for the Future’ consultation had been launched with a deadline for responses of 16 January 2025.

Chris Norton advised that the consultation had three themes: reforming LGPS asset pooling; boosting investment in localities and regions in the UK; and strengthening the governance of LGPS funds and pools. The proposals around pooling suggested an approach to bring all areas of the LGPS to the same position and same minimum standard – likely with fewer, larger pools. He advised that Border to Coast Pensions Partnership (BCPP) was already well positioned against the minimum standards for pools. It was regulated by the Financial Conduct Authority (FCA), and its partner funds were well progressed on the road to being fully pooled. Additionally, BCPP had a long-term strategy which was aligned with the direction proposed by the consultation.

Chris Norton highlighted that the phrasing of the consultation questions gave a strong indication of expected outcomes. He highlighted key issues relevant to the formal response to the consultation. These encompassed an awareness of pension funds’ control over setting of the strategic asset allocation, arrangements for investment advice, and clarity around how local investing would operate in practice. It was considered that a broader definition of the word ‘local’ in this context was needed. It was not proposed at this stage to mandate any mergers of pools or funds. However, greater clarity of the Government’s expectations would be required so that funds and pools could better understand the likely circumstances under which mergers would be expected or potentially imposed. A special meeting of the Sub-Committee would be held in early January 2025 to consider the formal response to the consultation. The Chair of the Staff and Pensions Committee would also be invited to this meeting.

Councillor Gifford highlighted concerns about the assertion within the consultation that “it is in the interests of members that their investments support the prosperity of their local areas”. He commented that many Warwickshire Pension Fund members had moved elsewhere. It could not be assumed that they would necessarily be concerned about local prosperity. He queried the definition of ‘local’ in this context. For example, international companies were among some of the largest employers in Warwickshire, but it was unclear whether it was being suggested that investment in these companies would fulfil the desired objective.

Councillor Gifford highlighted commentary in the report relating to the implications of the Devolution White Paper and the potential interaction of devolution proposals with pensions reform. A broad definition of ‘local’ investment covering the whole of the UK would require careful management should mayors or combined authorities seek to influence investment decisions. He expressed concern  ...  view the full minutes text for item 5