Issue - meetings

44.1     The Board considered a report providing an update on various governance workstreams completed and changes affecting the LGPS and the ESPF introduced by Sian Kunert (SK) who drew the Committee’s attention to the following:

1)    Following the Mansion House speech of 14 November officers were able to confirm that a consultation was announced on 15 November with significant detail provided.

2)    With regards to the LGPS the Government will legislate to consolidate the LGPS administering Authorities into 8 pools which was expected. Four key documents were provided with the consultation: the investment review interim report, a defined contribution consultation and an LGPS consultation and a paper on investment in the UK economy.

3)    The LGPS consultation covers: reforming the asset pools, strengthening governance and boosting investment in regional areas. There would be a requirement that the LGPS administering authorities fully delegate implementation of investment strategies to the pool and take principle strategic advice from the Pool. All of the Pools would have to be FCA regulated (5 of 8 currently) and the administering authorities would be required to transfer legacy assets to the management of the Pools.

4)    An indicative timeframe to move to that model is by March 2026 which is a very short timeframe particularly for non FCA regulated Pools. ACCESS is not FCA regulated so it would be challenging for them to meet the proposed deadline.

5)    In relation to boosting LGPS regional investment in the UK, the Committee would be required to include a target range of allocations to regional growth plans as part of the investment strategy. The Pool would be responsible for the due diligence of any local investment opportunity but the Committee would decide the target range of the investment. The expectation is that the investment opportunities would be within the Pool’s region and the Committee would have to set out the Fund’s local investment impact within its annual report.

6)    In relation to strengthening governance the information set out was as expected and there are no significant concerns at this time and no material changes would be required as the strategies and policies required are already in place, although a few of these would instead be consolidated into a single policy document. The Fund is in a very good position to respond. An independent two-yearly review would be undertaken to ensure that good governance practices are in place.

7)    The Pool board would be required to include a representative of their shareholders and improve transparency; at present ACCESS is not structured as a standalone built company and does not have a Board.

8)    The deadline to respond to the consultation is 16 January 2025 which is before the next Committee meeting and therefore delegated authority to the Chief Finance Officer to submit a return on the Committee’s behalf is sought.

9)    The asset pools have been asked to work with the administering authority clients to submit a separate proposal for how they will meet the compliance requirements and complete the transfer  ...  view the full minutes text for item 44