Issue - meetings

26.1     The Committee considered an update on local government pension scheme pooling.

26.2     The Committee RESOLVED to note the report.

1.1.  The Board considered a report on the activities undertaken by the ACCESS group.

1.2.        The Chair said that although there will not be any changes to the terms of reference of the Pension Board, there will be subtle changes to the way in which it assists the decision-making around the ESPF. This is because of the difficulty in holding the ACCESS Joint Governance Committee to account compared to the Pension Committee. He said that it was important that the Board’s role within the ACCESS framework is made clear before April 2018.

1.3.        Angie Embury (AE) said that Unison is lobbying to secure employee representation within the eight pooled funds. The Chair pointed out that none of the eight pooled funds yet have an equivalent of a pension board (with employer representatives) that assist their joint committees.

1.4.        OO confirmed that the ACCESS Joint Governance Committee comprises a representative of the pension committees of each of the 11 administering authorities; the representative is either the Chair or Vice Chair of each committee. Cllr Stogdon is elected as the Vice Chair of the ACCESS Joint Governance Committee. The Committee met for the first time as a fully-fledged committee on 31 July 2017at Camden Town Hall.

1.5.        OO explained that although the requirement of pooling funds was to remove the power of pension committees to hire and fire investment managers, the committees will retain almost all of their existing powers, for example, the power to determine which asset classes to invest in based on their ISS; and they will retain all of their responsibilities around securing compliance with LGPS regulations. Pension boards will be able to continue to assist the committees with all of these matters.

1.6.        OO clarified that the £3.3bn ESPF would not all be pooled into ACCESS in April 2018, but the transition of liquid and non-liquid assets will be gradual over the next few years. 50% of those funds are passive and will go into a national passive procurement framework (along with other ACCESS funds) that is to be appointed to a single investment manager prior to April 2018 (from 9 Funds investing in passive assets on behalf of the ACCESS funds). Other investments are illiquid and will need to mature, such as property, infrastructure, and private equity and so will not be pooled immediately. In total, around 10% of funds, from active investments, will transfer to the ACCESS pool from April 2018.

1.7.        OO said that ACCESS will look at what asset classes all 11 funds want to invest in and match them with the investment managers who can provide the best returns on those assets. Investment managers will be seeded into the pool to avoid transition costs in the short term, rather than transferring those funds straight to new fund managers. This means that to start with there may be significant numbers of investment managers, but the number will be rationalised to achieve the benefits of scale. Over the next few years there should be evidence  ...  view the full minutes text for item 24

39.1     The Committee considered a report by the Interim Chief Finance Officer providing a summary of and the conclusions from the ACCESS Chairs meeting.

39.2     The Committees RESOLVED to:

1) note the report; and

2) approve the agreement of the Chairmen on the 2 September 2016 to initially rent the operator function, with a view in the medium term to wholly own the operator.