Agenda item

7.1       The Committee considered a report by the Chief Finance Officer introduced by Susan Greenwood, Head of Pensions.

7.2       The following points were highlighted to the Committee:

1)    Following Government’s response to the ‘Fit for the Future’ consultation, officers are working to understand the implications for the East Sussex Pension Fund (the ‘Fund’) from a governance perspective.

2)    The following will become minimum standards of pooling moving forward:

(i)    Authorities to delegate implementation of investment strategy to their pool;

(ii)   Authorities to take their principal advice on their investment strategy from the pool;

(iii) Authorities to transfer legacy assets to the management of the pool; and

(iv) Pools required to be investment management companies authorised and regulated by the Financial Conduct Authority (FCA).

3)    It is clear from the ‘Fit for the Future’ Consultation and the Government’s response that the current regulatory structure of ACCESS will not be permitted by government from March 2026.

4)    The Government requires that the authority evaluates options in relation to pooling are options are being explored at both the authority level and in conjunction with other members of the ACCESS pool.

5)    Officers met with civil servants in June to discuss progress and the authority is required to write by the end of September to advise of the authority’s intentions for pooling in the future to meet the requirements of the consultation.

6)    Out of the 8 investment pools in the UK, the government supported 6 pools leaving 2 pools with 21 funds needing to seek alternative pooling arrangements.

7)    Governance arrangements are being reviewed noting changes will be required and a report to Pension Committee will set out a plan to ensure the Fund is compliant to the requirements.

8)    The two key changes to the proposed governance arrangements since the consultation include recommending appointment of an independent expert to the Pension Committee as a non-voting member instead of a member with voting rights; and requiring independent governance reviews are carried out every 3 years instead of every 2 years.

7.3       The Committee discussed the timescales in terms of assessing options, formulating a position and proposed governance framework to comply with the deadlines set by Government and noted that while there is a need to be pooled with an alternative by March 2026, Government have recognised the short timescales and have indicated a level of flexibility for Funds who need to seek alternative pooling arrangements.

7.4       The Committee requested that Pension Board and Pension Committee Members are updated in terms of progress before a final proposal is considered by the Pension Committee in September.

7.5       The Committee noted that there will be costs incurred in relation to reorganisation of assets however this cost is unknown due to the uncertainty of the current position.

7.6       The Committee discussed that the proposed direction pursued by the Funds within the ACCESS pool collectively or by the East Sussex Pension Fund individually should consider what is best for scheme members.

7.7       The Committee noted the potential effect on existing pools supported by the Government in terms of potentially having to join with the 21 Funds currently seeking alternative options for pooling and the effect of the consultation on the entire sector.

7.8       The Committee RESOLVED to:

(1) note the current position in relation to the ACCESS pool’s submission in respect of the Government’s ‘Fit for the Future’ consultation; and

(2) delegate authority to the Chief Finance Officer, in consultation with the Chair of the Pension Committee, to continue work to assess the options available to the Fund regarding investment pooling.