Agenda item

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 of these benefits of scale through a reduction in the cost to the ESPF in managers’ fees.

1.8.        OO explained that ACCESS is currently going through the process of appointing an operator and  a ‘concept viability day’ has already taken place, which  involves publishing a specification and inviting companies to speak with ACCESS Members and officers to demonstrate their ability to provide the service. RS said that there had been a number of potential operators looking as if they could adequately fulfil the role. Kent County Council is leading the procurement process and RS has been appointed as the lead ACCESS Member on the operator procurement sub-group. 

1.9.        RS said that in theory the economies of scale should obviate the costs of investment managers, but the considerable transition cost and requirement to rent or build a FCA licenced operator might negate these savings.

1.10.      BR asked for clarity about how exactly the operator will interact with existing officers from the administering authorities.  The Chair suggested that the Board be provided with a clear description of the ACCESS structure at the training session in September.

1.11.      The Board RESOLVED to:

1) note the report;

2) request to clarify the roles and responsibilities of ACCESS, and its governance arrangements and the effect on the Board and Committee at the 26 September training session;

3) to request the details of the other 10 pension board chairs in the ACCESS group.