Agenda item

Consideration was given to the report of the Corporate Director Resources which provided an update on progress made towards meeting the Government’s requirements on a shared investment approach through pooling Local Government Pension Scheme Fund assets (for copy see file of Minutes).

Nick Orton advised that as reported at the last meeting the Pension Fund Committee Chairs and Vice-Chairs and Officers from the three north east Funds had met and agreed that it was not practical to form a separate north east pool. The report provided progress to date and informed Members of the decision to join the Border to Coast Pensions Partnership, on the advice and support of Durham Fund’s Advisers. The Partnership’s joint submission to Government was attached to the report at Appendix A.

Officers would continue to work with colleagues in the Partnership to further develop pooling proposals.

Nick Orton briefed Members on meetings he had attended with Beverley White that week at which colleagues in the Partnership had discussed options for the legal structure of the pooled arrangement. The Government’s preferred option was an approved contractual scheme where Funds would not own their individual assets but would be shareholders. There were clear tax advantages to this. Other options were discussed which included a joint Committee approach.   

In response to a question from Councillor Carr about legal commitments with existing Fund Managers, the Member was informed that this would have to be managed within the transition timetable. Within the submission the timetable suggested transfer of listed assets by December 2018, but up to 15 years for the transfer of any unlisted holdings, also the Government had accepted that Funds would not be forced to disinvest where there were financial penalties. Philip Williams added that the Fund was entitled to terminate any mandate but stressed the importance of seeking good investment advice.

In terms of the legal structure, Councillor Smith referred to the approved contractual scheme and asked if the cost in setting this up was likely to negate economies of scale achieved through pooling. Nick Orton confirmed that in the short term this would be a cost to all Funds.

Following a question from Councillor Martin, the Member was advised that self-management was inexpensive but should be evaluated carefully to ensure that it would be the most appropriate option for the Fund.

Resolved:

That the information given be noted and further progress be reported at subsequent meetings of the Committee.