Agenda item

The Board considered a report from the Corporate Director of Resources which provided details on the LGPS Consultation - Next Steps on Investments (for copy see file of Minutes). 

The Head of Pensions (LGPS) reminded Members that Durham, along with 10 other Local Authorities, had come together to pool their Pension Funds within the Border to Coast Pension Partnership (BCPP).  He noted that the Partnership have around £60 Billion worth of assets and pooling had helped in terms of savings of working at scale, as well as having provided capacity and opportunity for investment, noting it had been the right thing to do for the Durham Fund.

In respect of the rest of the UK, there were eight pension pools, with eight models of how to organise and invest.  He noted that some pools, whilst having been set up, were very slow to pool, indeed with two Pension Funds having zero funds transferred to their pool, with one Fund threatening to leave their pool.  The Head of Pensions (LGPS) noted that following those issues, Government had issued a consultation on pooling with a view to complete pooling by 31 March 2025.  He explained that it was not an issue for Durham and BCPP as we had now moved most of the funds over to the pool.  He noted that Government envisaged three stages, namely: 2025 deadline to pool; then greater collaboration between pools; and consolidation of pools, leading to fewer larger pools.

The Chair and N Hancock asked if there was anything that could be learned from the less progressed pools in terms of what not to do, or whether the issues they were experiencing were specific to those pools.  The Head of Pensions (LGPS) noted that Government had seen the inertia elsewhere while many others, including Durham, have gotten on with the business of pooling, looking at ‘local investment’, and responsible investment.  He noted that the 11 Local Authorities coming together in BCPP had been a challenge, and therefore could be an issue for consolidated pools, in terms of governance.  He added that those Pension Funds that had not yet moved assets, may wait until the consolidation stage and whole pool merges or Funds moving to other pools may occur.  He noted that BCPP may be looked at favourably by those Funds that had not yet pooled as a potential option.

The Head of Pensions (LGPS) reiterated that in respect of ‘levelling up’, Government meant UK investment when talking about ‘local investment’. 

He added that Durham was one of four Funds being cited as best practice for local investment for its North-East Investment Fund.

The Head of Pensions (LGPS) noted that it may be that local investment would work best outside of the pool and therefore Government would be asked for clarity on that matter in the Fund’s response.  He noted another area where clarity would be sought was in reference to 10 percent ‘private equity’, which was thought to in fact mean ‘private markets’, noting Durham was already at that 10 percent level in private markets.  He noted that the BCPP Joint Committee would respond to the consultation on behalf of the 11 Pension Funds.

N Hancock noted that within BCPP, we met some of the Government requirements already, whilst some were perhaps ‘ambitions’.  He asked if there would be clarity on what would be requirements as opposed to ambitions.  The Head of Pensions (LGPS) noted that pooling was reiterated as a requirement and that actions associated with levelling up were ambitions.  N Hancock asked the Head of Pensions as regards the move of sovereignty from Pension Fund Committees to BCPP.  He noted that Pension Fund Committees determined asset allocation, not Fund Managers, with BCPP picking Managers to meet the needs of Pension Fund Committee’s assets.  The Head of Pensions (LGPS) noted the consultation ended on 2 October, with the Chancellor wanting to be able to report back within his Autumn Statement. 

RESOLVED:

That the information given be noted.