Agenda item

The Committee considered a report of the Corporate Director of Resources which briefed the Committee on developments in matters that were both LGPS specific, as well as providing an update on non-LGPS specific matters of interest (for copy see file of Minutes).

The Head of Pensions (LGPS) noted that the main issues were set out within the appendices, with Appendix 1 referring to the new suite of KPIs, Appendix 2 referring to gender pay gap, and Appendix 3 referring to a letter from the Local Government Minister to all Chief Executives and s151 Officers asking whether the current number of Pension Funds was right, or whether they could consolidate further.

The Head of Pensions (LGPS) noted continued cross-party support in respect of greater LGPS support for “UK Plc”, however, he would note that the first duty was a fiduciary one to make sufficient returns in order to pay pensions.  He added that the Committee had already committed to supporting the UK in terms of the UK Opportunities Fund with BCPP to try and help benefit the UK and our region.

Councillor K Earley asked whether there were further advantages of scale in further consolidation of Pension Funds, noting he felt 87 Pension Funds seemed about right.  He added he would support other Funds catching up in respect of pooling and noted that if further consideration was to create something ‘too large to fail’, then perhaps it would also be too large for local influence.  The Head of Pensions (LGPS) noted that there were fee savings in terms of larger pools, however, there was a concentration of risk.  He added that perhaps if there was focus on consolidation of existing pools, that may generate greater inertia in those yet to pool. 

The Chair noted Durham had been clearly ahead of the game in this regard, working with others in terms of BCPP.  He noted there needed to be balance between local control and working at a scale to bring about the associated benefits, such as in respect of fees and investment opportunities.

Councillor K Early noted that post-national elections seemed a good time to lobby in respect of our position working with BCPP.  The Head of Pensions (LGPS) noted that the letter to Chief Executives and s151 Officers would be responded to by Officers, providing an opportunity to set out our position and progress to Civil Servants.

Councillor J Atkinson asked if it would be helpful to ask ‘what has pooling done for us’ in order to set out the progress we had made working with BCPP, to then be able to see what we needed to do next.  The Head of Pensions (LGPS) noted that objectives that had been achieved included: fee savings; investment in infrastructure; internal management capabilities and approach to Responsible Investment. He noted the significant value added by Border to Coast in respect of Private Markets, with Climate Opportunities and UK Opportunities, as well as UK Real Estate.

Councillor B Kellett noted it appeared the Minister was stating ‘there was room for improvement’ and that Government were looking for further economies of scale with larger pools.  He noted he felt Government wanted further control, and he felt that should be a matter for Pension Fund Committees.  The Head of Pensions (LGPS) noted that there was a school of thought that larger was better in terms of pooling.  However, he noted we would be able to point to the success of BCPP and our pooling progress, though that would not mean we would be immune to further pressure from Government.  Councillor B Kellett noted the ‘five percent to local investment’, with still no definition of ‘local’.  The Head of Pensions (LGPS) noted there was a lot of work in the background in this regard, and in terms of defining ‘local’, adding that the UK Opportunities Fund would be part of that five percent ‘local’ investment.  The Chair noted he agreed with Councillor B Kellett in terms of having the control at local level with local accountability in terms of investment.

Councillor J Shuttleworth entered the meeting at 11.00am

Resolved:

That the information contained in the report be noted.