Issue - meetings

The Chief Executive reported that 6 questions had been received under Standing Order 34 from Mr. Anthony Simmons

 

1)    “What is the total value of the funds in the Central Pool?”

 

Reply by the Chairman:

 

To date Leicestershire County Council Pension Fund (the Fund) is over 40% pooled (c.£2.6billion) as at the end of September 2024.

 

Combined assets of all partner funds within LGPS Central (Central) amounts to approximately £61billion based on numbers taken from the Government’s ongoing ‘Fit for the Future’ consultation.

 

As at 31 March 2024 Central were responsible for the management of £29.9bn of the eight partner funds’ assets.

 

 

2)    “What are the advantages and disadvantages of being in the Central Pool?”

 

Reply by the Chairman:

 

The Fund alongside Central and other partner funds work in close partnership and collaboration. This has delivered significant benefits including:

 

-        Delivery of cost savings for partner funds in support of efficiency and value for money.

-        Increased the range of investment opportunities, providing diversification benefits alongside management fee reductions to external managers only possible with scale.

-        Internal investment expertise and capabilities not available without pooling which includes significant responsible investment and engagement services.

 

While limited, part of the drawback of pooling relates to a limited ability to invest in smaller scale niche investments and having an investment product available to match the Fund’s investment priorities. Any potential disadvantages are managed via close partnership with Central and partner funds.

 

 

3)    “The Government is encouraging Local Government Pension Funds to form a 'mega fund'. If this happens, what would be its total value and what could be the advantages and disadvantages of such a coalition?”

 

Reply by the Chairman:

 

The Government are in the process of consulting on proposals for the Local Government Pension Scheme (LGPS) entitled ‘Fit for the Future’ in relation to asset pooling, UK and local investment and governance. At this time any reference to ‘mega fund’ by the Government refers to the continuation and acceleration of existing pooling structures. The focus is on further pooling of investments and not merging of fund administration.

 

 

4)    “Is there an arrangement somewhere between the current situation and the 'mega fund' that could be more advantageous and/or have less disadvantages?”

 

Reply by the Chairman:

 

As set out in the response to Question 3 above, the proposals are looking to conclude what was started in 2015 with the introduction of pooling. These proposals do have important considerations for how they impact schemes and initial views were set out at the Local Pension Committee in November 2024. A link is provided to the relevant paper here.

 

Governments consultation proposals at a high level relate to:

 

-        Pooling - Mandating certain minimum standards for pooling including, delegation of implementation of investment strategy to pools, pools providing principle investment advice and a requirement to transfer legacy assets to pools by 31 March 2026.

 

-        UK and Local Investment - Funds to set out approach to local investment with regard to local growth plans and local economic priorities in setting their investment strategy, noting however the definition of ‘local’ requires further clarification.

 

-        Governance - Strengthening the governance of both LGPS funds and LGPS pools.

 

At this point the Fund cannot fully set out advantages and disadvantages for the current proposals, at a high-level these proposals can be seen positively with continued partnership working between pools and partner funds enabling further benefits to be achieved.

 

The Director of Corporate Resources, in consultation with the Chairman of the Local Pension Committee, have been delegated the responsibility to respond to this consultation. Part of the Fund’s response will  ...  view the full minutes text for item 2