Agenda and minutes

The minutes of the meeting held on 11 December 2023 were taken as read, confirmed and signed.

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.

The Chief Executive reported that no questions had been received under Standing Order 7(3) and 7(5).

There were no urgent items for consideration.

The Chairman invited members who wished to do so to declare any interest in respect of items on the agenda for the meeting.

 

No declarations were made.

(This item will include a presentation by the Director of Corporate Resources. Those in attendance will have the opportunity to ask questions concerning the Annual Report and Accounts. Those unable to attend are asked to forward any questions they have to democracy@leics.gov.uk by 12 noon on Friday 6 December)

A presentation by the Director of Corporate Resources was given on the Annual Report and Accounts of the Pension Fund 2023/24. A copy of the report marked ‘Agenda Item 6’ and presentation is filed with these minutes.

 

During delivery of the presentation, the following points made:

 

i.          As of 31 March 2024, there were exactly 107,000 scheme members, and the scheme size continued to grow.

 

ii.          There were over 3,000 retirements in the year, with 9,552 new starters.

 

iii.          The Pension Fund as at 31 March 2024 was circa £6.5billion, which was 50% bigger than March 2020.

 

iv.          Whilst some Key Performance Indicators (KPIs) were slightly lower than target, when looking at the number of scheme Members and the complexity of the scheme regulations that changed during the 2023/24 financial year due to the McLoud Sargeant Judgement, the figures were quite impressive and showed a strong year of performance in total.

 

v.          Almost 60% of the Fund was classed as pooled, with the remaining investments being funds with external managers moving on to uncalled commitment (credited amounts to managers to be called down over time whenever they need that money to invest).

 

vi.          The Government recently launched its Fit for the Future consultation on three main proposals, which were the reforming of LGPS asset pools, boosting LGPS investment in the localities and UK, and strengthening governance of administering authorities. Feedback on the consultation would be provided by the Authority by the deadline of 16 January 2025.

 

vii.          Progress against the Net Zero Climate Strategy was positive, in that progress towards net zero had already exceeded initial expectations against two primary targets:

 

·       A reduction in weighted average carbon intensity by 50% - this had already reduced by 52.8% versus the 2019 baseline so was way ahead of the 2030 target.

·       A target reduction in financed emissions of 40% with an actual reduction of the total of carbon emissions by 40.4% from the 2019 baseline.

 

viii.          All progress towards Net Zero was against a backdrop of increasing assets under management that were continuing to outperform market benchmarks, which showed the Fund was continuing positive climate actions in a way that was supportive of its fiduciary duty.

 

ix.          The Fund continued to engage on a whole host of environmental, social and governance issues. One method was through voting with over 125,000 resolutions made over the past year and those were votes that the Fund expected Managers to support the long-term economic interests of its stakeholders, and to ensure that boards and directors were accountable to shareholders.

 

In response to questions raised, the following points were made:

 

x.          A member observed that the Committee and Board members came from varying different backgrounds with varying different skills, and noted that the extensive training programme in person and online, that members undertook had not been included in the presentation, and gave reassurance to scheme members that the pension regulations were observed by all Committee and Board members.

 

xi.          A member congratulated officers on the speed in which they had managed the implementation of the McCloud judgement, and how they had managed the extensive, complicated exercise with no additional resources.

 

xii.          A member questioned if, at the age of 55, a person chose to take a portion of their own pension pot, therefore reducing the final balance of their pension fund, if inheritance would also be reduced. It was explained that there would be scenarios where people would need to consider their overall estate, and inheritance was just one element of that. It was further noted that pensions officers were not financial advisors, therefore had to be  ...  view the full minutes text for item 6.

A report was presented on behalf of the Local Pension Board. A copy of the report marked ‘Agenda Item 7’ is filed with these minutes.

 

RESOLVED:

 

That the report be noted.

A report was presented on behalf of the Local Pension Committee Employee Representatives. A copy of the report marked ‘Agenda Item 8’ is filed with these minuted.

 

RESOLVED:

 

That the report be noted.

Three nominations were received for the Local Pension Committee, therefore there will be a ballot at the meeting.

 

There is a vacancy for the reserve Scheme Member representative, which will be offered to the person placed second in the ballot. The position will be held for one year.

The Chairman reported that three nominations for the position of employee representative on the Local Pension Committee had been received. However, there was only one position for employee representative for three years, and one position for reserve scheme member to be offered to the person placed second in the ballot for one year.

 

The nominations were for Mr. Vipul Bechar, Mr. Ray Hurst, and Mr. Rupert Simms.

 

It was noted that the current employee representatives elected to the Committee were:

 

·       Mr. C. Pitt (to remain an employee representative for a period of one year)

·       Mr. N. Booth (to remain an employee representative for a period of two years).

 

RESOLVED:

 

a)    That Mr. V. Bechar be appointed as an employee representative for a period of three years expiring at the Annual General Meeting in 2027.

 

b)    That Mr. R. Hurst and Mr. R. Simms, having received an equal number of votes, be contacted after the meeting to discuss the position of reserve scheme member.

 

 

One nomination was received for the Local Pension Board, no ballot is therefore required. Mr. Manjit Saroya will, therefore, be appointed to the Local Pension Board for a period of three years.

 

One nomination was received for the reserve Scheme Member representative. The position will be held for one year. Mr. Andrew Stewart will, therefore, be appointed to the Local Pension Board as reserve Scheme Member representative.

 

The Chairman reported that one nomination for the position of employee representative on the Local Pension Board has been received. The nomination was from Mr. Manjit Saroya. It was noted that there was also a vacancy of reserve employee representative. Mr. Andrew Stewart, currently elected to the Board as reserve employee representative, had agreed to continue in this role.

 

It was noted that the current employee representatives elected to the Board were:

 

·       Mrs. R. Gilbert (to remain an employee representative for a period of one year).

·       Mr. A Cross (to remain an employee representative for two years).

 

RESOLVED:

 

a)    That Mr. M. Saroya be appointed as employee representative for a period of three years expiring at the Annual General Meeting in 2027.

 

b)    That Mr. A. Stewart be appointed as reserve employee representative for a period of one year expiring at the Annual General Meeting in 2025.

It was noted that the next Annual General Meeting was scheduled for 15 December 2025.

There were no urgent items.