Agenda item

The Board received a report from the Director of Corporate Resources which provided an update on LGPS Central’s (Central) Joint Committee and Annual General Meetings, and other relevant matters. A copy of the report marked ‘Agenda Item 5’ is filed with these minutes.

The Chair welcomed Mr Ian Armfield for Central to the meeting.

Arising from the discussion, the following points arose:

       i.          The eight Midlands-based Local Government Pension Funds totalled over £45billion, which included £5.5billion Leicestershire Fund as of 31 March 2023.

      ii.          For clarity, it was explained that ORCA was the Operations Risk Compliance and Administrations committee.

    iii.          Members were informed that, as Leicestershire County Council had a risk register for the Fund, similarly Central held its own regularly reviewed risk register, in that risks were listed with consequences, actions taken, and mitigation of risks, and RAG rated accordingly.

    iv.          In terms of the LGPSC’s Audit, Risk and Compliance Committee, Members were reassured it had oversight of risk management and assurance, providing appropriate scrutiny of the control environment, and focussed on the integrity of financial statements to ensure they had been appropriately and accurately prepared.

     v.          There were also internal auditors under the direct control of the Board, with KPMG used as external auditor for the internal audit, and who had a rolling plan of work that looked at all aspects of Central’s operations, and ensured management followed up on any recommendations and improvements for operations on a timely basis. Members were informed that Central produced an AAFO120 report with information on the controls around certain investment management activities and were the first Pool to produce such a report.

    vi.          As a regulated entity Central had to ensure it had sufficient regulatory capital (currently at 200% required by the regulator) and produced an annual statement to the regulator. Members were reassured there was nothing of concern to bring to the attention of the Fund.

  vii.          Members were further reassured there was a compliance monitoring programme, looking at a broad range of topics around compliance, including investments, market abuse regulations, monitoring of fraud, and conflicts of interest. Priorities for the current year included, from a risk perspective, the automation of manual processes where possible, making them effective and smarter to reduce risk, and further scrutiny of suppliers, to ensure services were provided good value for money.

 viii.          Incremental improvements would be made in all aspects of reporting, ensuring that what was being reported was accurate, appropriate, helpful and produced within time frames.

    ix.          LGPS Central were in the process of renewing its internal audit mandate and was an opportunity to refresh and rethink what was wanted from an internal audit service.

     x.          Advisors were being encouraged to add value (or more value) to what they did, or in some cases explain the value they were adding from the service they provided, which was not always obvious.

    xi.          A Member queried that how Central monitored communication across all stakeholders effectively to ensure value for money. Members were assured that Central was a well-structured, organised business with good budgetary control, whereby detailed budgets were ultimately approved by partner funds.

  xii.          A Member further raised the issue of pensions having an aspect of questions around green or climate investment at local level. Officers confirmed that recently the Local Pension Committee had approved the Net Zero Climate Strategy after extensive engagement and consultation, and an annual Responsible Investment (RI) Plan, to which the public could be directed to online. It was noted that Managers had to improve, and new Managers had to ensure their RI credentials were in line with the Fund’s policies, and funds were measured for green target attainment.

RESOLVED:

That the report and update be noted.