• Home
  • About
  • 151 IMPACT AWARDS
  • Subscribe
  • Conference
  • Events Calendar
  • Webcast151
  • MOTB
  • Log In
  • Register

Room 151

Impact Awards –>
  • Treasury
  • Technical
  • Funding
  • Resources
  • LGPS
  • Development
  • 151 News
  • Blogs
    • David Green
    • Agent 151
    • Dan Bates
    • Richard Harbord
    • Stephen Sheen
    • James Bevan
    • Steve Bishop
    • Cllr John Clancy
    • David Crum
    • Graham Liddell
    • Ian O’Donnell
    • Jackie Shute
  • Interviews

Jeff Houston: LGPS and investment cost transparency

0
  • by Guest
  • in Blogs · LGPSi
  • — 17 Apr, 2018

The LGPS Advisory Board has been the first to sign up to a new disclosure template for investment costs. Jeff Houston explains what’s happening and why.

It seems a very short time since the mantra of “net return is all” was in the ascendancy throughout the LGPS and investment cost reporting was, by and large, restricted to invoiced fees. It is, of course, true that only net returns can pay pensions but for a number of reasons, including reputational and regulatory, the price of achieving that return is now firmly on the agenda.

The move toward investment cost transparency is an important factor in the perception of the LGPS as being value-led. Increased transparency is now included in CIPFA accounting standards and is an objective in the government’s criteria for pooling investments. Finally, the introduction of MiFID II has seen a greater obligation on managers to fully report costs.

The LGPS Advisory Board’s voluntary Code of Transparency was launched in May 2017.  Signatories to the code commit to the principles of transparent reporting and agree to complete a template of costs for their clients and submit to third party compliance checks. In return they are named on the board’s website and are able to use the code’s “tick” logo in their marketing material.

At the core of the code is a listed assets template which was developed during with the help of the West Midlands Pension Fund, Dr Chris Sier and the Investment Association.

Since the launch, the number of code signatories has grown at a steady rate, despite the restriction to listed assets, and now includes over 50 asset managers covering over £160bn of assets.

Following the release of the FCA’s asset management market study in the summer of 2017, the Institutional Disclosure Working Group (IDWG) was formed in order to “gain agreement on disclosure templates for asset management services provided to institutional investors.”

The group, chaired by Dr Sier, includes asset owners, managers and academics, and is currently developing a range of templates at both the account (manager) and user (trustee) levels. The templates will cover all of the major asset classes and are due to be released in the summer of this year.

At its meeting on 26th February, the Advisory Board agreed to adopt the IDWG templates, when available, for use in its code. This decision was taken for a number of reasons including:

  • Consistency of reporting. It makes sense for both managers and asset owners if a standard format for reporting is used across the institutional space.
  • Adoption of the IDWG templates will provide a route into the Code for those alternative and property managers who until now have not been able to sign up.  At the meeting of the 26th, the Board also agreed to an amendment to the Code which enables these managers to sign up in advance of the arrival of the IDWG templates.
  • The IDWG user template provides a useful summary of costs for LGPS committees together with the ability to drill down into the detail of account templates when required.
  • Whichever body takes over, the work of the IDWG will continue to develop and maintain an effective and relevant set of templates.

The adoption of the IDWG templates will, however, require existing signatories to make changes to their reporting systems.

The new templates will differ in a number of ways. Firstly, there will be a single listed template rather than separate segregated mandate and pooled fund versions. Secondly, there will be an increased degree of detail, although the actual extent of that detail is still to be determined.

Accordingly, the board agreed that from the point of release of the IDWG templates, although new signatories to the code will be obliged to use them, existing signatories will benefit from a transition period of up to 12 months.

Beyond the introduction of new templates, both the board and the IDWG will continue to face two important challenges. The first is to ensure LGPS committees and institutional trustees are able to make best use of the increased knowledge available to them.

The other, perhaps more daunting, challenge is to ensure that increased transparency is not mistaken by scheme stakeholders, the press and industry commentators for an increase in costs. It would be a shame if, in exposing costs in order to better manage them, we miss the opportunity to promote a better understanding of the mutually-beneficial relationship between asset owners and managers.

Jeff Houston is head of pensions at the Local Government Association.

 

Share

You may also like...

  • MBA develops ESG bond framework 28 Jan, 2021
  • Country data, trade and deflation Country data, trade and deflation 30 Jul, 2012
  • 2021: Better income outcomes? 14 Dec, 2020
  • LGPS, fossil fuels and the divestment question LGPS, fossil fuels and the divestment question 17 Oct, 2016

Leave a Reply Cancel reply

You must be logged in to post a comment.

  • Register to become a Room151 user

  • Latest tweets

    Room151 14 hours ago

    Impact Awards: Liverpool’s cafe culture and Warrington’s investment in homes: The CCLA/Room151 Impact Awards showcase  finance teams with a direct impact on their local communities and the environment. This week we spotlight Liverpool City Council’s… dlvr.it/RxJsKb pic.twitter.com/dEYpaz6HP0

    Room151 17 hours ago

    Doing something in #localgov #finance for housing or regeneration? Check out the 'Place Shaping' category room151.co.uk/impact-awards/… sponsored by @31tenConsulting in the CCLA/Room151 Impact Awards. #timetoenter !! pic.twitter.com/dU99vE6Wws

    Room151 1 day ago

    Doing something in #localgov #finance for Adult Social Care & Health? Check out the ASC&H category room151.co.uk/impact-awards/… sponsored by Fundamentum Social Housing REIT in the CCLA/Room151 Impact Awards. #timetoenter !!

    Room151 2 days ago

    Doing something in #localgov #finance for the environment? Check out the 'carbon management' category room151.co.uk/impact-awards/… sponsored by @ACSLLP in the CCLA/Room151 Impact Awards. #timetoenter !!

    Room151 2 days ago

    So what are the seven categories for the CCLA/Room151 Impact Awards? Here they are room151.co.uk/impact-awards/… #localgov #finance #outcomes

    Room151 2 days ago

    Why should LGPS be concerned about rising inflation?: The impact of the coronavirus pandemic, lockdown and wider economic uncertainty created  deflationary pressures which raise important considerations for the Local Government Pension Scheme writes… dlvr.it/RxF7Fs pic.twitter.com/JlcjROBIpz

    Room151 2 days ago

    JOB ALERT: LPFA Finance Director vacancy: London Pensions Fund Authority Finance Director and s151 Officer Competitive salary and benefits The largest Local Government Pension (LGPS) provider in London with around £6.5 billion of assets and 135[...] dlvr.it/RxBdJP

    Room151 3 days ago

    Richard Harbord: Further signs that local government finance is failing: The crisis in Liverpool and a fix for education budgets are further indication that local government finance is in need of a root and branch review. Even for those students[...] dlvr.it/Rx9PSV pic.twitter.com/sAanC2gEyu

    Room151 1 week ago

    Impact Awards: Finance helps launch school meals company and support business during lockdown: The CCLA/Room151 Impact Awards will showcase the way finance teams have a direct impact on their local communities and the environment. This week we spotlight… dlvr.it/RwnlF4 pic.twitter.com/AJhne1MVG4

    Room151 1 week ago

    "This work has made a vital, practical contribution to ensuring people have been supported through the pandemic." #impact #151awards #covid #s151 room151.co.uk/treasury/impac… #impactcasestudies #councilfinancemakesadifference

    Room151 2 weeks ago

    room151.co.uk/impact-awards/ #passiton #localgov #s151 #151awards pic.twitter.com/A0uO0dwBkM

    Room151 2 weeks ago

    Financial pressures loom for 2023 and beyond: Kate Ogden writes the government has addressed most of the short-term Covid-19 financial pressures facing English councils, but problems loom in 2022-23 and the years following. As we enter the[...] dlvr.it/RwfDsz pic.twitter.com/hpv2R09w75

    Room151 2 weeks ago

    Calling all #localgov finance officers and #s151s room151.co.uk/impact-awards/ It's the #151Awards Thanks to the @LGALocalism for helping us get the word out along with all the LA treasury societies. pic.twitter.com/Nkal9BrH1J

  • Categories

    • 151 News
    • Agent 151
    • Blogs
    • Chris Buss
    • Cllr John Clancy
    • Dan Bates
    • David Crum
    • David Green
    • Development
    • Forum
    • Funding
    • Graham Liddell
    • Ian O'Donnell
    • Interviews
    • Jackie Shute
    • James Bevan
    • Jobs
    • LGPSi
    • Mark Finnegan
    • Recent Posts
    • Resources
    • Richard Harbord
    • Stephen Fitzgerald
    • Stephen Sheen
    • Steve Bishop
    • Technical
    • Treasury
    • Uncategorized
  • Archives

    • 2021
    • 2020
    • 2019
    • 2018
    • 2017
    • 2016
    • 2015
    • 2014
    • 2013
    • 2012
    • 2011
  • Previous story Karen Shackleton: The cost conundrum of active managers
  • Next story LGPS Q&A: Chris Rule of Local Pensions Partnership on housing and regeneration

© Copyright 2021 Room 151. Typegrid Theme by WPBandit.