Neil Mason: Football and pension funds – the need to identify core principles

I remember that fateful day back in 1981, when my Granddad suggested that I might want to go to watch my local football team.

I was nine, bright eyed and full of optimism, when I turned up to watch a team with a funny name (Queens Park Rangers) and a unique kit (blue and white hoops).

We got to the FA Cup Final that season and in the next two, were promoted to the first division and qualified for Europe.

It would be like this for ever. I loved my Granddad and I was the luckiest supporter in the world…

Roll forward to 2019 and since 1981 we’ve won nothing, not a sausage, and achieved very little.

And worse; QPR are an example of one of the worst run teams in the country.

Dilapidated stadium, under financial fair play sanctions and a woeful team.

In the last 10 seasons they’ve had 12 managers – whenever a new manager arrives there is fresh sense of optimism, and then, after a few defeats they are jettisoned and the whole process is repeated again, ad infinitum.

So apart from venting to a probably largely non QPR supporting audience, what relevance does this have to my job managing the Surrey Pension Fund?

QPR fail, because they don’t identify a set of core beliefs and principles, then work so that all of their plans, from the tea and coffee provision to stadium development and playing style, cascade from this set of principles.

I firmly believe that the same applies for pension funds.

At Surrey, we have recently been through a review of all we do: from administration and governance, to our funding and investment strategy.

We’ve hosted workshops with our pension fund committee and local board members to establish exactly what our core beliefs are, and to ensure they are an expression of our key stakeholders and that they are understood and agreed.

We then joined dots to our plans, across the many disciplines, to ensure these were consistent in delivering to our beliefs.

It’s something I think we do instinctively as part of our everyday activities, but, when had we last sat back and considered questions such as:

• What is the overriding objective of the Fund?
• What is our destination now, in five years and in 25 years?
• What is the investment philosophy that reflects this?
• Is our asset allocation consistent with this; do we have the right mix of growth and income, passive and active management?
• What risks do we accept as tolerable?
• What is our attitude to responsible investment, and is our investment strategy consistent with this?
• Does our investment strategy drive our funding strategy?
• How closely does it all align with the approach of our asset pool provider and fellow partner funds?
• And are the views of our elected members, consultants, advisors, actuaries and officers all represented in these core beliefs?

It has been a hugely rewarding process and has brought significant engagement and ownership from our elected members, who are after all, the decision makers.

It also encouraged officers, elected members and (dare I say) consultants and advisors to challenge themselves.

Furthermore, it chimes with how I view the LGPS pooling project.

Strategy is the job of councils at local level.

What the pools do is help us implement this strategy (hopefully more efficiently and effectively than we otherwise could).

Before I finish, I know many of you will be left wondering, do I resent my late Grandad for 1981?

Never, it could have been infinitely worse; he could have taken me to Chelsea!

Neil Mason is Strategic Finance Manager (Pensions) at Surrey County Council, he is also an independent member of the London Borough of Hounslow Local Pension Board and a member of the PLSA Policy Board