• Home
  • About
  • Subscribe
  • LATIF
  • Conferences
  • Dashboard
  • Edit My Profile
  • Log In
  • Logout
  • Register
  • Edit this post

Room 151

  • 151 BRIEF

    What's New?

  • LGA calls for government support as regulators face staffing issues

    May 19, 2022

  • WMCA signs £4bn investment agreement with L&G

    May 18, 2022

  • Bill will give UK Infrastructure Bank power to lend directly to councils

    May 18, 2022

  • £400bn pension group collaborates on climate transition initiative

    May 17, 2022

  • CIPFA rejects proposal for vote on publication of fraud hub report

    May 17, 2022

  • John Turnbull elected president of the SLT

    May 12, 2022

  • 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
  • Briefs

Editor’s Blog: LGPS embarks upon its new journey

0
  • by Gavin Hinks
  • in LGPS
  • — 24 Jan, 2017

Open road. Photo: Larisa-K / Pixabay

Room151’s new LGPS Quarterly Briefing comes as local government pension funds stand on the cusp of radical change. Pooling, the project to consolidate all 89 LGPS funds into eight groups, giving them greater scale and potentially greater savings, is well under way for the 2018 deadline.


Subscribe to our LGPS Quarterly Briefing and be first to receive more content like this.


It wasn’t always this way. Progress had be no means been seamless since the September 2015 announcement by the then chancellor George Osborne that the structure of LGPS should be overhauled, as was to be expected with the interests of 90 odd pension funds at stake. But with the result of the EU referendum, and a new broom sweeping through the government, there was a sharp intake of breath; surely a government so preoccupied with Brexit would not have the energy to see home the relatively parochial ambition of consolidating local government pensions?

Commitments

Just days after the Brexit result, LGPS funds were warned to monitor their assets because volatility in the wake of the referendum could affect the performance of growth assets. Within a few short weeks the message changed and insiders were voicing serious concerns about the possibility of pooling being delayed. The fear in pools across the country was that with an already tight deadline, any Brexit-induced delay could cause a real threat to being ready on time.

The question on everybody’s mind was whether new chancellor, Philip Hammond, was as committed to pooling as George Osborne had been, or would his work on Brexit prove a major distraction?  As the day of Hammond’s first Autumn Statement approached in November, all anybody in LGPS wanted was clarity on the way forward.

The chancellor’s statement failed to offer reassurance but it wasn’t long before the direction of travel became clear. It seemed that amidst the flux and rumour, Marcus Jones MP, minister for local government, was plodding on with the job in hand, setting up meetings and checking on the pools’ progress. Just seven days after Hammond’s statement LGPS Central and Welsh Councils became the first two pools to receive the all-clear in writing from Jones and to move forward.

A month later and Border to Coast, the largest of the proposed pools with £36bn under management, also received a green light. Brunel Pensions Partnership and the London CIV were told they were cleared to continue this month. To date six of the eight proposed pools now have the go ahead, the most recent being Local Pensions Partnership.

Doubts

That’s not to say that pooling has been without controversy. There are those that have raised fears and highlighted unresolved issues. Some have even considered postponing the process entirely.

In July Hugh Grover, chief executive of the London CIV, warned that member funds would need to compromise over investment strategy, a reminder, perhaps, that administering authorities will inevitably see change to their relationship with funds.

Doubts also remain about the reasoning behind the entire project. In the first issue of the LGPS Quarterly Briefing Trevor Crossely, an LGPS consultant, argues that pooling is built on “flimsy policy analysis” and “false comparisons with foreign investment frameworks”. LGPS pooling remains nothing if not controversial.

Perhaps the biggest concern was the government’s aim of having pools invest in infrastructure developments. Administering authorities were obviously disturbed by this. Their position was that the funds had autonomy to make their own investment decisions without intervention from central government. The LGPS Advisory Board even called on Theresa May’s new government to clarify whether it intended to enforce infrastructure investment.

But the fears were allayed in a speech by the chancellor to much relief and infrastructure fears receded.

Asset allocation

Despite its ups and downs many are now looking forward at what they see as the big issue for administering authorities: asset allocation.

The issue is high up the list of priorities for Mike Jensen at Local Pensions Partnership who says allocation is the most important issue in pension fund management; regular Room151 contributor, and LGPS expert, John Harrison outlines four key factors underlying allocation; meanwhile Nick Vickers, head of financial services at Kent County Council and Toby Nangle at advisory firm Columbia Threadneedle share their allocation approaches.

And that is coupled with good news in the wind for LGPS. According to Barry McKay of Hymans Robertson, the soon to be published triennial valuations will show that LGPS is improving with material increases in funding ratios. One fund advised by Hymans is up by 7%.

LGPS is on a journey with everything that entails: discord over the route and continued disagreement over the destination. But the journey is incontrovertibly underway. The Brexit result presented an external threat to the project but the crisis many feared did not materialise. Most minds are now no longer distracted by the strategic decision, but on the detail of how it will work. Much is still to be resolved, and there will certainly be difficulties ahead. But LGPS management is set to change profoundly. About that there is no doubt.

Room151 Newsletters

Share

You may also like...

  • ‘Demand outpacing supply’ on green LGPS investments 24th Feb, 2022
  • How LGPS can help drive economic growth in local places 26th May, 2021
  • The risks of de-risking LGPS 12th Jul, 2021
  • The climate-impact: Why are green house gas emissions so important to LGPS? 21st Jul, 2021

Leave a Reply Cancel reply

You must be logged in to post a comment.

  • Register to become a Room151 user

  • Latest tweets

    Room151 18 hours ago

    Treasury to restrict PWLB loans to councils at risk of non-repayment: The Treasury has released new guidance that restricts local authorities’ access to Public Works Loan Board (PWLB) advances if there is a “more than negligible risk” of a council’s… dlvr.it/SQhLTV pic.twitter.com/vBsS7xMJdb

    Room151 18 hours ago

    Mixed reaction to proposed government intervention powers: There has been a mixed reaction to the government’s legislative plans to strengthen its intervention powers over local authority finances. The Levelling Up and Regeneration Bill has proposed… dlvr.it/SQhLMB pic.twitter.com/50foWxpPGs

    Room151 19 hours ago

    Post-Brexit struggles for national and local government regulators. @LGAcomms @NAOorguk Click the link below to read 🔻🔻 room151.co.uk/brief/lga-call… #Brexit #government pic.twitter.com/s3c8ySGy5G

    Room151 24 hours ago

    CIPFA: a question of transparency: Roman Haluszczak’s campaign for publication of the independent report into the collapse of CIPFA’s London Counter Fraud Hub has been rejected again by the institute. He is now calling for[...] dlvr.it/SQgC5V pic.twitter.com/08fWsHFF4g

    Room151 2 days ago

    Back to the future for the PWLB: The Public Works Loan Board is tightening its lending criteria to ensure that loans will be repaid by local government borrowers. But, asks Peter Findlay, shouldn’t they have been doing[...] dlvr.it/SQcmmm pic.twitter.com/bVv4fe0Xlv

    Room151 2 days ago

    Great piece from Peter Findlay on the PWLB’s tightening of its lending criteria. He raises some pointed questions for the Treasury and explains why the ‘casino council’ characterisation was simplistic and inaccurate. #PWLB #localgov room151.co.uk/treasury/back-…

    Room151 2 days ago

    The Queen's speech highlighted the need for accelerating UK infrastructure investment into levelling up projects and cutting emissions. @UKInfraBank #QueensSpeech #ClimateAction #emissions Click the link below to read 🔻🔻 room151.co.uk/brief/bill-wil… pic.twitter.com/hFmF2veVIa

    Room151 2 days ago

    Huge funding heading to the @WestMids_CA from @landg. @andy4wm #LevellingUp #netzero #regeneration Click the link below to read 🔻🔻 room151.co.uk/brief/wmca-sig… pic.twitter.com/ajhZhia6mx

    Room151 2 days ago

    LGPS governance, Cagney and Lacey style: What regulatory response can be expected following the publication of the Good Governance project’s Phase 3 report and the closure of the Single Code of Practice consultation? Susan Black offers[...] dlvr.it/SQbfXf pic.twitter.com/xwqHOEu2AP

    Room151 3 days ago

    More evidence of the importance of emerging markets in the journey to net-zero. @BordertoCoast @BrunelPP @northernlgps @EAPensionFund @WYPF_LGPS Click the link below to read 🔻🔻 #LGPS #NetZero #NetZeroCarbon #EmergingMarkets room151.co.uk/brief/400bn-pe… pic.twitter.com/qCm0EGxzLn

    Room151 1 week ago

    ‘Urgent consultation’ issued in response to continuing audit delays: CIPFA and the Local Authority Scotland Accounts Advisory Committee (LASAAC) have announced another “urgent consultation” to consider proposals to address the latest issue that has led… dlvr.it/SQJ0kV pic.twitter.com/s6vw0bnGXO

    Room151 1 week ago

    Bags of capacity – now to housing delivery: HRAs have been freed up and councils are starting to invest, but some remain cautious, writes Steve Partridge. He suggests that a minimum of £10bn of additional borrowing could be[...] dlvr.it/SQDvxk pic.twitter.com/yZmoWzHv6U

    Room151 1 week ago

    Bags of capacity – now to housing delivery room151.co.uk/treasury/bags-…

  • Categories

    • 151 News
    • Agent 151
    • Audit
    • Blogs
    • Business rates
    • Chris Buss
    • Cllr John Clancy
    • Council tax
    • Dan Bates
    • David Crum
    • David Green
    • Development
    • Education
    • Forum
    • Funding
    • Governance
    • Graham Liddell
    • Housing
    • Ian O'Donnell
    • Infrastructure
    • Interviews
    • Jackie Shute
    • James Bevan
    • Jobs
    • Levelling up
    • LGPS
    • Mark Finnegan
    • Net Zero
    • Private markets
    • Recent Posts
    • Regulation
    • Resources
    • Responsible investing
    • Richard Harbord
    • Risk management
    • Social care
    • Stephen Fitzgerald
    • Stephen Sheen
    • Steve Bishop
    • Technical
    • Transport
    • Treasury
    • Uncategorized
    • William Bourne
  • Archives

    • 2022
    • 2021
    • 2020
    • 2019
    • 2018
    • 2017
    • 2016
    • 2015
    • 2014
    • 2013
    • 2012
    • 2011
  • Previous story The improving financial health of the LGPS
  • Next story Investment outlook 2017: Decoupling and Donald Trump

© Copyright 2022 Room 151. Typegrid Theme by WPBandit.

0 shares