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

Room 151

  • 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

Minister calls on LGPS pools to channel more investment into housing

0
  • by Colin Marrs
  • in 151 News · Development · LGPSi
  • — 23 May, 2018

Rishi Sunak. Photo (cropped) Conservatives, Flickr, CC

Local government minister Rishi Sunak has encouraged Local Government Pension Scheme (LGPS) pools to increase their investment in housing.

Speaking at the Pensions and Lifetime Savings Association (PLSA) local government conference, Sunak singled out the private rented sector as an opportunity to provide long-term returns whilst helping solve the housing crisis.

He pointed to the example of Greater Manchester Pension Fund’s Matrix Homes partnership with Manchester City Council and Homes England, which is already investing in the sector.

Sunak said: “Housing in general is a government priority for the country. We all know we need to build more homes. It is widely accepted that our housing market isn’t working as well as we would like it to.”

He added that there is a need to “deploy” more capital to build homes in the private rented sector.

“If that works for all of you, great,” said Sunak. “It supports society’s needs but, first and foremost, it is about what works for you, and what works for your funds, and what is going to deliver for the people you have to deliver for.”

Sunak said that he would not set central targets for the sums that pools should be looking to invest.

He also reiterated that it was not for government to dictate the amount of overall infrastructure investment pools should make, whilst urging them to do more in this asset class.

“The LGPS is one of largest pension schemes, not just in Europe but in the world, but does not yet punch its weight in this area,” he said.

Although pools have set targets for infrastructure investment of 5–10% of assets in the long term, this is still below some international comparators, the minister said.

“Nevertheless, I don’t want to set arbitrary targets for investment. Investment strategies should always be set to deliver the income to pay pensions.

“The LGPS primarily exists for this purpose and we should never lose sight of that. But it can also look to maximise the wider benefit of its investments.”

Speaking after the minister, Roger Phillips, chair of the LGPS Advisory Board, warned that there were limits to the volume of housing investment that LGPS would be able to provide.

“We are not housing associations. A housing association has a very clear mandate. It invests in housing, it gets income and it reinvests it. We are not the same,” he said.

“We need to be clear about what those packages are. Particularly on infrastructure as well. Some time ago there was this idea that on 1 April the pools would start and there would be infrastructure schemes shouting at the door. I think history will recall it will be a small burn.”

Phillips said that placing money in housing and infrastructure should only be undertaken if funds and pools understand it properly and it is investment they “genuinely want to do”.

He said: “We are one of the largest pension schemes in the UK and some of the lowest paid members of the public sector. They deserve a decent retirement and it is our responsibility. And sometimes we forget in the hurly burly of the investment world that that is what we are there for.”

During his speech, Sunak said that his department was looking to improve the quality of data held by LGPS funds.

He said: “I recognise that the complexity of the scheme including the large number of employers and the introduction of the career average scheme have greatly increased the challenge for funds in this area.

“The Government Actuary’s Department was concerned with the quality of data they were provided with by funds in their 2016 valuation – and poor data means less ability to manage risk and may mean that employers pay out more funds to protect themselves against a worst case scenario.”

The minister also announced that his department will consult later in the year about improvements to arrangements for the transfer of pension responsibilities when councils outsource services to third party providers.

He said: “I want to improve the way mergers and transfers are handled, and I also intend to reform the operation of the fair deal policy so it works in a fairer more cost effective and administratively efficient manner.”

In a recent Room151 interview, Chris Rule, chief investment officer of the Local Pensions Partnership, spoke about an increased activity in UK housing investment within the pool’s real estate portfolio.

He said: “I think the short hand is, we are going to have to build more in this country if we are going to have enough houses. For us, as an institutional investor, we want to invest in diversified portfolios and while housing isn’t without its challenges, it’s attractive for many reasons.”

Notably, the long-term income-generating and liability-matching characteristics of housing investments are seen as attractive for pensions and annuity players.

Get the Room151 Newsletter

Share

You may also like...

  • Councils have ‘moral duty’ to preserve spending power through investment, says GLA investment chief Councils have ‘moral duty’ to preserve spending power through investment, says GLA investment chief 27 Sep, 2018
  • News round-up: PWLB borrowing drops, Brexit threatens rating, abolition call for LA taxes, housing association strategies News round-up: PWLB borrowing drops, Brexit threatens rating, abolition call for LA taxes, housing association strategies 3 Nov, 2016
  • What’s going on in equities? What’s going on in equities? 21 Sep, 2012
  • News round-up: Record low for 10-year gilts, Bond agency banks, Croydon’s 1,000 homes, London CIV award, shared service deal News round-up: Record low for 10-year gilts, Bond agency banks, Croydon’s 1,000 homes, London CIV award, shared service deal 9 Jun, 2016

Leave a Reply Cancel reply

You must be logged in to post a comment.

  • Register to become a Room151 user

  • Latest tweets

    Room151 4 hours ago

    Budget 2021: A missed opportunity while bidding could prove a strain: The chancellor delivered the budget this week giving councils the opportunity to bid for funds but offering no resolution to long-term issues such as business rates retention, adult… dlvr.it/Rv2llw pic.twitter.com/8RwHboQAnL

    Room151 1 day ago

    ESG presents LGPS with investment innovation opportunities: Sponsored interview: Dawn Turner of Quinbrook talks about the opportunities in environmental, social and governance issues for LGPS. LGPS has the opportunity to innovate in its investment… dlvr.it/RtyK3Y pic.twitter.com/swAksOAXYQ

    Room151 1 day ago

    The opportunity in the UK renewables and grid support market as UK looks to ‘build back better’: Sponsored article: Mark Burrows and Rosalind Smith-Maxwell examine infrastructure opportunities emerging from efforts to meet the UK’s net zero target.… dlvr.it/RtyJyz pic.twitter.com/BQCYQZQpi2

    Room151 1 day ago

    McCloud consultation ends with “greater security” for LGPS members: The government’s consultation on LGPS, Catherine McFadyen argues, closes with a decision which avoids forcing members to make choices that could be “financially disadvantageous”. But… dlvr.it/RtxhL6

    Room151 2 days ago

    Could 2021 be less eventful for LGPS, please?: Barry McKay looks at McCloud, the 95k exit cap, employer risk and investments to see what to expect for LGPS in the coming year. On one hand, 2020 was in[...] dlvr.it/RtslFd pic.twitter.com/H4debuPmGG

    Room151 2 days ago

    Fixed income investing can help target both financial and sustainability targets: Sponsored article: Adam Whiteley offers a guide to the ESG benefits of investing in fixed income. Investing responsibly in fixed income can be crucial for local government… dlvr.it/Rtsl9h pic.twitter.com/khJL1xNfGh

    Room151 3 days ago

    Going beyond the standard metrics for climate change: Sponsored article: With climate change an investment imperative and an imminent reporting requirement, Ritesh Bamania argues UK pension schemes should look beyond today’s standard metrics. With… dlvr.it/RtnpLS pic.twitter.com/6ABaFHyS9I

    Room151 4 days ago

    LGPS webinar: Governance the key to TCFD implementation: LGPS funds have been warned that governance is it at the here of Whitehall plans to impose a new climate reporting regime on pension funds. In January the Department for[...] dlvr.it/RtjwNq pic.twitter.com/YMiMdmRyzU

    Room151 4 days ago

    LGPS webinar: Central bank management of bond purchasing could affect all asset classes: When the government debt caused by the pandemic is eventually tackled there may be a huge impact on assets of all classes, according to a leading investment expert… dlvr.it/RtjwJx pic.twitter.com/7v8K5vMYHo

    Room151 4 days ago

    #LGPS readers...what to do about #bonds? room151.co.uk/blogs/lgps-web… @BrunelPP 's new CIO, David Vickers tackles a problematic area #centralbanks #assetallocation #fixedincome pic.twitter.com/yUJr0azbKv

    Room151 5 days ago

    LGPS Challenges: Balancing Realpolitik and responsible investment: Elizabeth M. Carey warns of the perils of an ESG echo chamber as countries outside the West continue to invest in fossil fuels. Anyone working with the LGPS probably feels[...] dlvr.it/RtjMpq pic.twitter.com/MykIYxuYri

    Room151 1 week ago

    How can local government ‘build back better’?: Beverley Gower-Jones looks at the options for driving small business entrepreneurship in clean technologies. Innovation is essential for local authorities to save money and reduce emissions, it is the… dlvr.it/RtT3nS pic.twitter.com/bSMB6OG70t

    Room151 1 week ago

    Helen Randall: Spelthorne report places spotlight on ‘controls’: Fresh criticism of Spelthorne Council raises the question of what “good” controls look like when negotiating a property deal. Spelthorne Council’s continuing debacle over property… dlvr.it/RtSPhy pic.twitter.com/9uCOJgBcH6

    Room151 1 week ago

    Step-out strategies: Hitting the sweet spot between liquidity and ultra-short duration: Sponsored article: Jemma Clee describes how an ultra-short duration strategy can help local authorities enhance returns. Despite the expectation of a low, and… dlvr.it/RtSPZb pic.twitter.com/pdXPpv5lcN

  • 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 Clive Heaphy: My first 100 days as CFO at Birmingham City Council
  • Next story Conrad Hall: The lesson in backgammon for LOBO management

© Copyright 2021 Room 151. Typegrid Theme by WPBandit.