To receive a presentation and update from Mike Weston.

50.1  A presentation was given by Mike Weston, Chief Executive and Callum Campbell, Head of Client Services for LGPS Central (copy of slides attached to signed Minutes) which covered the following areas:

·           Introduction

·           Our Shared Objectives

·           Progress to Date

·           Key Performance Indicators

·           Governance and Oversight

·           Responsible Investment and Engagement

·           Our People

·           How we communicate

50.2  The Chairman informed the Chief Executive and Head of Client Services that some concern had been raised at the Pensions Board Chairs meeting that the payback was not going to materialise in the timeframe promised and that the amount expected back was not as much.  The Chief Executive explained that he had been in discussions with the Local Authorities concerned and explained about the benefits and economies of scale coming from investments and the more you invest, the more you save.  He informed the Board that different funds were more involved than others so it was difficult to predict more accurately. 

50.3  In response to a query, the Chief Executive explained that they chose managers who they felt would perform best before discussing price.  He informed the meeting that the eight partner funds did challenge those decisions about how managers and advisers were chosen as they were aware that they did not have the monopoly on experience so did take advice from partner funds who brought a different angle to the recruitment process.

50.4  The Chief Executive went on to explain that strategic asset allocation remained the prerogative of the Pension Funds themselves and that was where advisers could add significant value in order to advise the Central fund before asset classes were chosen.

50.5  A question was raised about what the ‘Business as usual’ timescale was.  The Chief Executive confirmed this would be when the bulk of transitions into the Central fund had happened.  It was suggested that 2020 was a very aggressive timescale and difficult to achieve. 

50.6  In response to a query it was confirmed that residual assets would remain with partner funds.  The Director of Finance, Governance and Assurance (Section 151 Officer) responded to a query in relation to residual assets and felt the only issue would be if other funds wanted to go in a certain direction that did not fit with Shropshire’s requirement.  The Head of Treasury and Pensions informed the Board that Shropshire was quite different to some of the other funds as it was towards 100% funded and had invested in certain asset classes specific to Shropshire.  In response to a query, the Head of Treasury and Pensions confirmed that the decision about which asset classes to invest in remained with the individual Pensions Committees.

50.6  A brief discussion ensued in relation to the ability to withdraw funds from the Central pool if, for example, Shropshire wished to put more funds into an asset class not supported by the Central fund.  This could, in theory, be achieved, however it was hoped that in this instance something mutually beneficial could be found.  Discussion then turned to the collation and monitoring of investments which would be undertaken by the Scheme Advisory Board.

50.7  The Head of Treasury and Pensions confirmed that a response to the CIPFA Pooling Guidance Consultation had been done on behalf of the Shropshire County Pension Fund.  The Chief Executive informed the Board that the LGPS Central Annual Report for the year end to March 2019 would be published late May/early June.

50.8  In response to a query, the Chief Executive explained how the audit process worked and the Head of Treasury and Pensions assured the Board that officers were happy with the arrangements.  The Chief Executive went on to talk about responsible investment and informed the Board that there was a specific responsible investment team within the Central fund with a bespoke strategy of engaging rather than excluding in order to influence change.  He then took Board Members through their approach to Governance and Oversight.

50.9  The Head of Client Services informed the Board of the various methods of communication with Partner Funds through the Practitioner Advisory Forum and various sub-groups, publications, conferences etc which he felt was a very important part of their job.  In relation to interaction with other pools, the Chief Executive highlighted the Cross Pool Working Groups attended by five other pools and the Head of Treasury and Pensions reported that there was an officer Cross Pool Working Group also.

50.10In conclusion, Members thanked the Chief Executive and Head of Client Services for their attendance which they had found to be very useful and hoped that they would engage with the Pensions Board on a regular basis.