Agenda item

The purpose of this report is to update the Board on recent developments within the Local Government Pension Scheme (LGPS) regulatory environment and any recent consultations issued which would have a significant impact on the Fund.

John Smith (Pension Manager, Brent Council) introduced a report that updated the Board on recent developments within the Local Government Pension Scheme (LGPS) regulatory environment and any recent consultations issued which would have a significant impact on the Fund.  In terms of key updates, the following issues were highlighted:

·             The call for evidence published as part of the first phase of the recent pension review announced by the government, which had included consideration of measures to accelerate asset pooling and increasing Local Government Pension Scheme (LGPS) funds investment in ‘productive finance’.  The response submitted by the LGPS on behalf of the Local Government Association (LGA) had been attached as Appendix 3 to the report supplemented by a response from the Scheme Advisory Board (SAB) attached as Appendix 4 of the report.  The second stage of the review was expected to include consideration of pension adequacy, fairness and the consequences of the gender pensions gap.

Guidance had also been published regarding the LGPS fund account return with the information used to provide a benchmark on administration and fund management, compiling the national accounts and illustrate the role of the LGPS in the economy.

·             Publication of a report by the Government Actuary's Department (GAD) to the Ministry of Housing, Communities and Local Government (MHCLG) on the 2022 fund valuations, which had examined how fund valuations had delivered against the aims of compliance, consistency, solvency and long-term cost efficiency.  The analysis had found the LGPS to be in a strong financial position with many funds in surplus with GAD making recommendations for the Scheme Advisory Board to consider including whether greater consistency could be achieved to allow easier comparison between funds and to refine the climate change principles in advance of the future valuations.

·             In terms of more general updates, the Board were advised that the Government was considering extending the Fair Deal to local government including pension provision for councillors.  MHCLG had also signalled their intention to address discrimination by removing the age 75 limit on death grants and giving widower’s pensions parity with widow’s/same sex partners following the Goodwin ruling in the Teachers’ Pensions Scheme.  Moving on the Pension Dashboard the Pensions Regulator had now published its Pensions dashboards compliance and enforcement policy, in response to a consultation, and updated breach of law guidance. As a result, Brent would be reviewing its own policy with schemes expected to connect to the dashboard eco-system in line with the Department for Work & Pensions staged timetable designed to reduce delivery risk to industries and test software to ensure a successful launch.

The Chair thanked John Smith for the comprehensive update provided and then welcomed contributions from members, with comments raised summarised below:

·             Referring to reference within the August 2024 LGPC Bulletin (attached as Appendix 1 of the report) to the recent Government focus seeking to encourage UK pension schemes to invest more in the UK economy, further clarification was sought on the Canadian model cited as an example.  In response officers advised the Government’s interest was focussed on the potential for pension funds to boost investment on infrastructure within the UK based on an approach which had sought to pool the use of direct investments and management of assets between eight Canadian pension schemes (referred to as the Maple-8) in productive assets and vital infrastructure within the Canadian economy. Views were being sought on the approach as part of the recent call for evidence under the wider pension review with further specific details awaited from the Government and the Board recognising the advantages of the Funds well-diversified investment portfolio in reducing exposure to market volatility and risk.

·             In relation to the approach adopted towards the diversification of investment and focus on commercial property funds, further details were sought on any anticipated longer term impacts arising from the pandemic on that sector.  In response officers advised that it was common practice for most LGPS Funds in managing a broad and diversified portfolio of investments to include a commercial property allocation.  Whilst recognising the current challenges in terms of performance within the commercial property investment sector, members were assured that whilst Brent held investments in Commercial Property Fund Managers (with a suitable offer not currently available through the London CIV) the Funds exposure remained lower than many other schemes.

With no additional issues or comments raised, the Board welcomed the update provided and RESOLVED to note the overall report and recent developments outlined in relation to the LGPS.