Agenda item

Investment Pooling update

[To provide an update on progress and to ratify decisions to move with LGPS Central]


Geik Drever, Strategic Director of Pensions delivered a detailed presentation on progress regarding the pooling of investments in the Local Government Pension Scheme (LGPS). In doing so she asked the Committee to ratify the decisions to use a Financial Conduct Authority (FCA) regulated authorised structure for the LGPS Central investment pool and to create / build an operator and to agree the business case for the LGPS Central investment pool for the Department for Communities and Local Government (DCLG) submission on investment pooling required by 15 July 2016.


During the ensuing discussion Cllr Angela Sandison asked about the advantages to the West Midlands Pension Fund (the Fund) of joining a large investment pool given that the Fund was already large in its own right and that there was a limit to the economies of scale that could be achieved.  She also noted that under the proposed governance arrangements for LGPS Central investment pool, every partner Fund (eight in total, the WMPF and WMITA Pension Funds are counted as one Fund) would have one vote each even though the West Midlands Pensions Fund was a third of the value of the investment pool. The Strategic Director of Pensions reported that it had been agreed that each partner of LGPS Central would have a single vote.  The Strategic Director went on to explain some of the benefits and efficiencies that could be gained from being in a larger investment pool.   It was also reported that the Fund had no choice in joining an investment pool as it was a Government mandate.  If the Fund did not join an investment pool the Government would pool the Fund with another investment pool.


Cllr Angela Sandison also commented on investing in infrastructure and indicated that she did not feel that social housing would be a right area for LGPS Central to invest in on behalf of scheme members.  The Strategic Director of Pensions advised that a definition of ‘infrastructure’ had been sought from Government who had said that it is up the investment pools to determine what to invest in within the asset classes.  


Malcolm Cantello, Unison asked if all the Fund’s assets are transferred to the LGPS Central what would happen to the Fund’s staff and would the Pensions Committee manage anything.  He expressed concern that a new bureaucracy was being created under investment pooling.  The Strategic Director of Pensions advised that under the Transfer of Undertakings (Protection of Employment) Regulations 1981, the staff within the Fund’s internal management team would move if their roles moved to the investment pool. The Strategic Director also responded to a question on the location for LGPS Central and informed the Committee that two locations for the Pool had been agreed, a headquarters and a satellite office.


In response to further questions from Cllr Tersaim Singh and Malcolm Cantello, Unison, the Strategic Director of Pensions also reported on the forecast breakeven point for LGPS Central and on the Funds contribution to the shared costs for LGPS Central and how the figure had been arrived at.



1.     That the decision to use an FCA regulated authorised structure for the LGPS Central investment pool be ratified.


2.     That the decision to create and build an operator for the LGPS Central investment pool be ratified.


3.     That the business case, including all annexes and draft budget for set-up costs, for the LGPS Central investment pool be approved.