Agenda item

The Head of Pensions Governance and Investments presented a report to provide Members of the Teesside Pension Board (the Board) with an update on current issues affecting the Pension Fund locally or the Local Government Pension Scheme (LGPS) in general.

The following issues were highlighted:

LGPS and Levelling Up

Since this issue was last reported to the Board, the Fund, along with other LGPS Funds and pooling companies (including Border to Coast) had been trying to obtain further detail in relation to these plans.   As yet, nothing was confirmed but the current expectation was that the Government would not be expecting LGPS Funds to report on investments made within their specific local area, but was looking to leverage LGPS assets to invest further in projects across the UK (or possibly across England and Wales) – primarily infrastructure but possibly private equity investments as well.  Further updates would be provided when available.

Scheme Advisory Board Annual Report 2021/2022

The Scheme Advisory Board (SAB) published its ninth Annual Report for the Local Government Pension Scheme (LGPS) in England and Wales recently.  The report could be found on the SAB website at the following link: https://lgpsboard.org/index.php/foreword-2021

The report emphasised that the LGPS is one of the largest defined benefit (DB) schemes in the world and was the largest DB scheme in England and Wales, with 14,448 active employers, 6.2m members and assets of £342bn.

Key highlights for the LGPS were listed as follows:

• Total membership of the LGPS grew by 66,624 (1.08%) to 6.226 m members in 2021 from 6.160 m in 2020.
• The total assets of the LGPS increased to £342bn (a change of 23.4%). These assets were invested in pooled investment vehicles (66.2%), public equities (13.4%) bonds (4.6%), direct property (2.3%), as well as other asset classes (8.7%).
• The Local Authority net return on investment over 2020/21 was 20.56%. This was reflective of the market conditions during the year and set against the UK equities return of 30%.
• The scheme maintained a positive cash-flow position overall, including investment income.

• Over 1.8m pensioners were paid over the year.
• CoViD-19 significantly impacted life expectancy - with a drop of 0.9 years and 0.5 years for males and females respectively (2019 figures v 2020).
• Total management charges increased by £196m (+12.9%) from £1,517m. This was primarily driven by a £193m (14.9%) rise in investment management charges, while administration and oversight and governance costs remained broadly stable.

The main activity for the SAB during the year ending 31 March 2021 was listed as dealing with issues relating to the McCloud discrimination case, the good governance project, the government's introduction of the £95k exit payment cap (subsequently removed) and responsible investment guidance.  In addition, the SAB directed a large part of its resources to responding to the Covid-19 crisis and supporting the sector through that and the ensuing changes in ways of working.

LGPS On-Line Learning Academy

The Fund has recently purchased Hymans Robertson’s LGPS On-Line Learning Academy and has ensured that every Pension Fund Committee and Teesside Pension Board member had access to it.  The Learning Academy provided a suite of short training videos explaining different aspects of the pension scheme, covering administration, governance and investments as well as current pension issues such as measuring the carbon exposure of the Fund’s investments and other responsible investment issues.  It was intended to cover all of the knowledge and understanding requirements that Pension Board members were legally required to obtain.  

There were a lot of topics covered within the Learning Academy it was recommended that Board Members set aside some time each week to work through them at their own pace.  There were short quizzes included to ensure the training was effective, and certificates were available for completion of different sections.

Appendix A to the submitted report contained a few introductory slides showing what Members could expect from the Leaning Academy.   Members were requested to provide feedback at any point in relation to the product.

AGREED that the information provided was received and noted.