Agenda item

A report of the Interim Director of Finance was presented, the purpose of which was to:

•           Advise the Members of the Teesside Pension Board (the Board) of an       ongoing government consultation: “Local Government Pension Scheme   (England and Wales): Next steps on investments” which set out a proposed      direction of travel in relation to investment pooling on the Local Government             Pension Scheme (LGPS).

•           Explain the process being followed in relation to the Pension Fund and Border      to Coast Pensions Partnership (‘Border to Coast’) responding to the     consultation.

•           Outline the main points the Pension Fund was likely to make in response to          the consultation.

Border to Coast, together with its Partner Funds, had been working to develop a joint response to the consultation, which was being drafted at the time of writing this report.  Alongside this joint response, which it was expected all Partner Funds would be able to sign up to, each Partner Fund would also be submitting a response to government.  These individual responses might emphasise particular aspects or cover areas of special concern to each Fund but were not expected to contradict the general collective approach being developed by all the pool participants.  A response from the Teesside Fund would be presented to the Pension Fund Committee on 27 September for comments and approval.

Much of what the Government was proposing was in line with the approach to pooling that had already been adopted by Border to Coast and its Partner Funds.

Questions from the consultation together with some summary comments on collective response that was likely to be given from Border to Coast and its Partner Funds were set out at paragraph 5.3 of the submitted report.

Areas the Teesside Fund was likely to emphasise in its own response to the consultation included:

•           Re-iterating resistance to the Government’s continuing attempts to direct Funds as to how to allocate their assets. The 2015 consultation started with a drive to use LGPS Funds to pay for UK infrastructure projects, the latest iteration looks to leverage LGPS assets to help pay for the Government’s ‘levelling-up’ agenda.

•           Caution around the drive to invest in private assets – although private market performance had been very good over recent years, past performance was no guarantee of future outcomes, and with an era of ‘cheap money’ seemingly coming to an end there was a risk Funds could be directed inappropriately into illiquid investments that might not deliver expected outcomes.

•           The consultation suggested the ‘deadline’ for the transfer of non-listed assets into Funds could easily be 31 March 2025 as well. In fact, there were significant barriers associated with transferring these assets. One in particular the Government could alleviate, would be to allow the transfer of property assets from a Fund to a Pool without incurring stamp duty.

The consultation period would end on 2 October 2023.  The expectation was that the Government might either announce the outcome of the consultation or give a strong steer as to its likely announcement in the Autumn Statement (expected to be in November).  The Board would be kept up to date with future developments on the guidance and/or regulations relating to LGPS investment pooling.

A Board Member commented that the Fund’s assets should not be used to implement central government policy objectives and suggested that this view should be worded as strongly as possible in Teesside’s consultation response.

AGREED that the information provided was received and noted.