Agenda item

The Group Manager for Funding, Investment & Risk will provide the Board with a verbal update on this item.

The Group Manager for Funding, Investment & Risk addressed the Board. The following points were raised in her update to them.

Consultation on LGPS reform

·  The Fund issued its response to the consultation by the 16^th January deadline. Pools had to issue their response to the proposals by 1^st March. No further response has yet been received from the Government / Treasury department.

Pooling – reforming the pools

·  AAs to fully delegate implementation of investment strategy to, and take principal investment advice from, the pool.

·  All pools to be regulated by FCA – Brunel already are.

·  All legacy assets to be transferred to the pools.

UK Investment – in localities and regions

·  Set target allocation to local investment with input from other local authorities/bodies to agree priorities and identify opportunities.

·  Record of local investments to be included in annual reports and ISS.

Governance – strengthening governance of LGPS funds and pools

·  Builds on many of the recommendations of SAB’s Good Governance review.

·  Further requirements around transparency and reporting, and board membership of pools.

Proposals and impact on APF

·  Strategic asset allocation: APF sets high level investment objectives & allocate in line with defined set of asset ‘buckets’. Brunel allocates to their portfolios to meet the objectives set by the APF. Risk Management strategy is more complex and need to discuss with Brunel how this will be managed.

·  Primary advice: Brunel is primary strategic advisor. APF can take independent strategic advice to set high level objectives.

·  Cash: Brunel to manage investment balances. APF to manage Treasury cash (used for day-to-day banking). Possible area of tension due to liquidity needs.

·  Governance: With change in responsibilities, pool governance will be adapted; may have implications for APF governance arrangements.

Current activity

Brunel & Clients

·  Identifying potential changes and workstreams

·  Identifying impact on governance arrangements

·  Need Pensions Bill to be laid before commit to extra budget/spend

APF

·  Closely involved in Client group discussions

·  Take issues for consideration to Panel (changes to strategy implementation) or Committee (strategic / governance changes) as necessary.

Alison Wyatt asked about Brunel’s capacity to undertake these new proposals.

The Group Manager for Funding, Investment & Risk replied that they would likely have to buy in the advisory role and build out that capacity. She added that they will also have to increase their Investment and Operational teams.

She stated that it was also important that they maintain the investment stream with regard to the Local Impact portfolio.

Jon Evans asked if there would be any duplication of roles between Brunel and the APF.

The Group Manager for Funding, Investment & Risk replied that officers would still be required to hold Brunel to account and were likely to become more involved in the ‘local’ work. She added that they would also act as conduit to other parties.

She said that Brunel will need to resource impact reporting and that she expected a closer partnership in terms of strategies.

Jon Evans asked if a project manager was required to oversee theses forthcoming changes.

The Group Manager for Funding, Investment & Risk replied that Brunel have already appointed a project manager.

The Board RESOLVED to note the update that had been provided.