LGPS Central delivers investment management, stewardship and advisory services to eight partner funds across the central region with total assets of £64 billion, fostering the long-term growth and sustainability of their investments.
Fit for the Future
LGPS Central Limited (LGPSC) currently provides investment management and stewardship services for eight local authority pension funds. LGPSC welcomed the Fit for the Future proposals which set out the government’s ambitions for the next phase of LGPS pooling. By providing clarity and consistency, we believe that our Fit for the Future plan will enable us to deliver the full potential of pooling for our partner funds, accelerating the journey we were already on.
Building capability
LGPSC colleagues have extensive experience and expertise, with our workforce already including a number of qualified actuaries and former investment consultants. This institutional expertise provides a strong foundation with capability to design and deliver a high-quality offering.
These experienced staff already have roles within the organisation, of course, so LGPSC will need to meet additional resourcing requirements to fully resource itself as the principal investment adviser to partner funds.
Looking through the twin lenses of quality delivery and value for money, we will consider the appropriate balance between building capability in-house and utilisation of external partners. We believe that in the longer term, we will be able to craft our service around the needs of our partner funds as well as delivering the lowest cost solution by building in-house capability.
From a practical perspective, and to provide our partner funds with assurance, we will probably work with a number of third-party strategic partners in the shorter term as we build out resources and earn the trust of our partner funds in our capabilities and quality of output.
LGPSC becoming the principal source of advice on investment strategy
Partner funds will continue to be responsible for the final investment strategy decisions including specifying weightings to high-level strategic building blocks as well as setting individual responsible investment beliefs and local investment allocations. Our partner funds have a range of governance models, some working with independent advisers, some working with investment consultants and others with both. Decision making is delegated to officers and sub-committees to varying extents.
As we build our business plan, we are working alongside our partner funds and their existing advisers to observe the process they currently adopt in receiving and challenging advice. We will use the information gathered to ensure that we design an offering that is able to provide a tailored service to each partner fund going forward with minimum disruption to their existing processes. We know that one size will not fit all.
Engagement with partner funds
LGPSC and its partner funds worked closely together to develop our Fit for the Future plan through a process of regular consultation. We expect to continue this level of engagement as we develop our detailed business plans to implement each proposal. Whilst many of the anticipated requirements are already met by LGPSC, there is particular focus on new services and how these are best delivered.
Louis-Paul Hill gives the Investment Oversight & Strategy Manager’s take
As someone who has previously advised LGPS funds as well as working with private sector pension schemes who used fiduciary management, I can see the advantages of the pool giving advice, whilst understanding that not all partner funds are yet fully comfortable with all aspects of this proposal.
LGPSC’s focus on engaging with and listening to partner funds, as well as learning about industry best practices, gives me confidence that we can find a flexible solution that will work for everyone.
Further reading
Wiltshire Pension Fund chooses LGPS Central as preferred partner
What does it mean to invest locally?
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