At the recent NAPF Local Authority conference 2014 in the Cotswolds, the National Association of Pension Funds (NAPF) outlined its key principles for reform of the Local Government Pension Scheme (LGPS) to ensure it meets its goal of sustainable, affordable pensions in the long-term.
This was in response to the government’s consultation “Local Government Pension Scheme: Opportunities for collaboration, cost savings and efficiencies” – published 1 May 2014.
Speaking at the conference, NAPF Chief Executive, Joanne Segars, set out the NAPF’s principles for LGPS reform as follows:
1. The outcome of reform should focus on delivering good value for employers, taxpayers and scheme members to ensure the long-term sustainability of the fund, not just low cost.
2. The outcome of reform should acknowledge the benefits that can be delivered by developing new structures and solutions that leverage scale whilst also providing funds with sufficient flexibilities to invest in accordance with their local circumstances where that is shown to add value, including internal and active management approaches.
3. The governance of any investment structures must be aligned with the long-term interests of LGPS funds so as to continue to provide good long-term value.
Segars commented: “The principles I’ve set out are aimed at helping us collectively assess the success of reform and to guide us to a good outcome. Balancing these principles isn’t easy, I acknowledge, but that’s the challenge. The NAPF looks forward to working with Local Authority members to respond to the consultation and to shape the Government’s proposals.”
Report outlines the case for secondary property
Secondary property as an asset class is attracting more attention as a potential investment opportunity, according to a report published by the National Association of Pension Funds at the NAPF Local Authority conference 2014 in the Cotswolds.
The report is the latest in the series of Investment Insight reports, and looks at the relatively neglected secondary property market – which can be defined as UK commercial property situated in less prime areas – and looks at why pension funds might consider investing. It considers valuations, the asset characteristics and what trustees should consider before investing in this asset class.
Helen Roberts, Policy Lead: Investment, NAPF, said: “The flight to safety in recent years has led to substantial investment in UK high quality prime real estate assets, principally in London. Investors have, up to now, eschewed lower quality secondary properties but the tide is now turning with potential opportunities opening up for pension schemes to invest.”
“The reasons for looking at secondary property now include the historically large gap in yields between prime property and secondary property, an increased appetite for more illiquid assets against a backdrop of an improving economy and the forced selling, primarily by banks, currently seen in the market.”