Joe Dabrowski, Head of Governance & Investment at PLSA
For most people, the Cotswolds conjures up glorious scenery and golden stone buildings but for those of us in the local authority world, it is also notable as the location for the annual Pensions and Lifetime Savings Association (PLSA) Local Authority Conference. Held at the De Vere Cotswold Water Park Hotel between the 15th and 18th of May, this year’s conference brought together almost 400 people representing local authorities, membership organisations, regulators, product providers and investment specialists.
Entitled “Global Forces, Local Solutions”, the event kicked off on Monday, 15th May with a Local Pension Boards Networking Lunch which allowed selected delegates to share experiences from their different funds and discuss key priorities for the year going forward. With the most recent cycle of triennial valuations complete, employer contributions certified and cost management processes underway, Hymans Robertson then hosted an interesting session in the Learning Zone which examined affordability and considered improvements to asset allocation.
Other well-received sessions on the Monday included Capital’s look at how LGPS investors can capture the big trends reshaping our world, and Kempen’s views on why pools should consider investing in real estate and small-caps. The conference officially opened on the Tuesday with a welcome from Graham Vidler (Director of External Affairs at the PLSA) and a look at the year ahead from Councillor Roger Phillips, Chair of the Scheme Advisory Board in England and Wales.
His frank overview of the key issues for the Scheme Advisory Board was well received by the audience as was his announcement of the introduction of a new transparency code for Local Authority Pension Schemes (LAPS). The voluntary code has received a good response post launch from stakeholders, and continues the drive of the Board and the LGPS to improve cost transparency. In his remarks, Councillor Philips said that he believed that local authorities have a duty to provide a scheme that is fit for purpose and well managed and that a strong evidence base was needed to ensure that people do not misrepresent our schemes. He was also hopeful that the UK’s financial regulator would take into account funds’ concerns when finalising the status of LGPS funds as part of the implementation of the Markets in Financial Instruments Directive (MiFID II).
In addition, he called on LAPS to improve data standards. Data quality can be a challenge for all pension schemes and the PLSA partnered with Equiniti to develop a Made Simple guide – launched at the conference – which looks to provide LAPS with insight into the drivers for good quality data. Another popular Made Simple guide – looking at factor investing and sponsored by Robeco – was also launched at the conference.
Representatives from NEST, The Environment Agency and Capita shared their views on how pension managers could better communicate to members and engage with their employers at the following session. This point was colourfully and memorably illustrated by Dawn Turner from the Environmental Agency, whose presentation incorporated a variety of trainers, boots and wellies to highlight just how different members can be, and also how segmenting communications can help people engage with their pensions and their future. The presentation also captured the value of new technology and how schemes can use it to redesign benefits statements and engage with members.
Governance outcomes, fixed income in a rising rate environment and making inroads on cost transparency were covered in three concurrent events. Chaired by Graham Vidler, the cost transparency session was particularly popular with all three speakers – Jason Fletcher (West Midlands Pension Fund), Imran Razvi (Investment Association) and Dr Chris Sier (Newcastle University Business School) – providing authoritative and engaging content on this very topical and important subject.
Over lunch, there was a special briefing on the pensions dashboard featuring input from the Association of British Insurers (ABI) and the PLSA. Both organisations have been involved in the development of the prototype dashboard and were eager to share their views with local authority members.
Post dessert, I chaired the first afternoon session which looked at the future of academies and other bodies in the LGPS. We looked specifically at the work the Scheme Advisory Board has done on the future of academies in the LGPS has shone a light on the wider issues of admitted bodies and scheduled bodies which has seen significant change over recent years. Key influencers in this arena – Jeff Houston (Local Government Association), Neil Mason (Surrey County Council) and Mark Packham (PwC) – spoke about the report and next steps, as well as the impact on funds day to day experience.
The three concurrent sessions that followed – Meet the Pensions Regulator, Understanding MIFID II and Which Return Premiums Should Pools be Chasing – tackled sticky issues which keep pension managers up and night and allowed delegates to learn from each other’s experiences. Then, Lesley Williams (Chair of the PLSA and Director of Pensions at Whitbread Group Plc) led a discussion on the next steps for scheme funding. Political journalist and broadcaster – Isabel Oakeshott – then joined her to look at what forces drove the UK to leave the European Union in a session dubbed by one attendee as providing “wonderful insights”. A jam-packed day at this fast-paced conference was rounded off with the Gala Dinner hosted by television producer and writer – John Lloyd.
It was a wet Wednesday morning in the Cotswolds when I chaired an insightful session on the Governance Premium which looked at how to turn this sometimes elusive premium into tangible results. Lesley Williams, Fiona Frobisher (The Pensions Regulator), Steve Simkins (KPMG) and Clare Scott (Lothian Pension Fund) made this session a lively and interesting debate. As part of this discussion, Fiona Frobisher highlighted some of the Regulator’s key concerns and the scope for improvement – specifically the fact that 83% of local authority schemes are reviewing their data, but of these, only 23% of them have improvement plans.
Neil Williams (Group Chief Economist at Hermes Investment Management) then joined me to look at what the next two years will bring for the macro-economy and markets – a tough job in these uncertain times. The very popular, Lord Hutton (former chair of the Independent Public Service Pensions Commission) provided the penultimate session with a strong reminder of the very positive impact the LPGS delivers to its members, and the difference the average c. £4,000 per annum pension makes to their retirement.
At last year’s conference, the prevailing wisdom was that – irrespective of how you might personally feel – the UK was likely to stay in the European Union and we would see a second Clinton in the White House. So the final session – dubbed as one of the most thought provoking of the conference – was particularly apt. Tim Harford (Financial Times Columnist, BBC Broadcaster and author) closed the conference by looking at how local authorities could embrace resilience, creativity and avoid group think.
And so ended another busy Local Authority Conference which was designed to engage, challenge and inform attendees.
See you again next year!