Should Kensington & Chelsea stay or should it go?

Following an investment committee meeting on the 9th of February, the Royal Borough of Kensington and Chelsea Pension Fund (RBKC) announced that it would further evaluate its position within London CIV and called an extraordinary meeting the 16th of March.

RBKC’s position within London CIV had long been in the spotlight and was seen to be a potential watershed moment for asset pooling within the LGPS.

Quentin Marshall, chair of the investment committee, had reportedly said that membership of the pool was a net cost for the fund as no relevant products had been identified that would satisfy its investment strategy. Marshall explained that the mismatch comes from the fund’s passive investment strategy, leading to lower management costs than if its assets were invested via London CIV’s actively-managed funds. The debate was therefore primarily around whether the pension fund would better fulfil its fiduciary duty by staying outside of the pooling arrangement.

The pension fund’s investment strategy statement reads: “The fund recognises the government’s wish for LGPS funds to pool their investments”. However, noted Cllr Marshall, there is no legal obligation to pool assets. Yet despite much conjecture across the LGPS sector, the £1.5 billion Fund announced (following the 16th of March meeting) that it had decided to stay with London CIV.

When asked, Cllr Marshall said, “Following some constructive conversations with the LCIV, the committee decided not to leave at this time. The new CEO of the LCIV is taking the business in an exciting new direction with a renewed focus on delivering value for shareholders. RBKC is aligned to this vision.”

According to Cllr Marshall, RBKC’s decision reflects the impact the new London CIV CEO Dean Bowden is having on its investment strategy and structure at time when leadership is needed most.