Agenda item

To receive and note the information. 

DECISION:

To accept and note the information

The Investment Manager highlighted that this was now a regular report that noted the latest information on the WPP's work. She drew attention to discussions at the September 2024 meeting of the Joint Committee which included information about the pooled budgets (Gwynedd was second highest with 85% pooled), the standard business plan and the risk register.

She referred to the Operator's update for the period and the market conditions that they were monitoring. It was reported that the funds' performance had varied, with the equity funds performing strongly while the fixed income funds had lagged over the quarter in question. She noted that the funds were long-term investments and that officers, together with Hymans Robertson advisers, assessed the performances over 3-month, 12 month and 3-year periods.

She added that Russell Investments, the Investments Manager also assessed the managers continually and would reduce, increase or eliminate payments to try to enhance the long-term performance of the sub-funds – she referred to an example of work that was currently being undertaken with the Global Growth sub-fund, which had underspent historically. She reported that Russell Investments had provided an update on the new Private Credit fund, with the Gwynedd Pension Fund having invested £29m in the fund with the aim of increasing this amount substantially over time.

Attention was drawn to two procurement exercises that had taken place recently (for an Oversight Advisor and a Voting and Engagement Service Provider). She noted that interviews had been conducted, and they intended to present a recommendation to the next joint-committee meeting.

In the context of the 'Call for Evidence' consultation where the Westminster Government was reviewing the pension schemes of the LGPS, the Manager highlighted the response of the Gwynedd Pension Fund. It was reported that the situation had now changed following the Chancellor of the Exchequer's Mansion House speech, and a further consultation had been announced calling for evidence, which was a rough indication of the route that the Westminster Government expected the LGPS to take. She reported that the new consultation looked at areas such as asset pooling, local and UK investment, and Governance – there were 30 questions to respond to by 16 January 2025.

The main messages of the consultation were that there was no change to local funds, such as the Gwynedd Pension Fund, but there was a requirement to consider merging funds, although not mandatory. She noted that there would be expected changes to the pools, such as the Wales Pensions Partnership in respect of Gwynedd, with the requirement for them to be registered with the FCA (Financial Conduct Authority), to have the capability to provide advice to the local funds, the requirement for strategic asset allocation to sit with the pool rather than at a local level as is currently did, the requirement for 100% of assets to be pooled, and to report continuously in the Annual Report on local schemes.

It was added that the requirement to be registered with the FCA was significant which would mean a change in the current structure of the WPP, creating a new management structure with a chief officer and a chief investment officer for governance requirements. It was noted that this would have to be planned and implemented by March 2025. In addition, new governance requirements would require the appointment of a senior officer to be responsible for the Fund, ensuring there were specific policies in place and a firm process for monitoring this.

In light of potential significant changes to the pool, it was reported that Gwynedd officers would work with the host authority to provide a fair response to the consultation; any information / response would be shared with the Members.

The members thanked the officer for the report

During the ensuing discussion, the following observations were made by the Members:

·       Wales should remain as one pool – this would be the strength of the Wales pool. Should Wales have to merge with others – political issues would emerge from this

In response, it was noted that the consultation suggested that it was possible for Wales to stay as a pool as long as an explanation / a strong and viable business case was presented to support this.

·       The pooling was a Westminster Government proposal. The Wales pool should be kept independent – the development of the pool in Wales had been smooth and natural, and it had developed successfully and ahead of others. If we had to merge with others, we might lose control and the local investment opportunities.

·       Local investment opportunities – we needed more details about the process of delivering projects – a suggestion to share information about the process with Conwy and Anglesey Councils

·       A member suggested having a face-to-face session so that the members had an opportunity to share ideas / consider possibilities / arrangements regarding local investments, to put these forward in the business plan. We would require a strategic, detailed plan.

·       The Pension Board was concerned about the pooling situation – the Wales pool was small – this might be a weakness and there would be a risk of falling into the 'smallest' category.

·       There was a need to emphasise that the Wales pool served members through the medium of Welsh – there was a risk for this to be lost should a merger with others be obligatory – need to emphasise this in the response.

·       The Chair of the Committee to share the Committee's concerns with the Joint-committee.

In response to a question regarding funds in Scotland and Northern Ireland and whether, like Wales, they were in a position of having to present a business care, it was noted that these countries had different regulations and were not devolved in the same way as Wales.

RESOLVED

To accept and note the information