Agenda item

To note the update.

A report was submitted by the Investment Manager providing the Board with an update on the work of the WPP. As everyone knows, the Gwynedd Pension Fund had co-operated with other pension funds in Wales since 2017 and now had around £25 billion of assets under the control of the pool which had resulted in cost savings, improved investment opportunities, improved performance and increased collaboration and governance across Wales, that the co-operation had been beneficial for Gwynedd which now had over 85% of the Gwynedd Pension fund pooled. ⁠

Members were reminded that, since October 2023, the UK Government had been reviewing the investment arrangements of Local Government Pension Schemes (LGPSs) in England and Wales, with an initial consultation taking place in October 2024, and the Pensions Bill published in June 2025.

The three areas that had been covered were highlighted:

·        Reform of the pool's operating model – which was an element that had created a great deal of work in the short term in response to the requirements of continuing to be responsible for setting an investment strategy for the Gwynedd Pension Fund, but the implementation of the strategy would need to be delegated to the pool. It was reiterated that the administrative authorities must receive their main investment advice from the pool and not from Hymans Robertson, as was currently the case, and that all the Fund's residual assets needed to be transferred to the pool (which was not a huge change as Gwynedd already had a high percentage in the pool). The pool must also develop internal ways of completing due diligence on local investments and the management of these investments. ⁠

In addition, it would be necessary to create an investment company regulated by the FCA (Financial Conduct Authority). This would offer a unique opportunity to establish a centre of expertise in local government investments in Wales. It was noted that the application was approved by Cyngor Gwynedd's Full Council on 3 July, and that it would need to receive approval from the eight Councils in Wales that are part of the pool, before proceeding with the phase to create the new company.

·        Boosting LGPS investment in their areas and regions in the UK

·        Strengthening governance

(these two elements will be addressed within the next few months – consideration needed to be given to how they could be implemented for the pool and the Gwynedd Pension Fund).

⁠

Thanks were given for the report and for the detailed work completed within a very tight timeframe from the UK Government. It was considered that the situation was one where there was no choice but to comply.

In response to a comment that the Gwynedd Fund had saved fees by pooling with WPP, however, the WPP was now being forced, in line with UK Government rules, to spend around £5m to set up a new company (IMCo), and whether there will be an opportunity to save money as a result of the change, the Head of Finance stated that IMCo would be responsible for the governance structure and for advising and ensuring value for money. He added that while the amount appeared to be high, it was considered that the costs would decrease as the scheme progressed and that the £5 million reflected the highest cost. He noted that the comments had been conveyed to the Government, and that it was intended to keep a close eye on the situation in case there was a loss of control regarding expenditure. It was also noted that there were significant legal costs associated with the change along with a higher rate of pay than Local Government employment rates.

In addition, it will be the IMCo who will advise the pool and not Hymans Robertson, and therefore obviously the advice and support Hymans offers to the Gwynedd Fund will be significantly reduced.

It was reported that WPP chief officers meet weekly to discuss the development and that clear boundaries had been set to ensure that Gwynedd does not miss out.

RESOLVED

To accept the report and note the information.