The Royal Borough of Kensington and Chelsea (RBKC) has “unanimously voted” to remain in its Local Government Pension Scheme (LGPS) pool after suggesting that it was “preparing to exit” at the beginning of the year.
The pension fund, which has over 10,400 members and assets in excess of £800m, stated that it was “minded” to exit membership of London CIV (LCIV) in January.
At the time, Quentin Marshall, RBKC’s pension chair, told Room151 that the borough and the pool were “considering how their future relationship will evolve”.
However, following a meeting of RBKC’s Investment Committee on 15 March, the pension fund has decided against leaving LCIV.
Phil Triggs, tri-borough director of treasury and pensions, said: “Following extensive discussion, the unanimous decision of the committee was to remain as a shareholder of the LCIV.”
He added: “RBKC has engaged in constructive conversations with the new chief executive Dean Bowden, who is taking the business in an exciting new direction, with a renewed focus on delivering value for shareholders. RBKC is aligned to this vision.”
Marshall added that decision to stay in the pool follows “constructive discussions with the LCIV”.
Dean Bowden, London CIV’s CEO, said: “We are delighted that RBKC will be remaining with London CIV as its chosen pension pool. London CIV is focused on delivering real value through both asset pooling and a broad service offering, to the benefit of our shareholders.”
It sounds as if someone has put pressure onto RBKC in some way to cause this change of heart. But if they have been ‘told’ to stay within the LCIV, it does illustrate the difficult position that partner funds’ S101 committees are in if their pool is not able to provide them with tools for good implementation.
‘Change of heart’ caused by pressure
The news comes as last week’s Budget Report (the Red Book) indicated that LGPS funds could be forced to transfer all “listed” assets into their pools by March 2025 as part of the government’s plans to move “further and faster” on pooling.
Commenting on RBKC’s decision to stay within the LCIV, William Bourne, principal with Linchpin Advisory, told Room151: “It sounds as if someone has put pressure onto RBKC in some way to cause this change of heart. But if they have been ‘told’ to stay within the LCIV, it does illustrate the difficult position that partner funds’ S101 committees are in if their pool is not able to provide them with tools for good implementation.”
Bourne stressed that “in the short term, they can simply keep their funds outside the pool, as RBKC has. Now that the chancellor has indicated a target of March 2025 for a full transfer of assets, that will no longer be an option.”
He stated that as a result of the 2025 pooling target, LGPS funds will either have to transfer their assets, find ways to change their pool or risk the Department for Levelling Up, Housing and Communities (DLUHC) directing their fund under regulation eight [of the LGPS regulations 2013].
Bourne added: “These are all unattractive or difficult options”.
“I would prefer to see DLUHC making it explicit that funds could use other pools sub funds if their own one does not provide a suitable implementation solution. That would allow RBKC to find something more to its taste,” he said.
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Bromley’s ‘key decision’
In January, Room151 was also told that a “key decision” will be made at a meeting of Bromley Council’s Pension Committee on 22 February, which could involve withdrawal from its pool.
Bromley is a member of London CIV in name but has yet to transfer any assets. Its pension fund has more than 19,000 members and net assets of £1.3bn.
The pension fund has since been contacted by Room151 but declined to comment.
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