The Local Government Pension Scheme Advisory Board has issued further guidance for pension funds on divesting from Russian assets.
In a note published on its website, the advisory board said that it understood why LGPS funds might wish to divest for financial reasons, though there could be challenges to achieving this due to the closure of the Russian stock exchange and a lack of buyers.
Funds were also reminded of the two tests required should they decide to divest for non-financial reasons. These relate to a 2014 Law Commission Report, which concluded that divestment could take place based on non-financial criteria if:
- trustees have good reason to think that scheme members would share the concern
- the decision should not involve a risk of significant financial detriment to the fund
The note pointed out that similar provision can be found in the LGPS Guidance on preparing and maintaining an investment strategy statement 2017, which states that administering authorities “may also take purely non-financial considerations into account provided that doing so would not involve significant risk of financial detriment to the scheme and where they have good reason to think that scheme members would support their decision”.
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