A lack of joined-up information on individual fund liabilities could hinder Local Government Pension Scheme pools from making optimal investment decisions, councils have heard.
Speaking at the Pensions and Lifetime Savings Association’s local government conference last week, Denise Le Gal, the independent chair of Brunel Pension Partnership, said it would make sense for pools to combine their administration resources.
She said the change could reduce costs and give pools an improved overall view of the liabilities for the funds whose assets they manage.
Le Gal said: “I am struggling a bit with the pools having the assets but we don’t have an eye on the liabilities. We do, but it is at a granular level.”
She questioned whether, some years from now, it may make more sense for LGPS funds to combine their pensions administration.
She said that there would be “huge savings” to be made from doing so.
Speaking during the same session, Teresa Clay, head of local government pensions at the ministry of housing (MHCLG) said there was nothing to stop pools from exploring the option.
She added that one pool was already looking at liabilities and that creating shared services between funds in a pool could be a first step towards pools assuming full responsibility.
But, she added, the issue is not just for pools to consider.
“It is my observation that, even within a single fund, quite often administration and investment seem to exist in silos and they are sometimes not drawn together,” she said.
“I think that is something that really needs to be addressed because you can’t make good investment decisions without knowing in the greatest detail what your liabilities are.”
Clay added that it was essential that funds offer good quality, efficient administration and not just the cheapest option.
During a separate session at the conference, Andrien Meyers, head of treasury and pensions at London Borough of Lambeth, said that unless LGPS pools sign up to a transparency code, local authorities will only see aggregate pool data reported by managers instead of information about the performance of their own investments.
Last week, the LGPS Advisory Board’s annual report for 2017 revealed that total liabilities stood at an estimated £254bn at the end of 2016–17.
