Report of the Director of Corporate Services
The Director of Corporate Services informed the Committee that all Local Government Pension Scheme (LGPS) Funds were required to prepare, maintain and publishFunding Strategy Statement (FSS) and Investment Strategy Statement (ISS) documents. The FSS must be formulated, maintained and published in accordance with the Public Service Pension Act 2013, whilst the ISS must be formulated, maintained and published in accordance with the Local Government Pension Scheme (Management and Investment of Funds) Regulations 2016.
In preparing maintaining and reviewing both statements, the administering authority must have regard to guidance published by CIPFA. The latest such guidance for both documents was published in September 2016.
Whilst a full review of the FSS should be undertaken at each valuation and at least every three years for the ISS, it was considered good practice to review and update both documents annually, to reflect changes in the year. The FSS was consulted upon and approved by the Pensions Committee at its meeting in March 2017. Since March 2017, only minor amendments have been made to the FSS. As part of the review of the Fund’s various policies, it was decided that there was a need to separate the Bulk Transfer Policy from the Administration Strategy, as it should really form part of the FSS. The FSS had been reviewed on this basis, in conjunction with the Pension Fund’s Advisors Hymans Robertson, and this had also resulted in several other minor amends to the FSS. A full review of the FSS would be required later in 2019/20, following the 2019 Actuarial Valuation and it would be at this stage that the document would be put out to wider consultation.
With regard to the Investment Strategy Statement (ISS), the Committee were informed that the Local Government Pension Scheme (Management and Investment of Funds) Regulations 2016 came into force in 2017 and under Regulation 7(6) and 7(7), the ISS had to be published by 1 April 2017 and kept under review and revised from time to time and at least every three years. The ISS was a document that replaced and largely replicated, the previous Statement of Investment Principles (SIP). Authorities were required to prepare and maintain an ISS which documents how the investment strategy for the Fund was determined and implemented. The ISS was required to cover a number of areas, specifically:
The Committee were informed that the April 2018 version of the ISS had recently been reviewed and changes were considered necessary to better reflect the arrangements in place for asset pooling and the transfer of assets into LGPS Central Limited. However, the Committee noted that the document may need further substantial revision following the outcome of the MHCLG’s informal consultation on the Statutory Guidance on Asset Pooling in the LGPS, which was due to close on 29 March 2019. At this stage, wider consultation on the ISS might also be considered appropriate.
RESOLVED – (a) That the minor amendments to the Funding Strategy Statement (FSS), which now includes the Pension Fund’s Bulk Transfer Policy, be noted.
(b) That the requirement for further updates to the Investment Strategy Statement (ISS) once the outcome of the Ministry of Housing Communities and Local Government’s (MHCLG) informal consultation on the Statutory Guidance on Asset Pooling in the LGPS is known be noted.