To consider the presentation.

Chris Rule, CIO & MD Investment Business, Richard J. Tomlinson, Head of Investment Strategy, Pedro Pardo and Martin Pattinson, Director of Client Relationships from the Local Pension Partnership (LPP) attended the meeting to give a presentation on pooling with the Berkshire Pension Fund.

It was noted that due to the need to discuss investments future presentation would be in Part II.

The Panel were informed that LPP aimed to be ‘a leading pension services business’ operating on a ‘not-for-profit’ philosophy and working in partnership with their clients and other customers.  The LPP philosophy was to:

·         Aligned interest with clients, employers and members.

·         Strong governance.

·         Scale through collaboration.

·         Investment beliefs for long-term responsible investments.

The company was 2 years old, had 299 employees and managed assets over £16bn.

Cllr Law mentioned that there was the LPP Board and the LPPI Board.  The Panel were informed that the LPPI Board was a subsidiary of the LPP Board and was regulated by the Financial Conduct Authority, this was the arm of the company responsible for investments.  Details of LPP Investments Ltd were contained within the presentation on agenda pack page 15.  

LPP Investments Ltd was a not for profit company and dealt with the strategic objectives and were responsible for investments.  There were a number of fund vehicles that they managed and they would buy assets for the pooled pension funds.

The investment teams and structure were shown on agenda pack page 16.  The Investment Committee Permanent members were Richard J. Tomlinson (Investment Director Head of Investment Strategy), Chris Rule (Chief Investment Officer and Managing Director Investment Business) and Tom Richardson (Chief Risk Officer).

Cllr Worrall asked who decided which asset class was used and was informed that there was a bottom up approach.  Recommendations would be made to the investment committee after they had been to this Panel.

Cllr Law mentioned that the Fund’s strategy recommended that 12% be invested into infrastructure and asked if this was the amount the investment team could use.  The Panel were informed that the Berkshire Pension Fund set its investment strategy that would be benchmarked with tolerance levels either side. 

The Panel were informed that the LPPI main product line was providing a full SAA investment management services to its clients.  The delivery of this was via the following vehicles with a portfolio implementation of £15.6bn:

·         Public Equity

·         Private Equity

·         Infrastructure

·         Credit

·         Legacy Assets

·         Property Launching

·         Total Return Launching

·         Fixed Income

There was also the GLIL infrastructure vehicle that contact northern pooled assets that was aimed to go up to £2 billion and was now open to the other pooled funds to invest in if they wished.  This was operated under LPP but may have investors added that LPP did not manage funds.

Cllr Worrall mentioned that the Government had specified that pension pooling had to be over a specific threshold that LPP had not met.  The Panel were informed that the Minister had confirmed that there were no issues with LPP.  They would continue to look to grow if this was beneficial to their clients. 

It was questioned how the Global Equity Fund would benefit existing clients.  The Panel were informed that any additional clients would help reduce costs and a business case always looks at the costs of delivery. 

The Panel were also shown, on agenda pack page 19, the current Berkshire portfolio position.  The review showed that limited actions would be required in the short term with regards to asset allocations.  It was proposed to reduce public equity underweight by making an allocation to the LPPI Global Equities Fund of c.£120 million.  Forecast for the portfolio suggested that existing commitments for infrastructure would eliminate the current underweight in the coming years and exposure to property would be increased via participation in the LPPI

property pooled fund.

The Panel were also shown the proposed transition plan for assets that where suitable for pooling.  Other assets would remain on the schemes balance sheet until they mature or were sold. 

In response to questions the Panel were informed that the Total Return vehicle was to be launched in 2018 to allow the pooling of existing platform that had similar assets and it was felt best to create a new investment vehicle. It was noted that there was a difference in the current cash weighting in the presentation then that shown in the Stewardship Report because more cash assets had come in than expected and with officer illness and pooling it had been decided to wait for reallocation.

The Panel noted the presentation.