Investments in Leeds – bankruptcy in Birmingham – the two worlds of LGPS!

I am currently the guest of the Local Government Chronicle in a very nice hotel in a not very nice bit of Leeds. The hotel’s a bit above my pay grade but  I’m here to speak about topical pension issues with Tom McPhail and Joanne Segars, so I suppose it’s a pay bonus. Sadly it means that I can’t celebrate with the CIPP.

Keeping people paid, is a matter for employers and for pension funds. I associate LGPS with payroll because most of my contacts there are helping out members with their AVCs , their tax problems and their questions about how pensions work (the things that payroll do – above their paygrade). Pensioner payroll is of course vital to LGPS as all other pensions schemes.

But payroll wasn’t the topic of conversation when I crashed a party of top LGPS investment experts at a bar called “Revolucion de Cuba”. Everyone was talking about Government interfering in their investment decision making – again above my paygrade

As I supped and ate canapes, I half expected the “revolucion” to arrive at the door in the uniform of the CIPP,  demanding better representation for the employers who participate in LGPS funds.  Employers  appear a million miles (metaphorically) from the discussions on pooling and transitioning, I found myself having.

Nearby in Leeds, Steve Simkins was getting grumpy on linked in for this very reason

It’s fascinating that across all of these comments there are no references to employers. Many employers are currently over 100% funded on a very low risk basis which should cause them to want to derisk and which in turn challenges the whole debate around pooling, private equity, levelling up etc

Steve is a trombone playing actuary with a client bank of employers who participate in LGPS, often reluctantly and are chiefly concerned about the cost of that participation. Those clients should be happy enough that LGPS has swerved LDI and is currently swanning in the sunny uplands of high surpluses and talking the politics of investment.

All the talk is about the Mansion House reforms and the Government’s plan to require LGPS to change its investment management and governance, through an open consultation.

The funds and pools are here in force but is anyone asking employers about whether LGPS should take on more risk as detailed in Steve’s moan?  Well anyone can respond and the consultation is still open so there’s still time for Steve’s employers to have their say. But having scanned the delegate lists, not many will have their say at this conference.

While we are discussing the politics of pensions , the state of local government is a matter of national concern.It will be interesting how the crisis in Birmingham (and elsewhere) touches this conference.

Steve’s moan had been triggered by a long and detailed article by Martin George in the Local Government Chronicle, which you can read here

Steve’s point is spot on, there are not two but three agendas at play

  1. Government wants to see LGPS consolidating and investing for the common good
  2. LGPS funds and pools want to exercise their skills without interference
  3. Employers want stable costs for participating in LGPS.

Government . funds and pools will be here in Leeds, but not employers and I fear not Steve Simkins. All the payroll people are off partying for national payroll week. As for the members, I see no unions on the delegate list.

So. as with the conference I went to in June with the PLSA, I will be listening out for and asking question on behalf of employers and members whose voices tend to be drowned out as large institutions pitch for mandates. I may not have the swanky suits of the asset managers but I have a gob on me, and I intend to use it. I might even catch up on Steve Simkins, as Isio’s offices are just around the corner.

About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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2 Responses to Investments in Leeds – bankruptcy in Birmingham – the two worlds of LGPS!

  1. jnamdoc says:

    “…for the common good”
    Is there any concern that LGPS do not have the common good in mind? They seem to be doing a good job on funding and paying the pensions promised.

    I sense the hand of DMO behind this…

    Could it be that Gov’t, through the guises of the TPR having completed the stripping of the c£1trn of investment assets from private sector schemes trading then in for Govt gilts, are turning their eyes to the LGPSs as source for DMO…?. LGPS hitherto hold virtually no gilts – quite sensible too, they have their own local tax raising powers. Will a quest for “common good” look to redefine that…

  2. John Mather says:

    I quoted a wiser one than me on a recently posted blog. A cartoon of the frog in warm water on a stove comes to mind The quote long but worth the thoughts being provoked In case you missed it

    The splendid irresponsibility is the subtle art of moving without reaching results.

    There are three flavors of that irresponsibility.

    Taste 1: The Insignificant Improvements.
    Think about cleaning the file, rearranging the tables or optimizing the expense report. None of these activities really help to take major steps towards decent targets. People seem busy, though.

    Taste 2: Utopic Search.
    Under the umbrella of “an important cause”, organisations devote massive efforts to epic and unrealistic targets. A major feature is that results can only be measured vague, and the focus is on effort and contribution. Normally, you find this behavior in highly political environments, where moral duty is used as an excuse for any lack of conquests.

    Taste 3: Passion for Process.
    The process is everything and everything is process. In such an environment, the greatest virtue is to join processes and systems. The cases are everywhere, although the original purpose of the proceedings has often been completely forgotten.

    The three flavors have something in common: complete irresponsibility for the results ensures that there is no arrival, end or closure. “Completed” is a strange concept. Instead, more and more resources are needed because progress and progress are always around the corner.

    The splendid irresponsibility is a subtle trap: it provides many excuses not to take real action towards pragmatic results.

    The first rule of your life is not to waste it.

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