Hertfordshire joins Access LGPS pool

Chancellor George Osborne announced plans last year to create six ‘British wealth funds’ by aggregating the assets of the local authority schemes in England and Wales.

It is planned this will develop their capabilities for investing in infrastructure, and generate cost savings through shared governance and economies of scale.

The pool includes a range of funds from across central, eastern and southern England such as Essex, Kent and the Isle of Wight. It is being set up with a multi-asset structure as per the recommendation of the ‘Project Pool’ report.

Project Pool is a working group of 24 local authorities joined by 13 experts from other funds that was set up in September last year to create a proposal on the best way to pool LGPS investment. It published its report in January this year.

Details still to come

Kevin McDonald, director of the Essex Pension Fund, said all of the schemes involved in Access “will have an equitable voice” in how it is run, but added the details of this had not yet been fully worked out.

He said: “We are at the beginning of this journey. We have agreed to work together. The details of what it looks like and how it will operate we are researching and evaluating.”

He said the same will apply to the investment of the fund.

The question of fund representation has posed a problem for schemes entering investment pools, as wildly varying asset sizes mean different participants may want a greater say in the operation.

Ralph McClelland, associate director at law firm Sackers, said the debate around scheme representation is “at the heart of the governance challenge faced by these pools”.

“The [Project Pool] proposal is to have a very substantial delegation of authority. You want them to be able to go out there and select investment opportunities in a way that is not overly fettered by the councils,” he said.

Dave Lyons, head of public sector investment consultancy at Aon Hewitt, said there was as yet little detail on how the pools will handle representation of their members due to the tight deadlines for submitting proposals.

He said: “I’m not sure they’ve given that much thought to it. They’ve been rushing to get their proposals in to the government.”

One pool that has made fund representation clear is the London collective investment vehicle, which encompasses 31 of the London LGPS schemes. It is registered as an alternative investment fund manager with the Financial Conduct Authority, and each of the participating London borough schemes has a vote on governance in a so-called ‘one fund one vote’ model.