The latest in Pensions Expert’s Five Questions series features one of the leading lights in local authority pensions in Wales. Jeff Dong, head of finance and pension fund at the City & County of Swansea, explains how his fund has evolved over the past 20 years and the investments it is making into the local community.
With over two decades of experience in the Local Government Pension Scheme (LGPS), Jeff Dong has witnessed the sector’s evolution firsthand. From navigating economic crises to championing local investment, he discusses future opportunities for the LGPS and his thoughts on leadership and the importance of collaboration in delivering sustainable pension outcomes.
How can LGPS funds play a greater role in regional investment while balancing risk and returns?
Jeff Dong: More influential than the government’s growth initiative is the emerging flexibility of funds attaining full funding status at fund level, which has naturally allowed a fund to explore the boundaries of its fiduciary duty and what is an acceptable level of investment return, incorporating nonfinancial factors in its investment strategy. In recent years, many funds have identified local/national economic growth as an investment objective.
In parallel, the market has seized the opportunity and is now identifying and appraising local opportunities, which they may not have done previously. So, by expressing this local demand, the LGPS has been the agent of change in this space, demanding investment managers explore these opportunities.
The key to success is maintaining investment discipline and your return parameters, while having a robust conflicts of interest policy to make the right decisions.
Can you share an example of an investment or initiative that has made a tangible impact in Swansea or the wider UK?
Dong: Difficulties in attracting investment into “unfashionable” geographical areas like Swansea and South Wales have been experienced by the fund during the last three years where I have been given a clear mandate by the Pension Fund Committee to source and commit capital to projects which have a positive local impact, primarily in addressing the local (affordable) housing shortage.
Following a number of false dawns and engagement with a whole host of the usual suspects, eventually we have partnered with a specialist impact manager to form a £50m Swansea partnership fund delivering social infrastructure in the Swansea region, which will have a significant impact on the affordable housing sector locally.
With ongoing regulatory changes, how do you approach uncertainty in the LGPS sector?
Dong: The recent Fit for the Future government consultation offers a huge opportunity for Wales Pension Partnership to evolve and enhance its capacity to deliver improved investment outcomes for its employers and schemes members in Wales. [It can also] affect positive economic growth, job creation and improving the social and core infrastructure in Wales with the clear mandate to invest locally and for the benefit of the wider community, while still delivering the returns required.
Looking ahead, what do you see as the biggest opportunities for the LGPS over the next decade?
Dong: The attainment of full funding status at whole scheme level opens the debate on appropriate levels of employer contribution rates, re-setting the relative relationship between employee and the employer contribution rates. This will emphasise that the LGPS is the most efficient cost-effective public service pension provision compared with the civil service, the fire service and the NHS and so on, where costs are only going one way.
The public narrative and hostility about the cost of public sector pensions is evident, but quite clearly the LGPS is different and distinct from the other schemes and we need to highlight that difference and let people know that it is the most cost-efficient, value-for-money public sector pension provision.
What have been some of the biggest challenges in your career, and how have you navigated them?
Dong: When I first started 22 years ago, managing the pension fund was a side gig for the County Treasurer on a Friday afternoon. Now the LGPS has moved from the technical press to the front pages of national newspapers and now attracts the attention and high calibre personnel to run it that a multibillion-pound industry demands.
In 2008, post the financial crisis, the LGPS faced an existential crisis, with funding levels at 60% and with government figures seriously questioning its sustainability at that time. There was talk of it moving to an unfunded scheme or even defined contribution provision. But in less than a generation full funding has been achieved in the LGPS.
Affordable pension provision for the lowest paid workers in the public sector (the average pension in Swansea is £5,000 a year) has been safeguarded and has proven itself to be the most cost effective public sector pension provision of them all.
To read the full version of this interview, read the March 2025 edition of LAPF Investments. The digital edition is available here.
