LGPS authorities are being encouraged to pool assets into up to eight “wealth funds” in order to invest in infrastructure. This will necessitate adaptations to governance arrangements and the formation of joint oversight committees.
As Public Finance reported in August the guidance sets out the key principles authorities should focus on when adapting their governance arrangements for pooling and highlights areas that joint oversight committees should consider.
It has been prepared by Dave Lyons and Karen McWilliam of Aon Hewitt’s public sector team with support from Neil Sellstrom, CIPFA’s treasury management and pensions adviser.
Sellstrom said: “Regardless of the investment structures and operating arrangements, administering authorities should continue to demonstrate strong governance in the management of LGPS funds. The establishment of investment pooling will present a new environment which will require a review of existing internal governance to update policies and create appropriate oversight arrangements.”
Lyons, who is head of public sector investment consulting at Aon Hewitt, added: “The advent of asset pooling in England and Wales will transform the LGPS investment landscape, and indeed the various relationships between and across the investment pools, their administering authorities and their pension committees.”
While it was important that the asset pools themselves are robust, effective and well managed, he said, “it is equally important that this is also the case for these new formal and informal relationships. That way, it can be assured that no stakeholders are left behind on the long journey ahead and potential conflicts of interest are recognised and managed effectively.”