The Local Pension Board meeting scheduled for 11 March 2019 was set to cover a range of important pension fund matters, including updates on current pension fund operations, investment strategies, and significant government consultations affecting the Local Government Pension Scheme (LGPS). The meeting's agenda focused on ensuring the effective governance and administration of the pension fund, with a particular emphasis on investment pooling and legislative changes.

Current Update on Pension Fund Matters

A significant portion of the meeting was dedicated to a Current Update on Pension Fund Matters. This report was intended to provide the Board with information on the ongoing administration of the pension scheme and an overview of the Pension Fund's investment performance. Key areas scheduled for discussion included:

• Pension Administration: Updates were expected on the administration function, which is responsible for managing pension payments, contributions, and member records. This included information on the current work programme, such as efforts to improve member self-service through the Altair facility, and progress on complex projects like Guaranteed Minimum Pensions (GMP). The report also detailed the performance of the administration team against various performance indicators, with a note that performance figures showed a slight improvement, expected to further enhance once vacant posts were filled.
• Cost Management Process (Cost Cap): The meeting was scheduled to discuss the cost cap, a measure introduced following Lord Hutton's review of public sector pensions to monitor and ensure the affordability and sustainability of benefits. The report was expected to explain the complexities of the cost cap calculations, which are carried out by the Government Actuary's Department (GAD). It was noted that the Scheme Advisory Board (SAB) had announced results indicating a scheme cost of 19.0% against a target of 19.5%, with plans to award an increase in benefits.
• The McCloud Case: A significant point of discussion was the ongoing legal case known as the McCloud case, which concerns transitional protections for scheme members within 10 years of retirement as part of public service pension reforms. The Court of Appeal had ruled these protections unlawful on the grounds of age discrimination. The report was expected to outline the potential implications of this case, including the possibility of compensation for affected employees and the subsequent pause in the cost cap process due to the uncertainty. The Board was to be asked for its views on how to approach the 2019 triennial valuation in light of the McCloud case and cost management considerations.
• Fair Deal Consultation: The meeting agenda included a discussion on the Ministry for Housing, Communities and Local Government's (MHCLG) consultation regarding New Fair Deal, which aims to introduce stronger pension protections for employees of LGPS employers who are compulsorily transferred to service providers. The proposals include a new definition of a Fair Deal employer, ensuring continued access to the LGPS for transferred employees, and removing the option of providing a broadly comparable private sector scheme. The consultation also proposed that employees of Police and Crime Commissioners would be classified as Fair Deal Employers.
• MHCLG Draft Statutory Guidance on Asset Pooling: The Board was to consider draft statutory guidance from the MHCLG on asset pooling for the LGPS. This guidance, which is intended to have statutory force, sets out requirements for administering authorities regarding the pooling of LGPS assets. Key features of the draft guidance include the definition of pooled assets, the requirement for pool members to appoint FCA-regulated pool companies, and recommendations to consider moving from active to passive investment where active management has not outperformed. It also details tighter definitions for keeping assets outside of the pool and extensive reporting requirements on costs and performance.

Pension Fund Investment and Pooling Arrangements

The meeting was also scheduled to review the management of the Pension Fund's investments and its pooling arrangements with the London Collective Investment Vehicle (LCIV). This report was intended to provide an overview of how the Fund's investments are managed and how they align with the requirements of the Local Government Pension Scheme (Management and Investment of Funds) Regulations 2016. The report was expected to detail the Fund's strategic asset allocation, which aims to achieve a real return of 3.5% per annum to become fully funded within the timescales set in the Funding Strategy Statement. The current strategy allocates 80% to equity-type investments and 20% to bonds, with a diversified approach across various asset classes and managers. The report also noted that all of the Fund's investments are currently made via Pooled Unit Trusts, considered to offer lower volatility and a wider spread of investments. The meeting was to cover the government's objectives for mandating pooling arrangements, which include seeking investment efficiencies, delivering lower fund management fees, and enabling funds to invest in asset classes previously inaccessible to smaller funds, such as infrastructure. The Redbridge Pension Fund's current investment with LCIV, along with other London boroughs, was to be detailed.

Custody Services

The report pack indicated that the Pension Fund Committee had reviewed the provision of custody and performance measurement services and agreed to undertake a tender process. It was noted that Northern Trust was to be appointed for a period of five years, commencing from 1 April 2019.

Fairness Implications, including Equality and Diversity

Across several agenda items, the reports highlighted the council's commitment to the Public Sector Equality Duty (PSED), which requires due regard to the need to eliminate discrimination, advance equality of opportunity, and foster good relations between people who share protected characteristics. The reports stated that the proposed Fair Deal policy changes were not expected to have an adverse impact on any section of the LGPS employer workforce and were intended to have equal positive impacts on all groups.