Which funds make up Border to Coast?
The Border to Coast Pensions Partnership has 12 LGPS funds – Bedfordshire, Cumbria, Durham, East Riding, Lincolnshire, Northumberland, North Yorkshire, South Yorkshire, Surrey, Teesside, Tyne & Wear, Warwickshire. As at 31 March 2017, these funds had assets of c £43 billion.
Why are you pooling?
When Central Government proposed that the Local Authorities pool their pension assets, there were four principle benefits identified:
1. Cost savings through economies of scale
2. Improved governance
3. Improved approach to responsible investment
4. Improved ability to invest in infrastructure
What are the benefits of the Border to Coast?
Border to Coast’s Board and shareholders believe that pooling can make a difference to investment outcomes for partner funds by creating a stronger voice; working in partnership to deliver cost effective, innovative and responsible investment now and into the future; thereby enabling great, sustainable performance.
Who is running my pool?
The partner funds have appointed a Board of Directors, chaired by Chris Hitchen, which is responsible for ensuring that Border to Coast is run effectively and in line with the guiding principles set by the shareholders. The Chief Executive Officer, Rachel Elwell, is responsible for the day to day running of Border to Coast along with her team. Further information can be found at Meet the Board.
How is the pool held accountable?
The Chief Executive Officer and her team are, at the first level, held accountable by the Border to Coast Board. Border to Coast’s investment performance and capability is then overseen by the partner funds on a day to day basis by the Local Authority Senior Pension Officers and formally on a quarterly basis by the Joint Committee, which is constituted of elected member representatives from each of the Local Authority Pension Funds. Border to Coast’s performance as a company is overseen by shareholder representatives both on an ongoing basis and formally once a year at its AGM. Border to Coast is also regulated by the Financial Conduct Authority (FCA).
What part does my Local Authority play in pensions pooling?
Your Local Authority at the outset was responsible for the approach it wanted to take to pooling and in particular selecting the pool in which to be involved and ensuring that the pool was appropriately established to deliver its objectives. On an ongoing basis, your Local Authority will be responsible for setting strategic asset allocation to determine the amount of investment risk it wishes to take with the assets backing your Local Authority pension fund and working with Border to Coast to ensure that is implemented correctly. It is also responsible for oversight of performance of investments and whether Border to Coast is meeting its objectives.
Where can I find out more about Local Authority pensions pooling?
The pension pooling initiative is being driven by the Department for Communities and Local Government. DCLG consulted with Local Authorities and other interested parties in 2013/14 and in November 2015 invited Local Authorities to propose how they might pool pension fund assets. Guidance for Local Authorities was issued by the Local Government Pension Scheme Advisory Board and The Chartered Institute of Public Finance and Accountancy.
How many Local Authority pensions pools are there?
There are 8 pension pools (Border to Coast, Brunel, Central, LPP, London, Northern, Access, and Wales). Border to Coast combines authorities with internal management capability with others which are wholly externally managed and united by consistent investment beliefs.
Will leaving the European Union have an impact on pooling?
We have received advice from the Local Government Association (LGA), following discussion within government, that Brexit has not changed the intentions laid out in the draft Investment Regulations 2016 reforms and that prospective pools are to continue to develop and scrutinise the business case for pooling, within challenging timescales.
Will pooling affect my local authority pension?
No, if you have earned pension benefits in the Local Government Pension Scheme, the pooling of assets does not affect your pension. This is because your pension is a “defined benefit” pension and therefore not linked to the performance of the assets supporting the payment of your pension. Pooling of assets is about ensuring that the assets work harder so that it is more efficient to provide your pension.
Is my pension safe?
Yes, you are a member of a defined benefit pension scheme which promises to pay out an income based on your earnings and the number of years you have been employed up to the point of retirement.
What part does the pool play in managing my pension?
Border to Coast is not responsible directly for the payment of your pension: administration of pensions in payment remains with your Local Authority. However, Border to Coast will be working closely with your Local Authority to ensure that money is always available to pay pensions as required.
What part does the Local Authority play in managing my pension?
The Local Authority remains responsible for ensuring that your pension is calculated correctly and that benefits are paid when they fall due. The Local Authority is also responsible for setting investment strategy for its pension fund – for example how much to invest in equities, bonds, property and how much risk it believes is appropriate given the nature of the benefits it will pay in the future.
Is our pension fund being used to cover shortfalls with other pension schemes?
No, the benefits payable remain the responsibility of each Local Authority and each partner fund’s assets will always be identifiable separately.
How are members’ views represented?
The governance of the Pension Funds will remain as it is now, with the Local Authority Pensions Committees. Members views are represented either directly on the Pension Committees and / or via Local Pension Boards.
Is Border to Coast open for others to invest in?
No, the opportunity for others to invest may be developed in the future, but for now Border to Coast exists purely to provide services to its partner funds.
Do you invest ethically?
The Border to Coast Board and partner funds believe in Responsible Investment, which is an approach to investing that aims to incorporate environmental, social and governance (ESG) factors into investment decisions, to better manage risk and generate sustainable, long-term returns. Further information about Responsible Investment can be found on the UNPRI’s website.
How do you ensure that the investments are safe?
Border to Coast has a robust investment process which includes a number of different approaches to ensuring that the risks to assets are managed appropriately. These include holding a diverse set of assets, initial and ongoing due diligence and research, the appointment of a strong custodian to hold the assets and establish / ensure clear ownership and legal advice where appropriate for more complex asset structures.
When will the pool start to appoint third party asset managers and how?
Border to Coast is expecting to appoint third party asset managers in the second half of 2018. The process will be announced in due course.
What is an Authorised Contractual Scheme (ACS)?
A collective investment scheme is a form of investment fund that enables a number of investors to ‘pool’ their assets and invest in a professionally managed portfolio of investments, typically gilts, bonds, and quoted equities. An Authorised Contractual Scheme is a type of collective investment scheme in the UK that is regulated by the Financial Conduct Authority. It is “tax transparent” in that the tax treatment reflects the tax regime of each investor; making it particularly useful for pooling pension assets. For more technical information please visit www.gov.uk
The government’s criteria for pooling includes how environmental, social and corporate governance policies will be handled. What are Border to Coast’s intentions in this area?
Border to Coast believes that Responsible Investment is a fundamental part of the investment process in order to generate great investment performance. More information on Border to Coast’s approach can be found HERE
How does Border to Coast intend to respond to the governments key criteria of infrastructure investment?
Border to Coast believes that infrastructure investments can be a good source of investment return for long-term investors. It is working with the partner funds, the other pools and other industry partners to develop the capability to enable partner funds to make further investments in infrastructure projects.
When will the pool start to appoint third party asset managers and how?
Border to Coast is expecting to appoint its first third party asset managers Q4 2018, with active UK equity mandates (the process to bid for these mandates closed at the end of July 2018). Our first sessions with the asset management industry, which included the process for bidding for these mandates, were held in June 2018; further information can be found [here; include link to external manager day slides]. We expect to hold further sessions regarding future processes later in 2018).