Agenda item

a)    The Committee noted and commented on the main points identified for the DLUHC consultation response.

b)    The Committee delegated responsibility for approving the final DLUHC consultation response to the Head of Clwyd Pension Fund.

            Mr Latham took the Committee through this report. Officers and advisers proposed a draft response to the consultation, but noted that the final response should come from the Committee. The Committee were therefore being asked to provide any comments. The proposed response had been drafted from the point of view of Clwyd Pension Fund. Other funds within the LGPS are likely to be affected in different ways so will pick up on different issues.

            Mr Latham noted that WPP will be submitting its own response to the consultation which the Officer Working Group and the I, as a member of the Joint Governance Committee, would have the opportunity to input into. It is hoped that there will be consistency in responses from funds across Wales and the appendix therefore notes key areas where the Fund intends to take views from WPP once their response is agreed on.

            The Consultation document did not state if WPP would be exempt from the proposed future minimum £50 billion pool size. However, DHLUC officials have suggested that there is no intention to require cross border pooling so WPP will be given an exemption. This may be emphasized in the WPP response. Mr Latham explained that the Fund’s response had been drafted on the basis that the Committee was happy for WPP to continue in its current arrangement and asked the Committee to confirm that this was the case, to which there were no objections.

He then talked through the key points of the draft response where officers’ and advisers’ views did not align with the proposals within the consultation, highlighting:

-       The Fund’s view that investment strategy should continue to be determined locally by the Committee and that Pools should not provide investment advice as this would appear to be a conflict of interest.

-       The proposal that the constituent funds’ investment strategies should be closely aligned. The Fund currently has its own liabilities and manages inflation and interest rate risk differently from other funds. Under the proposals the Fund could not continue its existing strategy.

-       The Fund was already doing work in levelling up investments, including its work with Good Economy, and aligns with most of the proposals in this area. However, Mr Latham raised concerns about the proposal to report against the twelve levelling-up missions of the current Government. He noted that the industry continues to make progress in reporting against sustainable development goals, and his view that these would be more suitable targets to align with. He also noted that the twelve missions do not appear to include renewable energy.

-       The Fund has a long history of investing in private equity which not all LGPS funds do. However he suggested that rather than being restricted to private equity, the definition should be broadened to private markets in order to capture debt investments and other asset classes.

            Mr Latham noted that the deadline for responding to the consultation was 2 October 2023, which is before the next scheduled Committee meeting on 29 November.

RESOLVED:

a)    The Committee noted and commented on the main points identified for the DLUHC consultation response.

b)    The Committee delegated responsibility for approving the final DLUHC consultation response to the Head of Clwyd Pension Fund.