The Director provided the Board with an update on current governance related activity and regulatory matters.

Members questioned the reasons why there has been no uptake for the employer post on the Local Pension Board and whether there are any actions based on feedback that can be taken to mitigate this.

The Director responded that the Authority has not received any direct feedback, but instead heard that people are too busy to uptake the role or feel pensions is a very technical area which is intimidating to some. Allowances have been made available for the post and the Authority will continue to keep promoting the role.

Members probed around the Government Consultation response and elements within this response being ambitions rather than mandatory requirements, and asked what the decision-making process will be within the Authority to provide a response in the best interest of our members.

The Director responded that the Government have framed these as ambitions to ensure they are not seen to be telling pension funds how to invest.

The Authority have already taken a decision in relation to place based impact investments (which address “levelling up”) targeting 5% of the fund, and this decision was led by a working group of members of the Authority. This was being conducted with a focus on things we can invest in to support the growth of the South Yorkshire economy, but this doesn’t change the investment strategy.

One of the ambitions in the Government Consultation was that 10% of an LGPS fund is invested in private equity, this is more challenging particularly when putting money into UK private equity through a pooled structure.

If the Authority did decide to increase the allocation, which is already at the top of the range in the LGPS, the money would need to be taken from somewhere else so this will need to be addressed at the Investment Strategy review. This is not currently a priority before the review as the Authority are well above average in the LGPS.

Members further probed around the Government Consultation asking if the Authority would do anything before 2025 or would it wait for the valuation.

The Director responded that, for levelling up investments, the Government have asked for LGPS funds to produce a plan.

The member working group report provides the basis for this plan and hope to get this done in the next 12 months and this is also helpful in setting some of the framework for the strategy review.

In addition to this, there are some things on reporting which the Authority will seek to implement before they become mandatory. 

Members sought assurance on investing in levelling up and how the Authority would make money on these investments. 

The Director provided assurance that all local and “levelling up” investments were judged against the same financial criteria as other investments in the same asset class.

Members asked if the Board would receive a briefing on the context of the new General Code of Practice.

The Director responded that this will be reflected in the development programme next year.

RESOLVED: Members a) Noted the updates included in the report and b) welcomed the action being taken to undertake an Independent Governance Review.