LONDON (04 October 2016) – Aon Hewitt, the global talent, retirement and health solutions business of Aon plc (NYSE:AON), has produced in conjunction with the Chartered Institute of Public Finance and Accountancy (CIPFA) a guide to Investment Pooling Governance Principles for Local Government Pension Scheme (LGPS) Administering Authorities. The 90 LGPS Administering Authorities in England and Wales have been tasked with working together to pool their assets into what may be up to eight arrangements. It is expected that initial liquid asset transfers will commence by April 2018 at the latest.
The guidance has been written by Karen McWilliam and Dave Lyons and their colleagues in Aon Hewitt’s Public Sector Team. Support has also been provided by Neil Sellstrom at CIPFA, with legal guidance provided by Clifford Sims of Squire Patton Boggs. The guidance outlines key principles on which Administering Authorities should focus when adapting their own governance arrangements to fit with the new asset pooling environment, as well as highlighting areas that the Joint Oversight Committees of the pooling arrangements should consider.
Looking at the key challenges for local authorities implementing new investment pooling governance arrangements in the LGPS, Karen McWilliam, Head of Public Sector Benefits and Governance Consultancy at Aon Hewitt, said:
"With the advent of investment pooling arrangements, Administering Authorities will need to reassess their existing governance arrangements as well as ensure that the pooling arrangements' Joint Oversight Committees have their own robust governance in place. This is a brave new world for LGPS funds and we hope this guidance will be a helpful aid for them."
Dave Lyons, 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 is important that the asset pools themselves are robust, effective and well managed, 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."
Neil Sellstrom, Adviser, Pensions and Treasury Management at CIPFA, 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.”
For further information please contact:
Colin Mayes Anelia Fikiina
Aon Hewitt CNC
01372 733689 020 3219 8887
Notes to Editors
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