DECISION

1.            To participate in the establishment of the London (LGPS) Collective Investment Vehicle (CIV)

2.            To participate in the establishment of a private company limited by shares to be incorporated to be the Authorised Contractual Scheme Operator (the ‘ACS Operator’) of the London (LGPS) Collective Investment Vehicle (CIV), the ACS Operator to be structured and governed as outlined in this report.

3.            That following the incorporation of ACS Operator, the London Borough of Tower Hamlets:

·         become a shareholder in the ACS Operator.

·         contribute £1 to the ACS Operator as initial capital;

·         appoint  an executive member to exercise the Council’s rights as shareholder of the ACS Operator; 

4.    Under Regulation 11 of the Local Authorities (Arrangement for the Discharge of Functions) (England) Regulations 2012 to establish the Pensions CIV Joint Committee, pursuant to the existing London Councils Governing Agreement dated 13 December 2001 as amended, to act as a representative body for the Local Authorities participating in these arrangements; and

5.    to delegate to this Joint Committee those functions necessary for the proper functioning of the ACS Operator including the effective oversight of the ACS Operator and the appointment of Directors.

Action by:

CORPORATE DIRECTOR, RESOURCES (C. HOLME)

(Investment and Treasury Manager (B. Tobun)

(Chief Accountant (K. Miles)

Chris Holme, Corporate Director, Resources, introduced the report. He highlighted that this report was one part of a process in considering a proposal to establish Collective Investment Vehicle for London Local Government Pension Schemes.

The Mayor agreed the recommendations as set out in the report.

RESOLVED

1.            To participate in the establishment of the London (LGPS) Collective Investment Vehicle (CIV)

2.            To participate in the establishment of a private company limited by shares to be incorporated to be the Authorised Contractual Scheme Operator (the ‘ACS Operator’) of the London (LGPS) Collective Investment Vehicle (CIV), the ACS Operator to be structured and governed as outlined in this report.

3.            That following the incorporation of ACS Operator, the London Borough of Tower Hamlets:

·         become a shareholder in the ACS Operator.

·         contribute £1 to the ACS Operator as initial capital;

·         appoint  an executive member to exercise the Council’s rights as shareholder of the ACS Operator; 

4.    Under Regulation 11 of the Local Authorities (Arrangement for the Discharge of Functions) (England) Regulations 2012 to establish the Pensions CIV Joint Committee, pursuant to the existing London Councils Governing Agreement dated 13 December 2001 as amended, to act as a representative body for the Local Authorities participating in these arrangements; and

5.    to delegate to this Joint Committee those functions necessary for the proper functioning of the ACS Operator including the effective oversight of the ACS Operator and the appointment of Directors.

The Chief Accountant introduced to report advising the committee that a proposal to merge London pension schemes (CIV) had been suggested.  The following were noted:

• London Councils have asked all London boroughs to express their interest in the merger scheme by the payment of £1.00
• the proposals for fund mergers would reduce managers’ fees
• proposals were under investigation at present and Tower Hamlets, Hackney and Southwark councils were jointly seeking advice from a barrister on the implications of pooling their pension schemes.
• it was expected to take a year to initiate the CIV
• An information event was shortly to be held and most London councils had accepted an invitation to this event

The Committee supported the proposal to explore and pursue the expression of interest, However:

• Members asked for care in considering the proposal, since pooling would also mean that councils’ individual ability to direct their own preferred investment strategy would be diminished. 
• it would be necessary to understand how the Council would be expected to pool its investments and assess what proportion of its investments the Council wished to pool and what proportion it wished to retain under its own control.  The Hymans Robertson Representative informed Members that only investments into the same asset management pool would be placed into the appropriate CIV.

RESOLVED

1. That the report and discussion be noted
2. That TH Pension Fund be authorised to express its interest by the payment of £1.00