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LPF response to SAB structure consultation

Published: Thursday, 20 December 2018

The Fund issues it's full response to the Scottish LGPS Scheme Advisory Board’s Consultation on Structure.

In June 2018, the Scottish LGPS Scheme Advisory Board’s Consultation on Structure was launched with four options for the future of the Scottish LGPS.  The purpose of the review is to determine whether the long-term interests of scheme members and employers can be served better by changing the current structure.

The consultation document identifies four options for consideration:

Option 1 - Retain the current structure of 11 Scottish LGPS Funds

Option 2 - Promote greater co-operation in administration and investing between the 11 Funds

Option 3 - Pool investments between the 11 Funds

Option 4 - Merge the 11 Funds into one or more new Funds.

Full response
The Fund has issued its full response to the SAB consultation. 

Interim response
The Pensions Committee, at its meeting on 26 September, agreed its interim response that option 4, merger of funds into one or more new fund, was the preferred option.  Councillor Alasdair Rankin, Convener, Pensions Committee, City of Edinburgh Council stated, “We acknowledge that  merger is not a panacea and will involve significant change, particularly in relation to governance, which may not be palatable to some stakeholders and merger to a single fund could be difficult. Therefore, LPF’s preferred option would be to work with like-minded partners on a voluntary basis to develop a mutually beneficial merger solution.”

In recent years, LPF has made significant inroads in its collaboration via its FCA authorised company through which it advises other funds and hence allow funds to work together, address key person risks and develop trust within the current structure. These developments in collaboration, with like-minded investors, are welcome. Partner funds are benefiting from LPF’s internal resource and LPF is sharing its costs. However, there has not yet been any significant impact on any of LPF’s investments. The arrangements are expected to evolve and for LPF to benefit from greater overlap in investments. The governance of LPF’s collaborative arrangements is not straightforward. While other funds rely on advice from LPF, they need to continue to be resourced appropriately to make decisions for their respective funds. Further, there are practical constraints to the expansion of this type of collaboration.

Read the interim response here.