Mark Spilsbury, Head of the Pension Fund presented the report. He proceeded to explain that this was a standard report produced by the Local Government Association which all of the Funds within the Brunel Pool were submitting to their Pension Committees, as recommended by the LGA, to get approval to opt up to professional client status.
It was explained that the Gloucestershire LGPS already had this status but under the amended MIFID 2 Directive, all LGPS Funds would be down graded to retail investor status.
Members appreciated it was a technical report which sets out the implications of having retail status in paragraphs 4 to 6, and gave the process for opting up. In practice the clear expectation was that all Pension Funds would be granted professional client status.
It was put into context, as the minimum level of Assets under management need to be considered for professional status was £10 million.
The Head of the Pension Fund explained that there was really no choice because if retail status continued past 3 January 2018 investment costs would rocket and most of the financial institutions we dealt with, including the new custodian/administrator appointed under the Brunel partnership, may well refuse to deal with us, or at least reduce the products available to us.
In response to a question, Members were informed that the level of training received was comparable to other Authorities. It was noted that newly appointed members to the Pension Committee were required to attend an LGA Pension Committee training course. The Chairman added if members wanted any further training, they should contact the Head of the Pension Fund directly to make the necessary arrangements. Members requested that any training opportunities be actively flagged up for their attention. Action – Mark Spilsbury/Members
The Head of the Pension Fund and the Independent Advisor agreed to discuss possible areas for training, which included private debt, responsible investing, ethical investments, etc. The consensus was that more regular training would be beneficial to members. It was suggested that perhaps the LGA should host a condensed refresher training event, in order to keep members up to date. The Strategic Director of Finance agreed to relay this view to the LGA. Action – Jo Walker
It was noted that all LGPS Funds were being expected to go through this process. Therefore, the Committee was asked to approve the recommendations set out on Page 17 of the report, which basically meant the Fund retains the status quo going forward.
That the Pensions Committee approved the report recommendations, which were as follows:
i. The Committee noted the potential impact on investment strategy of becoming a retail client with effect from 3rd January 2018
ii. The Committee agreed to the immediate commencement of applications for elected professional client status with all relevant institutions in order to ensure it can continue to implement an effective investment strategy.
iii. In electing for professional client status the committee acknowledges and agrees to forgo the protections available to retail clients attached as in Appendix 1.
iv. The Committee agreed to approve delegated responsibility to the Strategic Finance Director and the Head of Pensions for the purposes of completing the applications and determining the basis of the application as either a full or single service.