GOVERNANCE OF PENSION FUNDS

1
GOVERNANCE OF PENSION FUNDS

• DO INVESTMENT COMMITTEES NEED TO BE MORE
  INCLUSIVE?
• BRIAN BAILEY
• DIRECTOR FOR RESOURCES AND SUPPORT
• WOLVERHAMPTON CITY COUNCIL
• WEST MIDLANDS PENSION FUND
• 6 NOVEMBER 2006

2
BACKGROUND

• LGPS regulations requiring Funds to prepare,
  publish and maintain Governance Policy Statements
  (November 2006).
• ODPM/DCLG Survey of Statements leading to July
  2006 DCLG consultation on Governance
  Arrangements.
• Audit Commission letter to Secretary of State
  (July 2006) on governance and accountability of
  LGPS pension funds.
• Trend associated with interested parties waiting
  engagement and accountability issues.

3
FOCUS IS ON COMMITTEE MEMBERSHIP

• The consensus is Pension Funds should have a
  broader membership than administering body
  councillors.
• But who should be represented out of the many
  interests
• - Non-administering body councillors
• - Trade Union representative.
• - Admitted bodies.
• - Others?

4
GOVERNANCE

• To direct, to control, to determine, to exercise
  authority.
• To be accountable, to demonstrate good governance
  (integrity, openness, fairness).
• How a Fund demonstrates good governance is just
  as important as how its committees are made up

5
ELEMENTS OF GOVERNANCE
Pensions Committee
Advisors and Officers
Investment Sub-Committee
Trade Union Representatives and Provision of
Information to Interested Parties
Meet Local Needs and Match National Good Practice
6
WHAT MEETS LOCAL NEEDS?
Communication Engagement Accountability
Committee Representation
The more remote the Committee representation
the greater the need to engage.
7
COMMUNICATION, ENGAGEMENT AND ACCOUNTABILITY

• INVESTMENT MATTERS

Investment Strategy
Active Company Governance
SIP/FSS
Myners Compliance
8
Investment Strategy

• STATEMENT OF INVESTMENT PRINCIPLE

Valuation Results How much to be paid into the
Fund and when payable to meet current future
expenditure
Funding Strategy Statement How solvency and risks
will be managed having regard to liabilities
Statement of Investment Principles How the
Pension Fund will be invested and managed
9
CUSTOMER CARE
Customer Care Charter
Communication Strategy
Consultation
Engagement Roadshow
10
THE GOOD GOVERNANCE STANDARD FOR PUBLIC SERVICES

• Sir Alan Langlands Commission
• January 2005

11
PRINCIPLES OF GOOD GOVERNANCE
Engaging Stakeholders and Making Accountability
Real
Promoting values for the whole organisation and
demonstrating good
Performing effectively in clearly defined
functions and roles
governance through behaviour
Focusing on the organisations purpose and on
outcomes for citizens and service users
Developing the capacity and
capability of the governing body to be effective
Taking informed, transparent decision and
managing risk
12

• DO INVESTMENT COMMITTEES NEED TO BE MORE
  INCLUSIVE?

Communication Engagement Accountability
Committee Representation
Meet local needs and match national good practice