Agenda item

Discussion. (Information papers attached)

There had been circulated copies of the Scottish Local Government Pension Scheme Advisory Board Consultation on the Review of the Structure of the Scottish Local Government Pension Fund.  Mr Robertson explained that the Pension Fund Committee and Pension Board had been invited to submit feedback on the four options contained in the consultation documentation. 

6.2       To facilitate discussion, Mr Robertson advised that the Scottish Borders Pension Fund was maintaining a good level of funding and investment performance over the short, medium and longer term.  He referred to the four options detailed in the documentation: Option 1 ‘Retain the current structure with 11 funds’; Option 2 – ‘Promote cooperation in investing and administration between the 11 funds’; Option 3 – Pool investments between the 11 funds; and, Option 4 ‘Merge the funds into one or more new funds’’, summarising the advantages and disadvantages of each option.  It was noted that officers considered that there were significant disadvantages with the full merger option and that the consultation documentation did not provide sufficient information on the impact this would have on funding arrangements.    Full merger would also require a new asset strategy, governance arrangements, TUPE transfer for pension staff and it was likely that local decision making would be severed. Officers felt that it was illogical to make changes when the present arrangements were working well.  There was also a concern that restructuring might unsettle the membership, causing staff to transfer out of the Fund or make alternative pension arrangements.

6.3       There followed a discussion and a number of points were raised: there were concerns at start-up costs of merging funds; lack of clarity as to what the savings would be and the benefit to members;  there was also evidence, from England and Wales, which showed that full merger of funds was not working.   It was also felt that the consultation document supported Option 4.  It was noted that COSLA supported Option 1 or Option 2, and that the preference from the other Scottish Funds, apart from Lothian, was for Options 1 or 2.  In response to a question regarding fee transparency, Mr Robertson explained that all investment managers in the Scottish Borders Pension Fund had signed up to the Fee Transparency Code.

6.4       The Pension Fund Committee and Pension Board were advised that Unison was one of the biggest drivers for Option 4 - full merger.  Mrs Robb advised that she would circulate Unison’s response to the consultation for information.  It was also acknowledged that in the future, Options 3 and 4 could be revisited when clearer outcomes were known.

6.5       Mrs Robb advised that a response to the consultation, incorporating feedback from the meeting would be circulated for comments. The next meeting of the Pension Fund Committee and Pension Board would also be brought forward in order that the final response could be submitted prior to the deadline of 7 December 2018.    Following which, the Pensions Institute would collate all responses and the National Pension Scheme Advisory Board would determine the submission to Scottish Ministers.

DECISION

AGREED

(a)        To request that officers prepare a response to the Consultation on the          Review of the Structure of the Scottish Local Government Pension Fund            and circulate for comments;

(b)       To request that the final response to the consultation to be presented to       the next meeting of the Pension Fund Committee and Pension Board;    and

(c)        That Unison’s response to the consultation be circulated for   consideration.