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MANAGEMENT OF THE FUND

Peter Wallach, Head of Pension Fund
                                                                            

Peter Wallach, Head of Pension Fund
 
The overall responsibility for the management of the Fund rests with the Pensions Committee chaired by Councillor Ann McLachlan.
 
In 2008/09 the Committee comprised; Councillors from the Wirral Labour group (3), Conservatives (3), Liberal Democrats (3), Independent (1), representatives of the four other District Authorities (Liverpool, St. Helens, Knowsley and Sefton), an independent representative from the other employers, employee representatives (3), the Director of Finance and other officers of the Fund. The Committee meets around five times a year to review the administrative and investment issues affecting the Fund.
 
The Committee ensures that the administration of the Fund is in accordance with the statutory framework within which the Local Government Pension Scheme operates.
 
The Fund publishes a Governance Compliance Statement confirming that it complies fully with best practice guidance issued by the Department of Communities and Local Government (DCLG). The Committee also ensures that the management of the Fund’s assets falls within the requirements of the Local Government Pension Scheme (Management and Investment of Funds) Regulations 1998. These regulations require the Fund to have regard to both diversification and suitability of investments and stipulate the requirement to take proper advice when making investment decisions. The Fund’s Funding Strategy Statement (FSS) and Statement of Investment Principles (SIP) provide further information on the investment framework.
 
The more detailed consideration of investment strategy and asset allocation of the Fund’s portfolios is considered by the Investment Monitoring Working Party (IMWP). This Working Party meets six times a year to review investment strategy and to receive reports on investment activity undertaken in the previous period.
 
One of its important tasks is to monitor the performance of the Fund’s external and internal managers which is undertaken in conjunction with professional advisers and the Fund’s officers. The Working Party comprises; the Pensions Committee, two independent advisers, Mercer Investment Consulting and members of the in-house investment team.
 
With regard to its investment management activities, the Fund uses a combination of internal and external management, both active and passive strategies. The in-house investment team manages active UK and European equity portfolios, property, cash and alternative investments such as private equity, hedge funds, infrastructure and commodities. JP Morgan and Unigestion manage active European equity portfolios and Nomura is responsible for equities in Emerging Markets, Japan and the Far East. UBS manages North American equities on a passive basis.
 
Active bond mandates are managed by Schroders and Legal & General Investment Management. Legal & General also manage the Fund’s other passive investments. During the year, the Fund appointed four unconstrained managers to run active UK equity portfolios. This is consistent with our investment strategy; focussing not just on asset allocation, but also style diversification and suitable apportionment of risk.
 
The managers have both proven and diverse, yet complementary, approaches to long-only equity investment.
 
Internal fund managers report to the Director of Finance through regular Fund Operating Group meetings and follow laid down compliance procedures. External and internal fund managers have been given specific benchmarks against which performance is measured and monitored quarterly at meetings of the Investment Monitoring Working Party. Cordea Savills Investment Management Ltd, who report to the Head of Pension Fund, act as strategic property advisers. The day-to-day management of the properties is handled by CB Richard Ellis, with an independent half yearly valuation of the property portfolio being carried out by Colliers CRE.
 
 

Risk Management
 
The Fund’s governance arrangements, set out in the preceding section, ensure that the management of fund administrative, management and investment risk is undertaken at the highest levels. The Fund recognises that risk is inherent in many of its activities and makes extensive use of external advisers and industry best practice in assessing and establishing policies to identify and mitigate those risks.
 
The principal documents relating to risk management and control are the Fund’s:
 
These documents are all subject to regular scrutiny by Pensions Committee and officers, and provide details of the key risks and explanations of the policies and controls adopted to mitigate them. These arrangements are assessed at least annually by the Fund’s external and internal auditors.
 
Additionally, and where applicable, the Fund adheres to the administering authority’s constitution in managing its operations. Legal opinion and advice is provided by Wirral’s legal team and from external sources where appropriate.