I've used MSCI's categories, MSCI are, are a rating agency, here, to give you types of-, an idea of the types of issues that crop up underneath the three banners E, S, and G. Firstly, the E is environment, it's probably the most talked about, I would say, especially in the last twelve to eighteen months, of all the three, given various net zero commitments from government around the world, Joe Biden in his first day in office in the White House even rejoined the Paris Agreement on day one. Pensions Increase 2021: 0.5%: 2020: 1.7%: 2019: 2.4%: 2018: 3.0%: 2017: 1.0%: 2016: 0% (no increase due to a -0.1% revaluation) Do all pensioners qualify for increases right away? And so, their emissions are substantially higher, and you're not really comparing like for like, you're not really comparing apples and apples in this instance. And your employer pays in too : the Scheme is provided by your employer who meets the balance of t he cost of providing your benefits in the LGPS. This is an uplift of 0.5% in line with the rate of inflation that was confirmed on 21 October 2020. So, we already have a very structured pension board representation, but this was looking at the role of other employers in the fund, not the administering authority. The LGPS update took place on 26 January 2021. Moving on to the UK stewardship code, so again, new requirements for sustainability reports, which need to be more outcome focused. We need some kind of mechanism for that, that so what (ph 48.26) piece to, to ensure that we are raising the bar for, for everyone.' And finally, as the age profile of LGPS funds change, like all other pension schemes around the UK pensions industry, you're likely, likely to see increase demand for impact investments. Some administering authorities report that they've undertaken some initial analysis of their pension records, and around 25% to 30% of those pension records are likely to be impacted and to have to be looked at again. That enquiry will run till 30th April. The Local Government Pension Scheme (Scotland) The purpose of this consultation is to seeks views on changes to the Local Government Pension Scheme (LGPS) in Scotland. If we move to the next slide after this, Josh, and this is the problem facing us all un fortunately. So, this leaves LGPS authority-, LGPS administering authorities and employers in a bit of a pickle, and on screen is a headline from the LGC magazine last October, just highlighting this. Pensions Increase 2021: 0.5%: 2020: 1.7%: 2019: 2.4%: 2018: 3.0%: 2017: 1.0%: 2016: 0% (no increase due to a -0.1% revaluation) Do all pensioners qualify for increases right away? The pension increase for 2017 was 1%. ESU factors can have both positive and negative impacts on, on the scheme's investments, and we'll go on to look at one of the negative examples a bit later on. I'll be happy to take some questions at the end, but for now I will pass over to Bob, thank you. However, it’s likely to be the guaranteed minimum of 2.5% – much higher than current inflation and earnings growth figures. I think there's, Josh said earlier, I don't think it's about getting out tomorrow, because that might not be in the best interest of the fund and the best interests of the scheme member. Can they prove it's integrated at each stage of their investment process, are there meaningful outcomes from engagements? Lorraine Bennett: I think it's probably a mixed picture. The price increases will become effective as of February 1 st, 2021 or as contract terms allow.. 27 January - LGPC Bulletin 205 published LGPC Bulletin 205 has now been published and is available on the LGPC Bulletins page: 18 January - Strain cost caveat working published We have published caveat wording for LGPS administering authorities to use when providing strain cost quotes to employers subject to the exit cap. Employers can apply for the cap to be waived in certain circumstances, for example, due to undue hardship, or where workplace reform would be inhibited. Lothian Pension Fund, one of the Scottish pension funds in the LGPS, have a nice way of phrasing it, saying, 'Engage on equity,' is engage when you're holding shares, and look to deny in debt if you don't believe companies are, are pulling their weight on ESG. members with benefits on hold or pensioners already receiving their pension. The third area considered was, was knowledge and understanding, and this was really making sure that everybody who's involved in the governance has the right level of knowledge and understanding to help them undertake that role. Also, the phase two report, as part of the service delivery recommendations, asked for some KPIs, so we've done quite a lot of work on that, and then, the, the other area that a significant amount of effort has gone into is looking at what a new governance compliance statement might look like. 2021. We've lost our zebra, we've demerged from the broader Investec group, and I'm delighted to say we've successfully listed as an independent asset manager, Ninety One. So, instead of paying the strain to the pension fund because they can't pay that, they would pay a lump sum to the member themselves up to the £95k cap limit. I think it, it's a really important topic, or-, albeit slightly ironic that it's snowing outside, or there's snow outside when we're talking about global warming, but nonetheless global warming for us is, is a really important issue, our winters aside, and what we'll talk about now is firstly we'll start off on a somewhat pessimistic note and describe how bad the situation un fortunately is, is looking, but then as Josh said, seeing what we can all do to improve things and importantly for us as investors with responsibilities to, to members etc., what we can do to, to, to benefit from some of the many initiatives that are taking place to address this challenge. So, a major chunk of work there for the new responsible investment advisory group to advise the board on how it should respond to that particular consultation. Once these guidance goes out, hopefully, we're now thinking about probably mid-February, we'll also continue to monitor the position. So, increasing regulation is, is something that you're gonna see continue, continuing. Employer guides and documents. 2nd March 2021 Employer Flexibilities guidance published. Josh Kriskinans: And also we spoke about engagement earlier Atul, and I think the ability to hold these companies, and not divest, and engage with them on, on, on their various scope one, two and three disclosures is a really powerful thing, and if you're able to hold investments in companies and engage with them over time then you're gonna help drive that change and improve the data quality in the industry. At Ninety One, as I've said, we really believe in the power of engagement in order to preserve and grow value for our clients, and these engagement can be held over the short medium and long term, over a variety of different areas, that they can resort in real benefits to society and the businesses themselves. Yes, no problem. Second thing is S, where we look at social factors. If you reach SPA after 5 April 2016 but before 6 April 2021, Merseyside Pension Fund pays the whole increase on the GMP as part of your LGPS pension. Josh Kriskinans: I think, I think the divestment versus engagement one is always gonna be one that splits opinion across the industry and people will have their own views. Only 19% of respondents said they would continue with the virtual only format when face-to-face meetings were possible. You tend to fill it up with more, so that's using probably more carbon than, than you need to. LGPS update,26 January 2021. Atole Schin: Well, I, you probably won't be surprised for me, to hear, but, like, imminently, now. You will usually receive this increase if: you are receiving a pension and you are over 55. you retired because of ill-health, or. Rachel: There's a couple of questions about concerns about batteries, and so whether electric vehicles are a good idea. Read more . The pension increase for 2017 was 1%. Bob Holloway: I think it's also important to point out that this independent review really is a tool for the scheme advisory board to monitor how standards of governance and administration are improving across the scheme. This could be investing positively to tackle climate change or into social housing products, for example. Ferrari said it’s in no rush to find a new CEO at this given moment, as the company announced its financial targets for 2021. I mean, a, a, a lot of (mw 01.30.37) investors are very much long term investors and, and they should be considering their decisions and how they can effect change, and take a real long term view on what is a long term problem, and there's still opportunities to change companies' business models and various other things over time with the correct engagement. MHCLG, as you'll be very aware, are quite stretched for resource just now, as well, dealing with some of the, the issues that have been touched on this morning, but we are still working with them and talking to them about when, when resource might be available to, to take this forward after it goes to the scheme advisory board. So, for example, a lot of engagements at the moment with big tech companies around data privacy or engaging with oil companies such as Shell or BP on their respective commitments towards renewable energy, and that is likely to continue. And finally, pooling. Please read more Full 2021 News Archive. For those of you not familiar with Ninety One, you may previously have know us as Investec Asset Management, and since March of last year there's been a few changes on our end. Read more . Some of our services are affected by the pandemic. The Covid-19 pandemic is not simply a public health crisis, it is also affecting societies and economies at their core and will increase poverty and inequality globally. You can see there, on the-, just before the graph falls off on around September 18th that the Environmental Protection-, Protection Agency actually announced fines against Volkswagen for cheating on their emissions testing for diesel vehicles. Expansion of ARRS roles (additional roles agreed in October 2020 to continue, and paramedics, AHPs and MHPs to commence from April 2021). The share price quickly dropped 15% on the back of this news, there were New York law firms involved, class actions, Volkswagen then went on to confirm that 11 million of their cars worldwide actually included this defeat device in the software, which meant that they could report up to 40 times less emissions in their vehicles. The pensions increase for 2018 was 3%. Last updated 12 January 2021 — see all updates. So, we're still keen to share some of that as part of the best practice, but the scope of this is focussing on other elements of the governance. The pension increase for 2019 was based on 2.4%. The first of them is regulation and policy, and actually we find ourselves slightly in a minority of liking regulation and policy in respect of what we do. Now, you might say, 'Well, we're all in lockdown, when we were in lockdown in March and April last year there's a lot of press around carbon emissions reducing, and isn't, isn't gonna solve everything?' We understand that MHCLG received around 700 responses to the consultations, with many of those commenting on the inequity of reducing the strain cost if a redundancy payment is payable. Pensions lifetime allowance to increase 0.5% for tax year 2021-22. I think that's going to slip by a few weeks, so we're probably talking about mid-February, I would hope, and touch wood, but I think both as an administering authority and as scheme employers, I think you really do need to look at this guidance in quite detail before you start thinking in any sort of great detail about the way in which applications might go. This is in line with the increase in the RPI for the 12 months up to September 2020. For exits from 12 February 2021, LGPS Administering Authorities must pay qualifying scheme members an unreduced pension under Regulation 30(7) of the LGPS 2013 regulations. This disciplined approach and deep skills in the residential investment sector set us apart in the market as a manager. LGPS Regulations and Guidance COVID-19 news and information: Welcome to the website for LGPS employers and pension funds in England and Wales: Home; Scheme regulations. What's many less well understood is the green set of scenarios relates to what we need to do in order to keep global warming to one point five degrees, which is largely considered as an acceptable pace and level of, of global warming. There is much debate and evidence on the suffering caused by housing insecurity on individuals and the positive impact of good quality affordable housing on regional competitiveness, economic performance, citizens’ health, wellbeing and quality of life. From a company perspective, when we're investing in companies, it's very common for companies to talk about these concepts called scope one and scope two carbon emissions, and a scope one emission simply relates to direct emission from, from the fuel burned on site or the vehicles that you own, so in other words, what comes out of your chimney pipes or your exhaust pipes. • Stable and predictable capital values, diversification Although implementation has been delayed until 2023 administering authorities will need to start work to make sure their data and pensions software systems are dashboard-ready. Well, increasingly managers like us are assessing companies not just in relation to their, their financial prospects but also, you know, in relation to the impact they have on, on the environment and on society, as Josh talked about earlier. We're expecting that from MHCLG shortly, so again, this is another watch this space and I'm afraid more work for you all to do. The original timetable was for them both to be published at the end of January. The next really major chunk of work the board's been doing is on an A to Z online guidance on responsible investment. MHCLG are working on statutory guidance to assist admin authorities and employers. The, the, the working group's also recommended that we have an enhanced governance compliance statement, where much of the change and much of the recommendations out of the phase one and phase two will, will effectively be reported and recorded, and also that all of this would be enacted through changes to the statutory guidance on governance of the funds. So, other councils and other employers which, which may include academies, other higher education bodies, and, and third sector employers that participate, how their views are represented and taken into account in, in the governance of the fund. Atole Schin: Yeah, absolutely. This protection will apply automatically – LGPS members who meet the qualifying criteria do not need to take any action. Bob Holloway: Yes, this is the Task Force on Climate change Financial Disclosures. But actually, if you're a fan of a latte, or if you drink your tea in the incorrect way of having much more milk than you have tea and water, then that significantly increases your carbon footprint because of the amount relating to, to milk. The other area of work which some of you will be aware of-, you may be aware that the LGPS all-party parliamentary group has just launched an enquiry into just transition. Disclaimer. I'm pleased to be joined today by my colleague, Atole Schin, and Atole, do you want to quickly introduce yourself now so that people know you're on the line? Are we expecting any challenges on the grounds of age discrimination? Joshua Kriskinans: Sure. Bob Holloway: Are we talking about scheme members or electing members? Pensions Increases - 2021. Use the filters menu to narrow down your search by subject matter, intended audience, year of publication or any combination thereof. I should say that we are hoping to run a conference, a proper face-to-face conference, next year on the 20th and 21st January in Bournemouth, so hopefully that fingers crossed we'll be in a situation we can do that, but apart from that I hope to see you there, and I'll remind you at the end, but, oh, the last thing as well, we are recording the session today so there will be a recording available at some point afterwards, and also we'll be providing you with a copy of the slides as well, if you wish. So, there's still a lot of unknowns, it's a huge undertaking, and as you would imagine a cause of concern for administering authorities. Josh Kriskinans: I would back that from an investment manager's perspective as well, Bob. And this chart shows the temperature differential last year versus the average of the temperatures around the world from the 1980s to 2010, and almost everywhere, particularly in the ice cap Siberia region, there are significant increases in,- in temperature. It provides for additional investments to restart services in a Covid-19 environment. As you will know, timing is very important, administering authorities need enough notice to plan effectively and ensure that software suppliers can programme the necessary changes, and this is something that we have been and will continue to push government on. I'm just going to share my, my screen with you. There was, I think, a worry amongst some people that the COVID pandemic and the implication of that might've stopped the trend that we had been seeing. They're, they, they contribute to the solution and they're certainly better from a carbon impact perspective than otherwise is the case, but they, they're not, they're not the, they're not the panacea of carbon reduction. The yellow set of outcomes relate to a range of possible outcomes based off current policies, and in that scenario you're still seeing a pretty meaningful increase in temperatures of about three and a half degrees. Purpose of the instrument 2.1 This instrument specifies the amount by which the Guaranteed Minimum Pension element of an individual’s … So, when MHCLG consulted on the regulation changes to amend the rules to accommodate the cap, they also consulted on further changes to local government exit pay, and, and the proposed changes that they're planning to reduce will limit the amount of discretionary compensation pay that can be paid to all employees, and provide that where employees aged 55 or over leave due to efficiency or redundancy they will be-, they'll be provided with more choice. Just to mention of course, this time last year just about we were actually holding our face-to-face conference. So, one more general, whoever wants to pick this one up, so, turning back to the point of the Covid-19 and the impact of working remotely, how do we seek to ensure that remote access works well for those members who have limited ability or means to seek such access? What I mean by that is giving you a false impression that they take ESG seriously. TCFD, so as Bob mentioned, that's the Task Force of Climate Related Financial Disclosures, that-, that very much started in the private sector, and us, at Ninety One, as a business will be releasing our own TCDF report later in 2021. Sunak fails to spot the levelling up wood through the top-down trees. When we asked them what their-, what authorities' plans were for future working arrangements, the majority said they expect to offer a more flexible working environment in the future, so a mix of home and office working, but 13% of respondents reported that they expect the majority of their staff to return to office working on a full-time basis in the longer-term. Employer's can access the latest newsletter here. But maybe a bit more, more seriously onto the next slide. Josh Kriskinans: No, no, I would say absolutely. I'm not aware of any challenges on age discrimination, but I can see how that-, how that could be applied. By Mike Weston, CEO, LGPS Central Limited. There are long waiting lists for affordable housing, and if a tenant leaves voluntarily, they must find accommodation in the private market. Some managers might be talking to the talk, but they really need to be walking the walk as well and integrating ESG throughout their investment strategies. Anyone? How do reviews, how does the deferred debt agreement or the debt-spreading agreement begin? So, from what you know, what do you think the-, how prepared are funds for McCloud? There could be a review of employer contributions mid-term between final valuations. The intention is that over time, perhaps over the first five or six months, the database will become more and more up-to-date and more and more topical. We've had a couple of questions about resourcing. You can find this online with your annual report or the governance compliance statement, they're usually all saved in the same space, so take a look, take a read through, and try and familiarise yourself with some of the, the kind of, the key features of your ESG and engagement philosophies. One of the benefits of your LGPS pension is that it will be increased in line with the cost of living (Consumer Price Index). So, there's lots of work ahead, lots of uncertainty, and lots for administering authorities to do. Rachel: Sorry, I'm just going through to see if we've got any last-minute questions that have come in. This is going to be a, a major piece of work. I think it's about managing that transition out of fossil fuel investments that, that best suits all parties. It won't be a consultation on regulations. The increase that will be applied from 12 April 2021 is 0.5%. State Pension increase 2021/22: The State Pension rose by its biggest amount since 2012 this year (Image: Getty) It saw a new State Pension go up from £168.60 to £175.20 a … This was really talking about how the LGPS administering authorities address the conflict that's inherent in the fact that, that some councils are playing a, a dual role of both being administering authority and an employer in, in the fund. Pension fund committees have a very vital say because they, they are responsible for having their investment strategy statement. Moderator: Yes, I can see them. COVID-19 Update January 2021 . Well, the good news is because of technological advances, we've seen a significant reduction in the costs of renewables as well as electric vehicle batteries, meaning that for the majority of consumers they'd become much more affordable, and for providers of those solutions they, they're able to generate profits as a result. And thank you to all of you who have attended today, hope you found it useful. So, if we take that a step further, with that in mind, and take that forward to impact investing, I would say there's three key things to consider when differentiating the two. Moderator: We're just over time now. Moderator: Hello. So, it won't be identical to what private sector schemes are having to report on climate change risk and financial disclosures. We know that there are regulations afoot to require private sector schemes to report on TCFD, and the government and MHCLG have made it perfectly clear they expect the same to be for the LGPS. We'll then have a ten-minute question and answer session at the end and then we'll take a break, 10:50 until 11:00am. The pension increase for 2019 was 2.4%. Because of this the pensions ombudsman is prevented from making a determination on a complaint, on a-, from a scheme member on the exit cap. So, the trend is continuing in areas like electric vehicles, and in many other places such as in investment portfolios too. So, one is asking, Bob, about squaring the duty to maximise the value of a pension fund to enable it to pay pensions with political decisions related to disinvestment from fossil fuels etc. The Aberdeen City Council Transport Fund has agreed a £230m buy-in with Rothesay in the insurer’s first deal with a Local Government Pension Scheme (LGPS) fund. However, the implementation group has been working hard over the last few months. I think it's, it's, it's the biggest challenge to that sector whereby the, the actual process of mining the, the, the raw materials, be it cobalt or, or, or lithium etc, can be quite intensive and there are associated ESG risks with them. These will be-, these will be approved by the financial reporting council. The survey responses did indicate that administering authorities adapted differently to the challenges, again, not surprisingly. So, yes, we will be monitoring how the new flexibilities are working over a period of time. The board's advice is for LGPS administering authorities to pay an immediate reduced pension or offer a deferred benefit, and for the employer to delay payment of the cash alternative until the legal uncertainty is resolved, and they've recommended this on the basis that it minimises the financial risk to both employers and administering-, and administering authorities, because whatever the outcome they will not be in a position of trying to recover payment from members. 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