LGC Investment Supplement - December 2011

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Rising to the challenge

If this autumn feels bleakly similar to 2008, that’s because it is, only (quite possibly) worse. With markets in meltdown, political paralysis, talk of a new global credit crunch and the sovereign debt and eurozone crises darkening by the day, it’s not hard to see how the role of the local authority pension fund manager - making complex, multi-layered decisions today for decades ahead, yet with a heavy responsibility to manage, protect but also grow the retirement nest-eggs of
hundreds of thousands - is a deeply challenging place to be at the moment.

If that wasn’t burden enough, managers are wrestling with some of the most ambitious reforms of the LGPS for a generation, in a climate where funds are maturing, membership levels and contributions are eroding, ageing population demographics are starting to bite and local authority budgets are being squeezed until the pips squeak. Oh yes, and there was the small issue of a nationwide strike over pensions last week. So, no pressure then.

Thankfully, as the contributors to this latest LGC Investment supplement make very clear, local authority pension fund professionals are rising to these challenges with aplomb.

Bridget Uku’s and Tracie Evans’ outline of how funds are reacting to the eurozone debacle shows the importance of staying nimble and responsive without losing sight of the bigger picture.

Phil Triggs and Graeme Russell highlight how, amid the complex toing and froing of pension reform, pension fund managers need to retain a role as gatekeepers of the higher principles of the LGPS: protectors of what public sector pensions actually are for.

Nathan Elvery, meanwhile, illustrates how a future, bluesky model of shared investment services might work, while Keith Bray emphasises the continuing importance of environmental, social and governance issues. The conclusion to draw is that local authority pension fund management remains robust and imaginative even in these straitened, challenging times. Long may it be so.

Nic Paton, editor

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Expert Opinions in the Supplement Including:

Comment - Emerging markets debt moves into mainstream

Gillian Evans, UK Institutional Business, Goldman Sachs Asset Management

Comment - Fund managers must face up to inflation

Joseph McDonnell, managing director, Morgan Stanley Alternative Investment Partners

Comment - First, pick your index…

Nick Hodges, business development manager, Legal & General Investment Management