Review of the Year 2019-20
The SAB kicked off the year by receiving the final report from the Pensions Institute, who had been commissioned to consult on a review of the Structure of the Scottish LGPS.
Respondents were asked to evaluate the scheme against the criteria of investment costs, governance, operating risks and ability to invest in infrastructure. The suggested actions from the research were to evaluate the case for merger; to examine how the Scottish Government could help boosting the supply of Scottish infrastructure investments; to challenge investment costs by making reporting using Institutional Disclosure Working Group templates mandatory; and to examine measures to ease the ability of multi-fund employers to consolidate into a single fund.
The SAB Chair wrote to the Cabinet Secretary with the outcome of this research, and in reply the SAB was asked to take forward work into the details of mergers and pooling and later included co-operation between funds. A detailed specification was prepared by a SAB working group and approved, before COVID struck and much of the work programme was severely disrupted.
The Autumn also saw the “Section 13” report by the Government Actuaries Department (GAD) on Fund valuations. It found that the valuations were compliant, and in aggregate that the funds were fully funded. It did highlight a recommendation that a standardised way of funds reporting, which would allow some cross-comparison, would be desirable.
In the new year, the ground-breaking online cost transparency system went live. This is the first step in a project which will allows fund managers to upload their cost transparency reports and Funds to analyse and compare these.
COVID disrupted the March 2020 meeting of the SAB, and so there were only three in the year, but many pieces of work were subsequently picked up and taken forward.
More detailed updates on key issues are included later in the Report.