Information on Local Government Pension Funds: FOI release

Information requested

1. Why is the fund in Strathclyde almost half of the total fund across local council funds?
2. Why are the Investment Management Expenses percentages for by far the biggest pension fund much higher than the percentage fees for all of the other funds?
3. Who administers the fees for each of these pension funds?
4. What value does Scotland get from the £328 million in Investment Management?
5. When are the investment management contracts renewed and how are the managers selected?
6. Does the investment management include payment and management of pensions direct to eligible pensioners?

Response

1. Why is the fund in Strathclyde almost half of the total fund across local council funds?
The data recorded in LFR 24 comes directly from the administering authority of the pension funds and is then validated against the pension funds' annual accounts. As well as having almost half of the total net assets, Strathclyde Pension Fund also has the largest number of members; accounting for 42% of members across all Scottish Local Government Pension Funds (258,378 from a total of 613,195). While there is not necessarily a direct correlation between number of members a pension fund has and the value of its assets, it is not unexpected that Strathclyde Pension Fund accounts for almost half of the total fund (46%) when it also accounts for 42% of total members.

2. Why are the Investment Management Expenses percentages for by far the biggest pension fund much higher than the percentage fees for all of the other funds?
The Scottish Government does not have the information you asked for because this is outwith the remit of the LFR 24 collection. However, you may wish to contact the Scottish Public Pensions Agency (SPPA) or the relevant Pension Fund who may be able to help you.

3. Who administers the fees for each of these pension funds?
The Scottish Government does not have the information you asked for because this is outwith the remit of the LFR 24 collection. However, you may wish to contact the SPPA or the relevant Pension Fund who may be able to help you.

4. What value does Scotland get from the £328 million in Investment Management?
The £328 million in the LFR 24 'Scotland' tab is the sum of the investment management expenses reported by each Pension Fund. Investment management expenses are defined in the LFR 24
guidance as including:

- "both internal fund management costs (such as staff, system and general costs), and external fund management costs (such as fund managers, consultancy and other external management costs including Unit Trust fees, custody fees, corporate governance fees etc.)

- internal monitoring costs, investment accounting, performance measurement, external investment consultancy and advisory fees etc.”

Pension funds have a fiduciary duty to invest their contributions in order to provide benefits for members. Investments are managed separately from the benefits administered by the pension funds and are therefore not for the benefit of the people of Scotland.

5. When are the investment management contracts renewed and how are the managers selected?
The Scottish Government does not have the information you asked for because this is outwith the remit of the LFR 24 collection. However, you may wish to contact the SPPA or the relevant pension fund who may be able to help you.

6. Does the investment management include payment and management of pensions direct to eligible pensioners?
As noted above, investment management expenses relate to internal and external fund management costs, as well as internal monitoring costs, investment accounting, performance measurement, external investment consultancy and advisory fees etc. These figures do not therefore include costs associated with the payments and management of pensions direct to eligible pensioners.

Costs associated with the payment of pensions direct to eligible pensioners are captured in the 'Benefits Payable' section of LFR 24 (Rows 29 to 37 in 2020-21).

Costs associated with the management of pensions direct to eligible pensioners are captured under the ‘Administration costs’ line in Section 4. Management expenses (Row 61 in the 2020-21 LFR 24 workbook). This is defined in the LFR 24 guidance and includes: 'Staff Costs', 'System Costs' and 'General Costs'.

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