The Secretary of State guidance (Six CIPFA / Myners Principles for Investment Decision Making and Disclosure in the LGPS)

The six CIPFA / Myners Principles for Investment Decision Making and Disclosure in the LGPS are set out below, along with the compliance of the Cornwall Pension Fund (the “Fund”)with the guidance.

Principle 1: Effective decision making
Administering authorities should ensure that
  • Decisions are taken by persons or organisations with the skills, knowledge, advice and resources necessary to take them effectively and monitor their implementation; and
  • Those persons or organisations have sufficient expertise to be able to evaluate and challenge the advice they receive and manage conflicts of interest.

The Fund has a dedicated Pensions Committee (the “Committee”), to which responsibility for the management of the pension fund has been assigned.
The Committee has a defined terms of reference to which it adheres.
Whilst there are no formal sub-committees in place, it is acknowledged that from time to time informal working groups may be set up to help achieve certain tasks. Membership of such working groups is agreed upon by the Committee before being formed.
The constitution of the Committee is for 14 members, consisting of 10 elected members of Cornwall Council and 2 Member Nominated Representatives and 2 Employer Representatives. There is currently 1 vacancy for an elected member of Cornwall Council and 2 vacancies for Employer Representatives.
A training programme is in place for Committee Members, through the Knowledge and Skills Framework, to ensure an adequate level of knowledge is maintained relevant to Members’ roles and responsibilities.
The Committee utilise the expertise of internal and independent external advisers to aid with the day to day running of the Fund.
Business plans are considered at each Committee meeting.
The Fund considers that it is compliant with this principle.
Principle 2: Clear objectives
An overall investment objective(s) should be set out for the fund that takes account of the scheme’s liabilities, the potential impact on local tax payers, the strength of the covenant for non-local authority employers, and the attitude to risk of both the administering authority and scheme employers, and these should be clearly communicated to advisors and investment managers
Objectives for the funding of the Fund are set out in the Actuarial Valuation Report, in agreement with the Fund’s actuary.
The investment objective of the Fund, as set out in the Statement of Investment Principles, is to achieve a return on assets which is sufficient, over the long-term, to meet the funding objective.
Appropriate benchmarks and objectives have been discussed with each investment manager. These are set out within the Fund’s Statement of Investment Principles, with analysis of each investment managers’ performance relative to these benchmarks and objectives presented at Committee meetings.
The nature of those pooled funds in which the Fund investsis such that the objectives of each fund are dictated by the investment manager, without influence from any of the underlying investors.
The managers’ approaches in attempting to achieve their objectives are clear and are understood by the Committee.
The strength of employers covenants are taken into account and form a key consideration for individual employer contribution rates.
As part of the Committee’s due diligence when appointing investment managers, the size of the funds the Fund is investing in is assessed.
A full range of assets have been considered and the current strategy is diversified across traditional and alternative asset classes to avoid risk concentration within any particular asset class.
The Fund considers that it is compliant with this principle.
Principle 3: Risk and liabilities
In setting and reviewing their investment strategy, administering authorities should take account of the form and structure of liabilities. These include the implications for local tax payers, the strength of the covenant forparticipating employers, the risk of their default and longevity risk.
The Committee consider the desired investment strategy to be appropriate to the Scheme's liabilities, having undertaken considerable work in relation to both risk management and return requirements.
A key objective of the risk management work is to focus on overall funding level, and consequently contribution rates.
The Fund has made an allocation into the Liability Driven Investment asset class, in recognition of the inflation risk that the Fund is exposed to through the inflation linked nature of its liabilities.
The Committee monitor the Fund’s liability valuations regularly, via quarterly funding updates from the actuary
The Fund considers that it is compliant with this principle.
Principle 4: Performance assessment
Arrangements should be in place for the formal measurement of performance of the investments, investment managers and advisers. Administering authorities should also periodically make a formal assessment of their own effectiveness as a decision-making body and report on this to scheme members.
The Committee monitor the performance of the investment managers regularly on a manager-by-manager basis, via quarterly reports provided by the Fund’s custodian, which are reported on at each quarterly Committee meeting.
However, there is currently no formal arrangement in place for measuring the performance of the investment strategy as a whole.
In terms of their own skills, Committee Members are enrolled in the Knowledge and Skills Framework
As part of the Framework Agreement between the Environment Agency and the South West Local Government Pension Schemes, evaluation sheets which include pre-set criteria are completed annually to provide feedback on advisers
The Fund considers that it is mostly compliant with this principle.
Principle 5: Responsible ownership
Administering authorities should:
  • Adopt, or ensure their investment managers adopt, the Institutional Shareholders' Committee (“ISC”) Statement of Principles on the responsibilities of shareholders and agents.
  • Include a statement of their policy on responsible ownership in the Statement of Investment Principles.
  • Report periodically to scheme members on the discharge of such responsibilities.

The Fund’s policy towards responsible ownership is set out in its Statement of Investment Principles.
The Fund has taken to investing into pooled funds more recently and, as a result of this, certain governance responsibilities are delegated to the investment managers of these funds.
The Fund’s adherence to the FRC UK Stewardship Code is set out in a publicly available policy document, along with the Environmental, Social and Corporate Governance policies for each of the Fund’s investment managers.
Reporting on governance issues is to be increased in the future by the introduction of a vote monitoring service provider.
The Fund considers that it ismostly compliant with this principle.
Principle 6: Transparency and reporting
Administering authorities should:
  • Act in a transparent manner, communicating with stakeholders on issues relating to their management of investment, its governance and risks, including performance against stated objectives
  • Provide regular communication to scheme members in the form they consider most appropriate

The Fund’s Statement of Investment Principles and is publicly available via the dedicated Cornwall Pension Fund website.
Reporting on governance issues is to be increased in the future, in line with the review of the Fund’s compliance with the FRC UK Stewardship Code.
A summary leaflet is sent to all scheme members annually to ensure they are aware of key issues.
An annual meeting for the employers is held which also provides a useful forum for employers to input their views into the strategic direction of the scheme.
The Fund considers that it is mostly compliant with this principle.