On the go: The £17.8bn West Yorkshire Pension Fund has made three senior appointments to its in-house investment team in response to ‘critical’ staffing issues that occurred last year. It has also weighed up the risk of handing assets over to external managers in the future.
“The greatest risk that the West Yorkshire Pension Fund currently faces is the recruitment and retention of key officers across the fund, and in particular the investment team,” an early draft of the scheme’s 2021-22 annual report seen by Pensions Expert sister title MandateWire read.
“With the forthcoming retirement of a number of key officers, a series of failed recruitments and a likely flow of retirements over the next few years, this situation is now critical,” the report said.
The Local Government Pension Scheme fund runs the vast majority of its assets in-house, with the exception of alternative investments, some of which are made in collaboration with other local government pension schemes through the Northern LGPS pool and GLIL Infrastructure.
The annual report warned of the possibility that assets might have had to be transitioned to external managers if the staffing challenges went unaddressed, which would come “at significant costs to the fund”, and could potentially lead to it “losing its cost performance as the lowest cost per member LGPS fund”.
The pension fund stated that this was an early version of the report that should not have been published, and that the situation has since changed.
“Recruitment is difficult in all sectors, and we are no exception, so it does remain a risk to be monitored and managed.
“However, I can confirm that three senior appointments have been made in the investment team in the last year, so any risk has been mitigated. We have also had no departures from the team in the last couple of years,” a West Yorkshire Pension Fund spokesperson said.
Elsewhere, the scheme is preparing to outsource the management of its £7.5mn direct property portfolio. Towards the end of the fiscal year, it started a procurement process to hire an external manager to “help grow its direct portfolio in a cost-effective manner”.
“The aim of making direct investments is to lessen ongoing fees and enhance control, enabling long-term investment throughout market cycles,” the annual report noted.
This article originally appeared on MandateWire.com
