Doug Heron - Chief Executive Officer
The product we offer materially impacts the lives of one in five people in Scotland. How well we do that, it follows, is sort of an issue of national importance. I respond best when I have clear accountability and a challenge that stretches me and I have both of those here at Lothian Pension Fund. I want us all to get behind the mission to safeguard the pension benefits of our current and future members. That might sound easy but it’s not. We need people with skills, who care and who have the right values. All working to a clear vision.
For almost twenty years my professional purpose has been to better understand why people need financial products in their lives and to use that understanding to influence how they should be designed and delivered. I’ve worked in start-ups, scale-ups, private firms becoming listed, global corporates and foreign government owned banks, and now I’m here. I’m an accountant by graduate education and professional qualification and have worked in finance, risk and operational disciplines from trainee through to executive management.
No two days are quite the same for me and I suspect that’s true for many LPF colleagues. My main commitment is in oversight of what we do: leading the team to deliver on our plans and giving guidance where needed. I think as much as I can from the perspective of our members and what they need from us today and how that might change in the future. I take those ideas and with the senior leadership team create a vision that all of our stakeholders can engage with.
The Investments function administers and manages the assets of the Fund with the objective of paying members’ pensions during their retiral years. It does this by investing the regular pension contributions of employers and members in a diversified portfolio of assets (currently circa £8bn in size), including equities, bonds, property and infrastructure.
The investment management team implements the investment strategy determined by the Pensions Committee. Whereas most LGPS funds outsource management of their assets to external providers, Lothian has expanded its internal management capability over the last decade, so that it is able to manage most asset classes in-house. This results in better alignment of interests and a truly long-term investment focus.
The team manages a number of different portfolios, including regional and global equities and sovereign bonds, meaning that it selects individual securities on listed markets and funds on unlisted markets.
The key activities of the investment analysts and portfolio managers are macroeconomic, financial market, quantitative and stock selection analysis, on which decisions are made and advice offered. They must be able to present this effectively to colleagues and external parties in writing and verbally.
In the course of their research and as part of their roles, members of the team interact with a wide range of individuals. Externally, they will speak to a variety of independent analysts and corporate executives across industries and geographies, and they work with other like-minded funds to create better outcomes; internally, they report to and support the Fund’s quasi-trustees, the members of the Pensions Committee who are ultimately responsible for the pension fund, and the advisers on the Fund’s investment strategy panel.
The Finance function is responsible for the preparation of the Fund’s (Group) Financial Statements in accordance with CIPFA / LASAAC Code of Practice on Local Authority Accounting in the United Kingdom 2018/19.
The Lothian Pension Fund group comprises the investment and pensions team employed by LPFE Limited (LPFE), supporting the Council in its separate statutory capacity as the administering authority of the Fund (Administering Authority) and LPFI Limited (LPFI), the Group’s regulated investment vehicle (together the LPF Group).
With Lothian Pension Fund valued in excess of £8 billion and, in 2018/19, 384,490 pension payments totalling more than £231 million being made to 30,623 to members to support their lives in retirement, therefore, there is both scale and complexity to the workload of the Finance team. Current workstreams also include:
- Investment Management fee transparency;
- Investment collaboration – shared service arrangements with Falkirk and Fife Council Pension Funds;
- Financial Conduct Authority (FCA) filing for LPF Limited;
- Employer Asset Tracking (unitisation);
- LPFE Limited – payroll;
- Financial reporting to the company Boards, LPFE and LPFI Limited;
- Monitoring and due diligence of global custodian;
- Employer covenant assessment;
- Global taxation management services
The Pensions Administration team is responsible for the delivery of our pension administration services to scheme employers and members in line with the Local Government Pension Scheme. The team carries out all types of benefit calculations.
The team is accredited by the Pension Administration Standards Association (PASA). Also, the Fund holds the Customer Service Excellence (CSE) Award. Accordingly, the team is committed to deliver a high-quality pension administration service placing high importance on continually improving member experience.
The team comprises a blend of trainee and fully qualified administrators. All new members of the team work towards achieving recognised pension qualifications and we encourage qualified administrators to undertake further CPD activities and additional qualifications.
Pensions Members and Employers
The Employer and Member team acts as a first point of contact for members and employers
The key responsibilities include:
Member liaison – answering calls and e-mails from members and helping members register for our online service.
Employer liaison – working with employers throughout their lifecycle, including employers joining the Fund, dealing with day to day queries on Scheme Regulations and administration of the Scheme, annual covenant analysis as well as working with employers leaving the Fund. The team is responsible for managing the year-end project, ensuring that annual pension forecasts are produced for members which involves monitoring monthly data from employers and cleansing data on a regular basis.
Pensions Payroll – the Fund pays pensions to more than 30,000 pensioners every month and the team is responsible for preparing data to ensure that the right amounts are paid to the right people.
Legal, Risk and Compliance
The legal, risk and compliance team manages those core functions of our regulated investment and pensions business, as well as all governance and company secretarial matters. That involves providing strategic advice on the development of our business to the board and supporting its market leading investment, pension administration and employer teams on the work they do to ensure a best value pensions product is delivered.
Because we invest across the whole spectrum of asset classes, and operates our own internal investment management team, we operate in a very transactionally active environment. The team also works to support its members on complex pensions administration matters, as well as the scheme’s employers in putting together cutting edge admission and affordability packages, involving security and guarantees arrangements to support contribution stability.
Our team operates a model which seeks to organically build and retain its own specialist expertise, transacting the vast majority of its work internally, allowing us to further invest in our own talent and prevail upon the highest quality specialist external support when that is required. A unique strength and feature of the LR&C team is its specialist support for its globally recognised private markets platform commercially and on its very active transaction pipeline. The team also maintains an important ‘client facing’ discipline through its collaborative work with other UK pension funds and institutional investors, as well as to the fund itself.
People and Communications
The People and Communications function was set up to accomplish two things:
- Ensure our people feel positive about working for us and enable them to effectively and efficiently serve our members through their efforts
- Use our corporate voice to influence member and other stakeholder behaviour to achieve our goals
The function comprises three departments:
Their key responsibilities are: developing and managing the Fund’s brand, strategic communications for Lothian Pension Fund, managing and delivering the Fund’s communications to employers and members, identifying opportunities to promote the research of our Investment and Pension Administration colleagues to enhance the profile of the Fund and impact the future of local government pensions schemes
Their key responsibilities are: developing and managing the Fund’s people practices, successful implementation and embedding of all HR and people policies and initiatives, attracting and retaining talent, delivering an exceptional employee experience, ensuring people policies and practices support and enhance our organisational culture
Their key responsibilities are: ensuring our office environment reflects the needs and aspirations of both colleagues and visitors, management of internal and external events, managing our Health and Safety needs, managing our Business Continuity responsibilities, organising travel
IT Oversight and Governance
We operate a pension fund for more than 85,000 and in the last year we made 384,490 payments to members to support their lives in retirement.
As you might expect, we need a combination of people, processes and systems to allow us to do that with efficiency and control. Our technology oversight and governance function exists to protect our operations against the risk of disruption from failure in our technology and to ensure our company and member data remains secure. How we do that involves ongoing monitoring, due diligence reviews, service plan goals and targets, maintaining business continuity plans and using policies to ensure a high standard of governance.