How we invest
The Leicestershire County Council Pension Fund (“The Fund” or “Fund”) invests employer and employee contributions to ensure that the Fund continues to have sufficient assets in the long term, that supports the payment of members' pension benefits, and ensure employers' contribution rates remain as stable as possible. To achieve this, the Fund invests in a range of assets globally, including equities (shares in companies), corporate and sovereign bonds, private equity, property, infrastructure and forestry.
These are expected to have a range of different risk and returns profiles, and by combining these into a diversified portfolio, they should support stability in employers contributions.
Leicestershire County Council, as administering authority of Leicestershire County Council Pension Fund, has delegated decision making on the overall investment strategy to the Local Pension Committee. The Committee has approved its approach which is set out in statutory documents, principally the Investment Strategy Statement and Funding Strategy Statement. Fund policies are found on the Fund and Finance page of this website.
All day-to-day investment management is delegated to specialist investment managers, but the Fund retain direct responsibility for asset allocation, manager selection and manager monitoring.
LGPS Central Pool
The Fund is a participating scheme in the LGPS Central Pool (Central). The proposed structure and basis on which Central operates was set out in the July 2016 submission to Government. The Fund is part of the LGPS Central pool with the objective that the pooled investments can expect to benefit from lower investment costs and the opportunity to access alternative investments on a collective basis. As a local authority owned and Financial Conduct Authority registered investment manager, the pool company, Central is required to provide governance, transparency and reporting to give the Fund assurance that its investment instructions are being carried out appropriately.
Central has developed a Responsible Investment and Engagement Framework. It incorporates the responsible investment beliefs of the pension funds within the LGPS Central Pool, which will be applied to both internally and externally managed investments. LGPS Central Limited has appointed a world-leading stewardship service provider to expand the scope of its engagement activities.
The Central pool consists of the LGPS funds of: Cheshire, Derbyshire, Leicestershire, Nottinghamshire, Shropshire, Staffordshire, West Midlands and Worcestershire. Collective investment management offers the potential for reductions in investment management fees, increased opportunities for investor engagement and access to a shared pool of knowledge and expertise.
Central manages climate change risk through robust investment stewardship, in order to positively influence company behaviour and enhance shareholder value. There are three avenues to our stewardship, each of which recognises that stewardship is more effective when engaged with a collaborative slant. We report on our activities quarterly to our Local Pension Committee and are always looking to improve and enhance our approach in line with best practice. More detail on how the Fund manages climate matters is available here.
Responsible Investment
Responsible investment is an approach to investment that aims to incorporate environmental, social and governance factors into investment decisions, to better manage risk and generate sustainable investment returns.
The Fund believes it has a responsibility to take these issues seriously and incorporates environmental, social and governance (ESG) considerations into investment decisions to better manage risk and generate sustainable, long-term returns. This is considered by the Fund in two key areas:
- Sustainable Investment/environmental and social factors: Considering the financial impact of environmental factors (including climate risk, social and governance factors) on the Fund's investments.
- Stewardship and governance: Acting as a responsible and active investor/owner through considered voting of shares and engaging with investee company management as part of the investment process.
The latest voting and stewardship reports are reported every quarter to the Local Pension Committee. More information can be found on the Leicestershire County Council website.
Local Authority Pension Fund Forum (LAPFF)
Membership of the Local Authority Pension Fund Forum (LAPFF) helps us to engage with companies to understand relevant issues, and to promote best practice. Collective pressure from investors via organisations such as the LAPFF helps to encourage listed companies to:
- enhance their corporate governance
- improve their environmental impacts
- improve their social impacts
The LAPFF publish their quarterly progress reports which are available on their website.
For more information about how the Fund manages climate risk and opportunities and the Net Zero Climate Strategy, please visit our page about Climate change.