Sixty Second Summary
Strategic focus and cash flow management in the LGPS
30 Sep 2019 - Estimated reading time: 1 minute
- A pension committee’s primary objective is to ensure the long-term sustainability of their Fund.
- To achieve this, a Committee must target the appropriate balance between investment risk and contributions. This balance, which will change over time, is unique to each Fund and driven by several factors.
- In addition to this focus on long-term sustainability, Committees must also focus on the shorter-term needs of meeting their ongoing cashflows. Committees need to understand the operational and strategic implications of their (and their employers’) cashflow profiles.
The LGPS valuation year
The valuation year for the LGPS in England and Wales is in progress, and as Committees contemplate the implications for their investment arrangements, it is important that they focus on a number of key areas to achieve success (see diagram below).
In a previous 60 Second Summary, we highlighted investment objectives and beliefs as core elements of a framework for robust investment governance - reiterating that Funds should have clear objectives upon which to set their funding goals and assess investment risk, and their investment arrangements should be grounded in a set of well-defined investment beliefs.
In this 60 Second Summary we take a closer look at strategic focus and cash flow management as individual elements of the framework. Other key areas will be explored in future 60 Second Summaries.
Download our full summary here.
If you have any questions about anything covered in the summary please don’t hesitate to get in touch.