East Sussex Pension Fund Annual Employers Forum 23rd November 2018 Presented by: Ola Owolabi, Head of Pensions.

What we will cover LGPS Investment pooling ACCESS Pool Governance ACCESS Pool Progress

Approved 8 Pools

ACCESS (a collaboration of central, eastern and southern shires) with assets of £44.9bn – all of which are managed by third parties. c3,250 employers c1,000,000 members Strong performing funds and potential for substantial benefits for a group of successful like-minded authorities collaborating and sharing their collective expertise. 75% of the assets are invested across 12 managers and 71 different managers used across the authorities.

Principles guiding decision making Draw out objective evidence based decision, risk management, unnecessary complexity and value for money and evolution. And implicit … fiduciary responsibility democratic accountability

ACCESS Governance Structure No FCA regulated decisions in client-side functions ACCESS Pool Officers Officer Working Group (OWG), s151 Officers, Monitoring Officers Joint Committee (JC) ACCESS Support Unit (ASU) Secretariat, Contract Manager, Support ACS Pool aligned e.g. passive Client side advisers Custodian Depositary Fund accounting Transfer & settlement ACS OPERATOR Transition managers ACS Operator Advisers Investment managers Investment services Reporting & compliance Advisers, managers etc. for Pool aligned assets Public ACCESS Regulators Primarily FCA, also TPR Government MHCLG, Treasury, Cabinet Office Pensions directors / leads s101 Committees Local Pension Boards Monitoring Officers Scheme members Participating employers Trade unions s151 Officers Funds (Scheme Managers) 11 Administering Authorities Funds’ investment advisers for ACCESS activities

Where does local decision-making end? strategy growth Equities Active/passive Global/regional Unlisted Alternatives Multi-asset Hedge funds Property Income Credit Short term enhanced yield Long term enhanced yield protection Bonds Index-linked nominal Infrastructure Global local LDI Investment managers Decided at pool level You will still make these decisions locally

ACCESS - Governance VfM discussion with S151s and legal advice Draft - Governance manual completed Legal review of governance manual (incl identifying any gaps in the ACCESS IAA) Workshop to develop communications plan. Next Update governance manual in light of legal review IAA review later this year TBC ACCESS Communication plan

ACCESS Progress - ACS Appointment of ACCESS Operator – Link Fund ACS, sub-funds, investment managers Appointment of ACCESS Operator – Link Fund FCA approved the Authorised Contractual Scheme (ACS) prospectus on 9th August Includes approval for 1st sub-fund Investment Management Agreements (IMAs) ESG guidelines to be included in IMA Tranche 1 lunched on 16th November 2018 Tranche 2 FCA application - 8th November 2018 Next Transfer assets to first sub-fund - Nov–Dec 2018 (TBC) Tranche 2 Prepare for “go-live” in January 2019

ESPF Assets Transitions Costs/Savings Mandate Passive Equities Active Global Equities Multi-Asset Credit Total ESPF ACCESS Mandates   £000's Anticipated Savings 672.9 224.6 - 897.5 Anticipated Costs (62.0) Total Anticipated Costs/Savings 835.5 Current Investment (£m) 1,400.0 271.0 251.0 1,922.0

ACCESS – Future Sub-funds ACS, sub-funds, investment managers Phase 2 sub-funds initial proposal for Global & UK equities developed advice on fixed interest & DGFs commissioned (bfinance report – under consideration) Next Agree Phase 2 Global and UK Equity Sub-funds Agree approach to ensure competitive tension

ACCESS Progress - ASU Permanent ASU ACCESS Support Unit (ASU) / contract management Permanent ASU Recruitment underway for Director of ASU Press release issued to help publicise Contract Manager appointed Next Start recruitment process for technical roles? Agree whether to extend interim ASU arrangements?

Summary Progress Issues ACS establishment & first sub-fund Phase 2 equity sub-funds proposal + process for competitive tension ASU establishment: recruitment in train Governance manual Issues Value for Money Timescales for ASU establishment

ACCESS Pool – Additional info ACCESS meeting papers/documents can be found using the following link: KCC - https://democracy.kent.gov.uk/mgOutsideBodyDetails.aspx?ID=898. ACCESS: A Collaboration of Central, Eastern and Southern Shires -https://www.accesspool.org/ DRAFT

Thank you Any questions ?